1) Remarks on Executing a Modern American Industrial Strategy by NEC Director Brian Deese (10.13.22)
. . . [S]trategic public investments are essential to achieving the full potential of our nation’s economy. It’s also an idea as old as America itself. . . . Over the last year and a half, President Biden worked with Congress to enact four foundational laws: the American Rescue Plan, which brought our economy back from the brink, and more recently the Bipartisan Infrastructure Law, the CHIPS and Science Act, and the Inflation Reduction Act.
There’s a strong animating vision that unifies these laws: a modern American industrial strategy. . . . It identifies areas where relying on private industry, on its own, will not mobilize the investment necessary to achieve our core economic and national security interests. It then uses public investment to spur private investment and innovation.
It means that—rather than accepting as fate that the individualized decisions of those looking only at their private bottom lines will put us behind in key sectors—we engage in strategic investment in those areas that will form the backbone of our economy’s growth over the coming decades, areas where we need to expand the nation’s productive capacity.
A modern American industrial strategy does not react to the potential for underinvestment by seeking to replace or push aside the private sector: it uses public investment to crowd in more private investment, and make sure that the cumulative benefits of this investment strengthen our national bottom line. It encourages that investment to reach all regions and communities. And it invests in workers—the people who will generate all this productivity and innovation.
This is not about having government pick winners and losers. . . . Our modern American industrial strategy reflects a commitment to make bold investments in key areas that everyone, from academics to business leaders alike, agrees are foundational to economic growth. These investments help accelerate and shape breakneck innovation, and they encourage private investment and market competition in a way that picks only one winner: the productivity, opportunity, and standard of living of the American people.
The first area is transportation infrastructure. . . . The second area . . . is technological innovation. . . . [T]hird . . . is clean energy. . . .
Far from supplanting markets or crowding out private investment, foundational investments in these three areas . . . will crowd in private investment at historic scale. Indeed, we estimate that the aggregate investment from President Biden’s legislative strategy, including both public capital and private investment, will total some $3.5 trillion over the next decade. . . .
I want to focus on three key elements of our execution plan . . . .
2) Remarks by Ambassador Katherine Tai at Roosevelt Institute Progressive Industrial Policy Conference (10.7.22)
. . . I want to focus on what progressive industrial policy means for trade.
We’ve been doing FTAs for almost forty years now. And while some sectors of the economy have benefited, many in this room know that the traditional approach to trade—marked by aggressive liberalization and tariff elimination—also had significant costs: concentration of wealth. Fragile supply chains. De-industrialization, offshoring, and the decimation of manufacturing communities.
At the same time, we’ve experienced over two decades of the PRC’s non-transparent, state-directed industrial dominance policies conducted on a massive scale. Traditional trade tools and the multilateral trading system failed to address these distortions, and markets even rewarded them. The global impacts of these policies have profoundly limited the ability of workers and industries in open markets and free societies like ours to thrive or even survive.
This has led many people to view trade and globalization with increased hostility—and to a lack of confidence in our very institutions.
Heightened economic insecurity, the pandemic, and Russia’s invasion of Ukraine have pushed us to re-examine our approach to trade. The need for correction is clear, and industrial policy is a part of that re-balancing effort. . . .
We believe industrial policy and trade policy must complement each other if we are going to realize this goal.
To get this right, trade has got to be about more than just unfettered liberalization, cheap goods, and maximizing efficiencies. Now, we have not sworn off market opening, liberalization, and efficiency. But it cannot come at the cost of further weakening our supply chains, exacerbating high-risk reliances, decimating our manufacturing communities, and destroying our planet.
We need to update the playbook and bring more people in, so that more get pieces of a bigger pie. We need to address the climate crisis. We need to support workers and working families—ordinary people. We need trade policy to be durable and help us rebuild trust with our communities and rebuild confidence in the fairness of the global economy.
So, what does complementary industrial policy look like in practice? . . .
3) Remarks by Treasury Deputy Secretary Wally Adeyemo at Roosevelt Industrial Policy Forum (10.7.22)
This gathering comes at a pivotal moment for our economy. Rarely has the federal government been responsible for implementing initiatives on the scale and breadth of those that President Biden and Congress have designed over the last two years. From infrastructure funding that will support projects like broadband access for all Americans… to investments in semiconductor manufacturing and development that will position us at the forefront of the 21st century economy … to the most significant investment in American history to address the climate crisis, we are at the beginning of a transformation that will lead to a more resilient and secure American economy. . . .
