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Georgia Gov. Brian Kemp has rejected White House efforts to capture a U.S. investment boom, saying the Biden administration's huge cleantech subsidies have fueled inflation in his state.
The White House has cited Georgia's fast-growing economy as an example of its strategy to revive U.S. manufacturing capacity through generous tax breaks enshrined in the Inflation Reduction Act signed into law by President Joe Biden in 2022.
But Kemp said his state's bonanza was driven by market forces and occurred even before the IRA was passed – and claimed that the additional federal stimulus measures threatened to overheat Georgia's economy.
“A lot of what the IRA did, apart from spending money on something that was coming anyway, also helped fuel the market and drive up costs,” Kemp told the Financial Times. “There was a real attempt to manipulate the market rather than the market moving in that direction.”
The comments from Kemp, a moderate Republican who has repeatedly clashed with Donald Trump, come as the White House struggles to convince voters in key swing states like Georgia of its economic vision for the US.
The latest FT-Michigan Ross poll found that 60 percent of voters disapprove of the way Biden is handling the economy, despite historically low unemployment, strong gross domestic product and wage growth and record highs in the stock market.
Georgia's economy has grown nearly 8.5 percent in real terms since Kemp took office as governor in 2019, driven by an influx of capital commitments in sectors such as electric vehicle batteries that made the country a center of manufacturing revitalization in the southeastern U.S have.
The Federal Ministry of Finance said this week that Georgia has received nearly $15 billion in clean energy project investments since the IRA was passed in August 2022. FT analysis shows that Georgia has since also topped the list of states for cleantech investments. Almost all of the projects were planned for Republican districts, including Hyundai's battery factories with LG and SK and Hanwha Q Cells' $2.5 billion solar factory expansion.
Democrat Jon Ossoff, one of Georgia's two U.S. senators, said the state's boom is directly related to policies designed by the federal government.
“What we have seen since the passage of the Inflation Reduction Act is rapid manufacturing growth in Georgia,” Ossoff told the FT. “And that reflects that we have designed the legislation, both the infrastructure bill and the manufacturing incentives, to take advantage of Georgia's strengths.”
Investments in infrastructure since Biden took office in January 2021 represent “the most significant phase of modernization since the Eisenhower administration,” Ossoff added.
But much of Georgia's infrastructure spending also happened before Biden's election, Kemp said, pointing to investments in Atlantic Coast ports like Savannah and Brunswick that were sanctioned “long before any federal aid.”
Georgia has offered significant incentives of its own to lure investors to the state, while Kemp has traveled across Europe and Asia to secure capital commitments.
Policy experts say the wave of cleantech investment is due to a mix of state and federal incentives.
“It's not necessarily the decision to invest or switch to electric vehicles that the federal government alone is responsible for,” said Glencora Haskins of the Brookings Institution think tank. “But the tax incentives help companies decide to accelerate their investments and ensure that production takes place in the United States.”
Kemp, who was re-elected governor in 2022, blamed Biden's pandemic stimulus spending for the rise in U.S. inflation, which hit a decade-long high in 2022 before falling last year.
“[The federal government] “We have spent far too much money dealing with the pandemic,” he said. “At a time when we should have been urging people to get back into the workforce, the Biden administration paid people to stay home.”
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Kemp, considered a future Republican presidential candidate, has drawn the ire of Trump for rejecting his efforts to overturn the 2020 election and has warned the party that they will lose the White House race again in 2024 will if she continues to make the former president's false claims.
But he insisted that “all Republican candidates running would do better than Joe Biden in the coming election.”
As voters across the U.S. continue to take a gloomy view of the booming economy, consumer sentiment has improved recently, with the University of Michigan's closely watched sentiment index recently hitting its highest level since July 2021.
Additional reporting by Amanda Chu
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