President Biden is traveling to Milwaukee on Wednesday to unveil an economic strategy aimed at revitalizing communities that have been cut off from the country's growing prosperity for decades.
Biden is scheduled to speak at a Boys and Girls Club in the Milwaukee area in a predominantly Black and Latino neighborhood where 17,000 homes and 1,000 businesses were destroyed in the 1960s to make way for a highway.
The president is expected to announce $3.3 billion in federal grants to remove or upgrade highways that in many cities separate minority neighborhoods from jobs, entertainment centers, hospitals and other services.
“The very fact that American English has the phrase 'wrong side of the tracks' tells you everything you need to know about our awareness in this country that infrastructure can divide as surely as it can connect,” Transportation Secretary Pete Buttigieg said reporters Tuesday.
Milwaukee is one of 132 communities in 40 states that will benefit from the Transportation Department's program, one of a series of new federal initiatives aimed at helping places suffering from long-term economic problems, officials said.
Biden's adoption of policies aimed at spurring development in specific locations marks a significant shift in U.S. policy, part of the broadest government intervention in the economy in at least four decades – and one with significant political overtones. States like Wisconsin are crucial to Democrats' hopes in November. Biden's appeal to the large number of black voters in Milwaukee could determine his fate there.
The government’s “place-based” approach to economic development has several objectives.
Using a mix of spending and tax credits in three key pieces of legislation, the government aims to distribute wealth more evenly, rebuild communities devastated by factory job losses and prevent decline in areas that would otherwise suffer from the transition to cleaner energy sources.
If successful, the effort could help bridge an economic divide that has stoked political resentment and convinced millions of Americans that Washington has left them to rot.
“People and capital are trapped in places where the prospects are not so good,” said economist Simon Johnson of the Massachusetts Institute of Technology. “This is a big country with a lot of space. Let’s ensure economic development where people want it.”
But in seeking to focus federal power on revitalizing oppressed communities, the president is deploying a series of policies with mixed track records. Even his supporters acknowledge that Washington may be struggling with the mammoth, decades-long effort that some distressed areas require.
“It just doesn’t happen overnight. We should look at this in an intergenerational context,” said John Lettieri, executive director of the Economic Innovation Group.
The political risks at stake during Biden's visit to Milwaukee are also clear.
The president made the grant announcement during a two-day tour of two battleground states. He will remain in Wisconsin Wednesday evening and attend a campaign rally in Saginaw, Michigan, on Thursday.
His campaign announced this week that it will locate its Wisconsin office in Milwaukee, the state's most racially diverse city, to solidify the coalition that helped Biden win Wisconsin by nearly 21,000 votes in 2020.
Biden has made tackling racial inequality a central aspect of his presidency — and his reelection. He was elected in 2020 after the killing of George Floyd, amid calls for criminal justice, education and police reforms.
Biden has failed to resolve several issues of great importance to black Americans and other minorities. There has been no significant police and criminal justice reform, and efforts to codify election protections into federal law failed in Congress.
But his aides say the administration has made other advances, including historic appointments to the Supreme Court and federal appeals courts and the election of Kamala D. Harris as the first Black woman to be vice president. Biden also insists that justice is embedded in laws like the Inflation Reduction Act.
As he fights for political support, the president is also seeking to cement his economic legacy. Its industrial policies, including place-based efforts, have oriented Washington toward a more active economic role.
About 20 separate programs under the bipartisan infrastructure bill, the Inflation Reduction Act and the Chips and Science Act are expected to inject tens of billions of dollars into the economy over the next half decade, the largest geographically targeted initiative of its kind in years.
“This is a sea change,” said Mark Muro, a senior fellow at the Brookings Institution.
Many of the programs, particularly those aimed at boosting domestic semiconductor production, have bipartisan support. However, lawmakers have not always fully funded them.
In 2022, for example, the Chips Act authorized $10 billion in funding over five years to establish 31 technology centers in communities across the country, an attempt to encourage technology development outside of Silicon Valley and other long-standing industrial centers .
Ultimately, however, lawmakers only allocated $500 million for the hubs. In October, the Commerce Department designated locations in 32 states as eligible for the first implementation grants of $40 million to $70 million each.
Economists have traditionally preferred to target government aid to people rather than places. But that began to change in recent years, as shared growth gave way to a more uneven pattern in the immediate post-World War II period. Some hardest-hit areas—such as former coal mining towns or Midwestern factory communities—suffered for years from low employment rates and chronic social ills.
The president's visit to Milwaukee on Wednesday is part of a broader administration effort to promote Biden's economic policies. Treasury Secretary Janet L. Yellen is in Elizabethtown, Kentucky, visiting Advanced Nano Products, a manufacturer of materials used in electric vehicle batteries.
White House officials distinguish Biden's approach from what they call failed “trickle-down” policies of the past. The emphasis on low tax rates and deregulation while relying on the market to provide capital for worthy projects has led to lopsided national growth, they said.
A different approach that focuses on leveraging the benefits of specific communities will narrow the regional gap in economic outcomes, they say. In recent decades, as innovative technologies spurred growth, jobs and prosperity became more concentrated in a few coastal cities, while other areas lagged behind.
According to Brookings, between 2005 and 2017, about 90 percent of all high-tech jobs were created in five metropolitan areas: Boston, San Francisco, San Jose, Seattle and San Diego.
Americans who once routinely moved in search of opportunity also became significantly less mobile, as high housing costs in job-rich places often made moving unaffordable.
In 2022, only 8.7 percent of Americans exercised — near an all-time low — down from more than 20 percent in the mid-1980s, according to the Census Bureau.
“The market failure is, in our view, pretty clear,” said a White House official who spoke on condition of anonymity to discuss the initiative.
Biden's approach focuses on helping oppressed communities by improving aging roads, bridges and telecommunications connections; Attracting private funds to co-invest with the government; and removing physical barriers to opportunity, such as the interstate highways that passed through many African American neighborhoods in the 1950s and 1960s.
Officials say they intend to “stack,” or combine, multiple federal initiatives into a single location in hopes of overcoming entrenched problems. In a recent speech, National Economic Council Director Lael Brainard cited Milwaukee and Allentown, Pennsylvania, as evidence of early success.
These place-based strategies draw on lessons from the past to prepare the economy for a better future. In 1933, President Franklin D. Roosevelt signed legislation establishing the Tennessee Valley Authority, which spurred regional development through electrification and flood control. In the 1960s, the Appalachian Regional Commission helped spur highway construction in one of the poorest areas in the country.
“TVA and ARC both worked. Of course, that was a significant amount of resources,” said Tim Bartik, senior economist at the WE Upjohn Institute for Employment Research.
Other geographically targeted initiatives drew more criticism. President Donald Trump's 2017 tax bill created “opportunity zones” designed to benefit low-income areas. However, they have been criticized for allowing investments that in most cases would have happened anyway.
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