American Manufacturing Alliance President Scott Paul reflects on President Joe Biden’s achievements in manufacturing.
Decades from now, economic and political historians may look back on the Biden administration as a transformational administration for the American economy.
This is how they will know: our country will have a strong supply chain that will not suffer from tsunamis or canal blockages. We will become a world leader in developing and manufacturing technologies that are unimaginable today. We will restore balance to our trade relationships and no longer run multi-trillion dollar trade deficits in goods. Instead of feeling (and looking) like our best days are behind us, we will have airports and other infrastructure that are the envy of the world. And finally, our middle class will grow and thrive.
That’s the best case scenario.
President Joe Biden’s 21cent The industrial policy of the century may prove to be temporary, in which case we will see our status as an economic and geopolitical superpower continue to be undermined. That’s a big mistake, whether the rollback is for political or philosophical reasons.
But no matter what view you take about Biden’s accomplishments, shortcomings, or actions on other policy issues, one fact remains indisputable. That means Biden has reinvigorated the idea of a modern, uniquely American industrial policy, based on a thesis first advanced centuries ago by Alexander Hamilton.
In 1790, Congress tasked Hamilton, America’s first Secretary of the Treasury, with developing a strategy for manufacturing in the United States. This was no small task, considering the agricultural orientation of each state, Britain’s industrial dominance, and the fledgling federal system.
his 1791 Manufacturer report The rationale for industrial policy is presented and its initial components – appropriately sized tariffs, “incentives” (aka subsidies), internal improvements (aka infrastructure), and safety and intellectual property protection – are defended. In the future, it formed the basis of economic policy written by Henry Clay, Abraham Lincoln, and Franklin Delano Roosevelt. Had Hamilton’s recommendations been ignored, the United States’ status as the second largest industrial power after Great Britain would likely have been delayed or denied.
Given these practical fundamentals, I return to Biden.
Biden was a U.S. senator and vice president, and while he was certainly aware of working-class concerns, he had a neoliberal outlook on trade policy and voted in favor of all disastrous trade deals. . It is unlikely to lead an economic revolution. When I heard his 2020 campaign rhetoric and read his trade and manufacturing policy platform (which looked a lot like AAM’s own wish list), I was skeptical. Many candidates talk well about “Made in America,” but few in either party make it a reality.
Biden proved me wrong. No president since FDR has been able to overcome a crisis to transform the economy. In response to the 2020 pandemic, President Trump and his administration launched temporary income support for desperate families and Operation Warp Speed to produce a COVID-19 vaccine, but they It was an emergency measure. President Obama’s response to the Great Recession was similar.
During his first 19 months, Mr. Biden launched the following initiatives: transformation economy. Soon, he set up a Made in America office in the White House to show he meant what he said and, despite loud calls from his party, to make more than just steel and aluminum. Tariffs on a range of Chinese products were also largely maintained. . In February 2021, he ordered a thorough review of vulnerable supply chains. These measures will determine the future direction.
In November 2021, Congress passed $1.2 trillion in infrastructure spending. What was simply a rhetorical “Infrastructure Week” has turned into the Decade of Durable Infrastructure. The size, scope and terms of the investment are all noteworthy. It’s the largest investment of its kind in history, expanding infrastructure from roads and bridges to clean water, broadband and energy systems, and permanent mechanisms to keep us safe. All materials for this building are sourced from American factories. This is a policy called “Build America, Buy America.” While infrastructure funding is certain to become a target for future austerity hawks, and Buy America requirements may become too loopholes to be effective, this public investment is essential to help the United States compete globally. , likely to help increase employment over the years.
For many presidential administrations, infrastructure legislation will be seen as an extraordinary accomplishment in its own right. But for Biden, that was just the beginning. In February 2022, the White House review Provide a framework for intervention to strengthen critical domestic supply chains and protect America’s economy and national security. Values in this report updated to decembermust be durable. It can shape policy, reveal vulnerabilities, and reveal market and investment opportunities for entrepreneurs. After all, semiconductors aren’t the only products the United States should produce more of. Think pharmaceuticals, batteries, and critical minerals.
Speaking of semiconductor chips, thanks to a bipartisan group of lawmakers and the Biden administration, CHIPS and the Science Act were enacted. The law was passed in August 2022 after years of work, leading to a surge in domestic factory construction. CHIPS is important for several reasons. First, it aims to restore U.S. leadership in semiconductor manufacturing. Second, it should help prevent disruptions to the microelectronics supply chain that disrupted the economy several years ago. Finally, this means an outdated and necessary return to industrial policies other than traditionally favored interests such as oil, agriculture, and defense.
Just one week after CHIPS was signed, the Inflation Control Act (IRA) arrived on Biden’s desk. Most relevant to manufacturing are the numerous tax credits, incentives, and capital support for the production of clean energy technologies. The law itself was the result of a delicate compromise befitting then-Sen. Joe Manchin (D-WV), within the permitted framework of the legislative mechanism known as budget reconciliation. Although far from perfect, it has unleashed massive private investment in clean energy vehicles and infrastructure, solar and wind power manufacturing, and new industrial facilities with a lower carbon footprint. We can talk all we want about climate change and all kinds of energy, but if we don’t actively invest in the technologies and industries of the future, America will be left behind.
To summarize, in just 19 months, nearly $2 trillion has been spent on Made in America offices, critical supply chain overhauls, infrastructure, microelectronics, and clean energy manufacturing.
Importantly, Biden has blocked these domestic efforts with a fundamentally different trade policy than previous Democratic administrations. He kept most of the tariffs imposed by President Trump and added new pre-emptive tariffs on a number of Chinese products, including electric cars and batteries. He imposed sanctions and restrictions to keep cutting-edge technology away from the Chinese Communist Party. He refused to cooperate with the flawed World Trade Organization, relying instead on U.S.-led efforts to contain China’s unfair trade practices. He did not propose a single free trade agreement or auctioning off access to U.S. markets at the expense of workers. His administration repeatedly used the USMCA mechanism to support Mexican worker rights. And his administration has accepted or initiated major trade cases involving Chinese shipbuilding and semiconductors.
We need to recognize that there have been many missed opportunities to go further, do more, or change course. Biden will be the first president since Bill Clinton to leave office with more manufacturing jobs than when he took office, but that is likely not what he will be remembered for. Americans were still clearly worried about inflation, prices, and scarcity. The goods trade deficit remains at $1 trillion. Challenges remain to keep factory employment on an upward trajectory. And we remain dangerously vulnerable to Chinese control of critical supply chains and materials.
There is no president to regulate the macroeconomic and global forces that affect the U.S. economy and can wash away the effects of industrial policy. There are still too many National Democrats who support neoliberalism, reject tariffs, and prioritize the wrong sectors of the economy. And let’s not forget the fierce opposition of many Republicans to these initiatives. There are big questions about how sustainable this Biden industrial policy will be.
My hope is that the incoming Trump administration will recognize the tacit agreement to find smart ways to contain China and expand domestic production. They will find it in their interest to avoid the landscape of half-baked chip factories, monthly employment reports showing factory job losses, and the prospect of Chinese EVs dominating the world.
Until that debate happens, please accept this appreciation for Joe Biden’s pragmatism when we needed it most.
