Biden administration aims to boost economy by investing billions to revive American manufacturing

One way the Biden administration says it's planning to help the nation's economy during the pandemic is by investing billions of dollars to revive U.S. manufacturing. Noam Scheiber, labor and workplace reporter for The New York Times, joins "Red and Blue" anchor Elaine Quijano with a breakdown of the proposal as well as bipartisan concerns over China's industrial ambitions.

Video Transcript

ELAINE QUIJANO: One way the Biden administration says it's planning to help the nation's economy during the pandemic is in part by reviving US manufacturing. The President's "build back better" agenda calls for a $400 billion investment in American-made equipment and $300 billion for research and development in technology. It would also allow for hundreds of billions in subsidies to promote the making and purchase of domestic products.

A recent "New York Times Magazine" piece reports Mr. Biden's plan represents a "rethinking of the country's economic posture" that includes promoting certain sectors so that competition abroad doesn't gain the upper hand. Noam Scheiber is the author of that piece. He's a labor and workplace reporter for "The New York Times," and joins us now.

Welcome, Noam. Thanks very much for being with us. So on the face of it, President Biden's goal is similar to several of his predecessors'-- reviving American manufacturing and jobs. What are the basic plans as to how?

NOAM SCHEIBER: Well, the basic plan is to spend a lot of money through a combination of tax credits, grants. So if you look at the auto sector, for example, the Biden Administration [INAUDIBLE] on the order of hundreds of billions of over 10 years to both give consumers incentives to buy electric vehicles, and also tens of billions of to give auto manufacturers money to retool existing plants, to help them produce electric vehicles and stand-up new plants. Battery production will be a major undertaking for electric vehicles.

Right now, we only have a few plants in the entire country that make batteries for electric vehicles. China has hundreds of these plants. So we have some ground to make up, and the administration basically wants to spend a lot of money to help the industry do that.

ELAINE QUIJANO: All right, spend a lot of money-- where does the administration plan to get that money?

NOAM SCHEIBER: Well, Biden on the campaign talked about basically undoing large portions of the Trump tax cut. So he's talked about raising taxes on people with incomes above $400,000 a year, people who have investment income and make above $1 million a year, and raising corporate taxes. So a lot of this will be kind of undoing a lot of the tax cuts from the Trump era.

ELAINE QUIJANO: So I want to ask you about something called the Trans-pacific Partnership, and the failings of it, and how China's actions have actually led the administration to this point. Tell us first of all, for viewers who might not know, what was that meant or intended to do, the Trans-pacific Partnership?

NOAM SCHEIBER: Well, the Trans-pacific Partnership was a 12-country trade deal that was intended to do what a lot of trade deals do, which is reduce barriers among a dozen countries on this side of the Pacific and in Asia. I think the thinking behind that trade deal, unlike other trade deals like NAFTA, say, was as much a foreign policy goal as economic goal. The idea was China is this rising economic power, and we need to tighten these alliances with countries like Vietnam and Japan in order to sort of balance China and contain its rise. And I think that was a foreign policy goal that a lot of people agreed with, but the economic aspects of it were more concerning, especially to the people on the left, to labor, to progressives.

There were some features of it-- one particular feature called "investor state dispute resolution," which critics argue would have allowed companies to basically sue the US government and get hundreds of millions of dollars in restitution because they didn't like our labor laws and they didn't like our environmental laws. So that was a big concern to people on the left. It was also a concern that we would kind of loosen the domestic content restrictions that we have in place on, say, the production of autos, so it would be easier for auto manufacturers to source the production of those vehicles from other countries, rather than keep those jobs here. But as I say, the big ambition behind that trade deal was to help us in this economic fight that we're in with China.

China has been very aggressive at subsidizing and funding the expansion of a lot of industries. If you look from steel, to shipbuilding, to electric vehicles, China has made huge, huge leaps in the past 10, 20 years. And I think there's a kind of growing bipartisan consensus in Washington that while they've been taking these massive initiatives, we've been kind of asleep at the switch, and we need to do some catching up. And so I think that's a sentiment you see, obviously, from Biden, from certain Democrats-- Elizabeth Warren has talked about this-- but also from Republicans-- Mitt Romney, Marco Rubio, Tom Cotton, some very conservative Republicans, who see this as a really important moment for us to catch up with the competition in China.

ELAINE QUIJANO: So it is remarkable to talk about bipartisan consensus on anything. But as you note, it exists on this issue of China. So Noam, what are some potential legislative solutions?

NOAM SCHEIBER: Well, there's actually one very interesting piece of legislation that passed last year. It passed as part of the Annual Defense Authorization bill, the bill that basically funds the Pentagon. And included in that Bill was a bipartisan amendment that would basically create programs to fund the semiconductor industry.

So this didn't actually fund this program, but it set up a series of programs that would give grants on the order of tens of billions of dollars to semiconductor manufacturers. And the reason that that has been such a high priority is that we saw, during the pandemic, that it became very difficult for American manufacturers to get the supply of semiconductors that they needed to [INAUDIBLE] a lot of cars, even just regular cars that you and I drive, to say nothing about self-driving vehicles and electric vehicles. Those are very dependent on semiconductors.

And during the pandemic, it's been very difficult. Some auto manufacturers even had to suspend production because it wasn't enough of a supply of semiconductors. So this has become very front of mind for people in Washington.

The amendment that inserted this into the Defense Authorization Act last year passed by, I think it was 97 to 4. So there was a lot of support on both sides of the aisle for doing this. I think that could be a model for the kinds of things we might see going forward, once Biden introduces his proposals and more formally.

ELAINE QUIJANO: All right, we'll continue to watch how it develops. Noam Scheiber. Noam, thank you very much.

NOAM SCHEIBER: Thanks for having me. Good to be here.