Biden economist wants businesses to “step up and make investments” in the U.S.
Biden economist wants businesses to “step up and make investments” in the U.S.
President Joe Biden wants to change the way the economy works through policy — and he hopes voters will notice. Heather Boushey, a member of the president’s Council of Economic Advisers, is one of the key people behind those policies.
The president’s economic agenda centers on several pieces of fiscal legislation, including the $750 billion Inflation Reduction Act and the $280 billion CHIPS and Science Act, which put public funds toward things like clean energy infrastructure and semiconductor chip manufacturing. In addition, the White House launched the Investing in America sub-Cabinet in January with the goal of generating private investment in these same areas. Boushey is the sub-Cabinet’s chief economist.
Yet this is happening at a time when inflation is still high and the president’s ratings for his handling of the economy are low. “Marketplace” host Kai Ryssdal spoke to Boushey about the president’s economic agenda and why it’s been a challenge for him to take credit for the economy. The following is a transcript of their conversation.
Kai Ryssdal: I want to start big picture, very big picture. And I want your reaction to what I’m about to say. Would it be fair for me to characterize what the Biden administration is doing with the economy as the biggest change in how the government interacts with this economy, certainly since Lyndon Johnson, maybe since FDR? What do you think?
Boushey: I think that this president came into office saying that he wanted to change the paradigm because he saw that the United States was facing a series of crises: the pandemic, but also these long-standing economic challenges — almost half a century of rising economic inequality — and the fact that our supply chains had become so fragile and brittle over time. So I would agree with you. This is a historic set of investments the president is making, in large part working hand in hand with Congress on a bipartisan basis to invest in America, and doing so in a way that is making sure that markets work, that they are competitive, that they function for small businesses and consumers and workers alike.
Ryssdal: Bipartisan by the hair of his chinny chin chin, it has to be pointed out.
Boushey: But still, that’s an accomplishment.
Ryssdal: Fair enough. I’ll give you the point even though margins matter. One of the things you do now in the White House is you are the chief economist for a group of cabinet officers that’s called the Investing in America sub-Cabinet, right? And basically, your remit, as it were, is to encourage and motivate private investment in this economy, in part by public investment, all the money that Congress and the president have approved. Here’s my question: These are multibillion-dollar companies that you’re looking to make these investments, whether it’s cars or semiconductors, or what have you. Why do they need government money to do their business?
Boushey: A few reasons. What we make in America and how we make it truly matters, and that “what” is so important. Sometimes the private sector needs a little bit of help because there’s what an economist would call a coordination failure and network effect or something. Think about the case of electric vehicles, right? So for a century, we’ve all been driving these gas-powered cars, and there’s gas stations everywhere. So when you need to fuel up, you can, and mechanics that know how to use them and all the things. Making a transition to a new way of powering how we transport ourselves requires a new set of charging networks that requires a new set of skills, you know, batteries instead of powertrain vehicles. And for any one business being that first mover is really risky and really expensive. What’s going to come first, the charging network or the new cars? And so a key part of so many of the investments that the president has made is saying, “Hey, where do markets need a little bit of help to make sure that we’re meeting national and economic security goals?”
Ryssdal: Let’s stick with EVs for a second, because you have a two-headed problem here. You have to incentivize corporations, right, to invest in the charging stations and high power lines and making the EVs, but you also have to incentivize consumers, because if we ain’t buying, they ain’t making. How do you do that?
Boushey: Well, already, every single state has a plan to put in place their piece of the puzzle to get those charging networks up and running. So that’s a supply side. And then on the other side, there are tax credits for consumers. So if you purchase a car that’s on the list, you can get up to a $7,500 tax credit. Now it’s solving both sides of that problem.
Ryssdal: Can we talk time scale here for a minute, because none of these charging stations are going up tomorrow morning, right? And EV sales, while booming, are still, you know, a small fraction of what we’re doing. So it’s going to take, roughly speaking, decades for the Biden administration’s investments to pay out. Rather than ask you how you’re going to know when it succeeds — because you’ll be out of your job, and I’ll be out of my job, and hopefully, we’re still around — what are you looking for early markers-wise?
Boushey: Well, I think we are already seeing a lot of progress. We’re seeing a really sharp uptick in the people who are out there buying electric vehicles, you see them all over the roads. I’ve been driving all around California. Every time I look, there’s a, you know, different kinds of electric vehicles. And there’s a lot of charging stations. So that all helps.
Ryssdal: Although many of them don’t work. Let me just say as an EV owner, it’s a little distressing, right? So you’ve got some repair work to do.
Boushey: That is important. There’s a lot of IT jobs, as it turns out.
Ryssdal: Did you rent an EV?
Boushey: I both own an EV and we rented one here. So yes, no, super fun. But, you know, the thing that we’re also looking for, especially in year one, is for the private sector to step up and make investments. And what we have seen is this sort of incredible new investment in manufacturing construction. You’re seeing costs come down, you know, at this point, solar and wind, or solar is actually now the cheapest form of energy that you can use. So we’re looking for all of those interim steps, and I think we’re starting to see a lot of them.
Ryssdal: All of this comes under the general heading of industrial policy, right?
Boushey: We like to call it industrial strategy, but yeah.
Ryssdal: Fair enough. I guess the question is, why do we have to have one?
Boushey: Well, because without it, businesses were not making the needed investments in the things that matter most to the U.S. economy.
Ryssdal: American business is doing fine, thank you very much.
Boushey: I said that businesses were not making the needed investments in the things that matter most. We just came through a pandemic where Americans could not get cars that they wanted because we did not have access to semiconductors, because of the fragility of our global supply chains.
Ryssdal: So let’s talk about this president for a minute. With the acknowledgement that you’re a policy official and not a campaign official, I do have to ask you about how the public feels about how the president is doing with this economy. And the short answer is lousy, something like [36%] approve in the latest AP poll on how the president’s doing. And I guess my question is: If the economy is good — which let’s stipulate here it is, right, unemployment at generational lows, inflation is coming down, economy is growing, the economy is good — what do you have to do to convince the public that that’s true? Because it’s not resonating.
Boushey: Well, so first off, we’ve just lived through a global pandemic that has upended business as usual for workers, for small businesses, for big businesses. And we’ve seen it, you know, affect prices. I think it’s been very unsettling, right, psychologically for people all across the country, all across the world. What we see in the data is a number of things, as you just mentioned: historic lows in unemployment. We have not seen the unemployment rate be this low for this long in over 50 years. And we’re also seeing that workers are reporting that they have very high job satisfaction. What I think the president hopes is that people see that a lot of this is because of the decisions he made and his willingness to work across the aisle and to focus, really importantly, on building an economy from the middle out.
Ryssdal: I don’t want to be flip here, but hope doesn’t get to 270 electoral votes, right? And you’re a policy person, not a campaign official. I get that. And if you don’t want to go there, I’ll understand. But he has a fundamental challenge in making people understand what part of the economy he gets credit for.
Boushey: Well, you know, what I see is, we see these investments going up all across the United States, in red states and in blue states. People are also seeing battery plants going up in their community. They’re seeing the fact that they have a job, their cousin has a job, and they are seeing the fact that prices have been coming down from the highs that they were early last summer.
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