Intro
In this episode of Freakonomics Radio, host Stephen J. Dubner interviews Gina Romando, the Secretary of Commerce in the Biden administration, and Brian Deese, President Biden’s chief economic policy maker. They discuss the Democrats’ efforts to reshape American industrial policy through key legislation and the importance of investing in technology, manufacturing, and infrastructure to compete with China and protect national security.
Main Takeaways
Democrats’ Efforts to Reshape American Industrial Policy
- The Democrats are trying to fundamentally reshape American industrial policy through three big pieces of legislation passed in President Biden’s first two years: the bipartisan infrastructure law, the inflation reduction act, and the Chips and Science Act.
- The investment is to achieve a set of national security goals to keep America safe, not corporate welfare.
- The timing of this investment is important as our national and economic security depends on it.
Competing with China and Protecting National Security
- The US’s big bet on treating China like an ally is no longer defensible.
- The Chips and Science Act was signed by President Biden in August 2022 to reshore the manufacturing of semiconductor chips, with the goal of bringing back a significant portion of chip production to the US.
- The final version of the Chips Act allocates $50 billion in subsidies, including tax credits and grants, to be distributed by the Commerce Department to boost research and training programs and build chip manufacturing facilities in the US.
- The investment will create a quarter to half a million jobs, but it is necessary because America has allowed its manufacturing base to wither and atrophy.
- Companies that receive funding will be required to provide good wages, workplaces, and invest in research and development.
Gina Romando and the Commerce Department
- Gina Romando, the Secretary of Commerce in the Biden administration, has a lot more central job due to the recent legislation.
- Gina Romando has a lot on her plate as Secretary of Commerce in the Biden administration, with a massive department of 50,000 employees to manage.
- Romando frequently meets with senators, counterparts from countries in the Indo-Pacific, and business leaders.
- Romando has a personal connection to investing in communities that need it, as her father lost his job in manufacturing when the company moved operations to China.
- The Commerce Department’s mission is to create economic growth and opportunity for all communities, with a range of bureaus and agencies under its umbrella, including NOAA, the U.S. patent trademark office, and the Census Bureau.
Investing in Infrastructure, Innovation, and Clean Energy
- The Biden administration has invested in infrastructure, innovation, and clean energy through legislation such as the trillion dollar bipartisan infrastructure bill and the Chips and Science Act.
- The inflation reduction act invests in America, lowers healthcare costs, and tackles climate change while reducing the deficit by over $200 billion in the next decade.
- Investing in infrastructure, innovation, R&D, and clean energy are some of the highest return areas and can help address subpar growth in the American economy.
- The inflation reduction act provides long-term technology-neutral incentives for investment in clean energy technology, which will help build clean energy manufacturing in America, hit climate goals, and drive down the cost of deploying early-stage clean energy technology.
- The investment of US taxpayer dollars in clean energy technology will drive down global costs of deployed technologies by 15 to 30%, benefiting economies in Europe and across the world.
Summary
Democrats’ Efforts to Reshape American Industrial Policy
The Democrats are pushing for significant changes in American industrial policy through key legislation, including the bipartisan infrastructure law, the inflation reduction act, and the Chips and Science Act. These investments are aimed at achieving national security goals and revitalizing the manufacturing sector.
Competing with China and Protecting National Security
The US is recognizing the need to compete with China and protect its technology and intellectual property. The Chips and Science Act, in particular, aims to reshore the manufacturing of semiconductor chips, which are crucial for various industries. The investment will create jobs, but critics argue that it could benefit larger companies more than smaller ones.
Gina Romando and the Commerce Department
Gina Romando, as the Secretary of Commerce, has a significant role in managing the Commerce Department and implementing the recent legislation. She emphasizes the importance of investing in communities that have been impacted by offshoring and promoting economic growth and opportunity for all. The Commerce Department’s mission encompasses various agencies and bureaus, covering a wide range of sectors.
Investing in Infrastructure, Innovation, and Clean Energy
The Biden administration’s investments in infrastructure, innovation, and clean energy are aimed at boosting economic growth and addressing climate change. The bipartisan infrastructure law and the inflation reduction act provide incentives for clean energy technology, which can drive down costs and benefit not only the US but also global economies.
Conclusion
The Democrats’ efforts to reshape American industrial policy and compete with China are centered around investments in infrastructure, technology, and clean energy. These investments aim to achieve national security goals, revitalize the manufacturing sector, and address climate change. While there are debates about the impact on different industries and companies, the overall objective is to create economic growth and opportunity for all communities.
