Image: Brendan Lynch/Axios
The Biden administration is courting a wave of private investment as a multiplier for the nearly $2 trillion in spending and tax stimulus Congress has approved over the past two years.
Why it matters: With little chance of further impetus from Congress, the White House sees business endorsement as the best way to push the envelope of President Biden’s infrastructure package, inflation-reducing bill, and semiconductor research bill.
- Team Biden’s goal is to use these massive packages – only about 5% of which have been spent – to expand projects aimed at improving the country’s power grid, weaning the US off oil and gas, the chip industry boost and much more.
- Their challenge is complicated by worries of a recession, stubbornly high CPI readings and a Federal Reserve committed to raising interest rates to bring down inflation, even if it means a slowdown in the economy.
What you say: “One of the lines of connection between infrastructure, the IRA, and (and) the Chips and Science Act is that they use public investment to push private capital,” Brian Deese, who is stepping down as director of the National Economic Council, told Axios into an interview.
- “There is both an historic opportunity and a need for the administration to work closely with companies across all sectors of the economy, from semiconductors to clean energy to construction and manufacturing,” said Mitch Landrieu, who is coordinating the launch of the administration’s infrastructure plan.
Between the lines: Public spending almost always has a multiplier effect on the wider economy. The White House’s strategy is to get more bang for its buck by partnering with parts of the private sector.
- For example, to help the US promote zero-carbon energy, the government is reaching out to electric car manufacturers, charging station manufacturers and utility companies, encouraging them to take advantage of tax breaks that reward clean energy production and investment.
There are signs It’s starting to work: Companies have announced more than $300 billion in investments in manufacturing projects since the top three bills went into effect 2021 and 2022, says the White House. Investments are rewarded with a combination of tax credits, grants and loan guarantees.
- The $220 billion Chips and Science Act offers more than $52 billion in tax credits and subsidies for US semiconductor production – Micron, Intel and TSMC have announced plans for new chip manufacturing plants in Arizona, New York and Ohio.
- More than 90 clean energy projects totaling $89.6 billion had been announced by companies by the end of January, according to a report by nonprofit group Climate Power. (Approximately $370 billion in public money is being spent on the climate and energy provisions of the Inflation Mitigation Act.)
- In Georgia, South Korean solar company Hanwha Q Cells is investing $2.5 billion to expand its solar panel plant and build another one.
- In Ohio, General Motors has committed nearly $1 billion to manufacture electric vehicle components and expand a lithium-ion battery factory.
What’s next: Expect Biden and his cabinet to tour the country promoting their efforts to restore US manufacturing ahead of the 2024 election.
- Biden traveled to a Laborers’ International Union of North America training center near Madison, Wisconsin last week to promote an expanded solar battery manufacturing facility.
- Secretary of Transportation Pete Buttigieg was in Louisiana to celebrate a $150 million grant to build a new bridge on Interstate 10 in Lake Charles.
What you say: “If the federal government actually shows up and does what it’s supposed to do, the private sector will come in really aggressively,” Landrieu said.
- “It’s a five to seven to 10 year rebuild … the expectation is that you will see the country’s transformation right before our eyes.”
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