History has shown what we can accomplish when government commits itself to investments like these—from Eisenhower’s funding of the Interstate Highways system, which economists estimate is worth more than $600 billion real GDP annually … to the Marshall Plan, which brought Europe’s economy back from the brink and set the stage for some of the fastest growth in world history … to Operation Warp Speed, which combined the best of public-private collaboration to deliver innovative vaccines that have saved millions of lives globally.
We know there are places where the scale of capital needed is so great that government investment is required. It is in those instances where the case for large scale public investment is the strongest—where government is uniquely situated to catalyze a new path toward economic prosperity. Today, I’d like to share some thoughts about our theory of the case when it comes to executing the investment President Biden has secured and deploying these historic resources.
Addressing inequality is a critical part of this approach . . . . I know that America will be more competitive—and more secure—if every American is given the tools and opportunity to fully participate in our economy.
What Secretary Yellen has dubbed “modern supply side economics”—making investments to expand our labor supply, build our human capital, renew our public infrastructure, and enhance our economic capacity through R&D and green investments—are case in point. These investments will promote sustainable and secure economic growth and advance economic and racial equity. When we invest in the untapped potential of underinvested communities by expanding labor market opportunity and building infrastructure like broadband to empower these communities to fully participate in the modern economy, it boosts economic growth for everyone.
At a high level, the President and Congress have given us two different types of economic policy tools to pursue these goals. The first is direct financing—the ability for government to offer direct economic support to industries and companies critical to achieving our economic goals. The CHIPS Act is a great example of this tool. . . .
Now, some might say we should leave decisions like these to the private sector alone. But the pandemic taught us that fragile supply chains are a danger to our economic and national security, a danger the private sector cannot resolve on its own. Simply put, moments like these have reaffirmed the clear need for government to step up and fill the void.
In addition, in too many cases the private sector has shown itself unwilling to make capital intensive investments in marginalized communities, leaving their economic potential untapped. Our semiconductor investment has already led several companies to announce plans to make major investments in under-resourced communities, from Ohio to upstate New York.
We need to continue to focus on ensuring that the communities too often left behind when it comes to technological investment benefit from the CHIPS Act. That’s why the CHIPS Act includes workforce and research investments targeted at both underserved geographies and institutions like Historically Black Colleges and Universities that will help broaden opportunity to enter STEM fields.
The second tool we are using to make these large-scale investments is tax incentives—the use of the tax code to provide economic support for activities that advance policy objectives and meet national needs. We have long used the tax code to promote our equity goals, through programs such as the Low-Income Housing Tax Credit, which has helped add roughly 3 million affordable housing units to alleviate our nation’s acute housing shortage. The Inflation Reduction Act (IRA) will similarly help advance these goals. It includes roughly $270 billion in tax incentives that will lower the cost of building out a clean energy economy. These incentives will catalyze trillions in private sector investment across clean energy production and related technology and manufacturing sectors. . . .
Let me conclude by talking about the infrastructure through which these tools are often executed and through which the tax revenue generated by higher growth will be collected and distributed—the Internal Revenue Service. The IRS and its tax experts make sure these credits go to the people who need them and to companies helping to effectuate our policy goals. And they are the ones who collect the taxes we use to fund these investments—especially from corporations and the wealthy who for too long have not paid their fair share. Today, more federal incentives flow through the IRS than anywhere else in the federal government. The IRS touches every American household and business. And yet, for too long it hasn’t had the tools it needs to provide the quality of service our citizens deserve.
. . . [T]he Inflation Reduction Act will allow the IRS to upgrade the 1960s technology it currently relies on. It will enable the IRS to administer the system of credits the IRA has put in place . . . .
. . . Every investment we make . . . depends on our ability to collect revenue. For too long, the IRS hasn’t had the resources it needs to perform that essential role. . . .
This is hugely consequential as a matter of revenue-raising—but what gets lost sometimes is how important this is as a matter of fairness. . . .