Joe Biden’s effort to remake the economy is ambitious, risky and selfish

A giant plan that has so many disparate objectives does not simply succeed or fail. Its full consequences may not become clear for many years. 

Get behind the wheel of an electric vehicle made in Detroit and drive south. The outline of a city that was once a byword for industrial decline fades in the rear-view mirror. Head into Ohio, where the battery under your feet was made. The semiconductors that regulate its charging speed were made there too, in a vast new factory that counts the Pentagon among its biggest customers. 

Recharge with electricity transmitted from one of West Virginia’s new nuclear plants, then start the long journey into the heartlands. After the endless wind farms of Kansas, you drive through Oklahoma’s vast solar fields, then loop back to the gulf coast. The trip ends by the water, the bright sun glinting off a spanking-new green-hydrogen plant.

This is America in 2033, if the Biden administration has its way. In the past two years Congress has passed three bills, on infrastructure, semiconductor chips and greenery, which will make $2trn available to reshape the economy. The idea is that, with government action, America can reindustrialise itself, bolster national security, revive left-behind places, cheer up blue-collar workers and dramatically reduce its carbon emissions all at the same time. It is the country’s most ambitious and dirigiste* industrial policy for many decades. In a series of articles beginning this week, The Economist will be assessing President Joe.

Sometimes news charges at you, sometimes it creeps up. This story is about news in the creeping category. In the past two years America’s Congress has passed three bills, on infrastructure, semiconductor chips and greenery. They’re complicated and they have misleading names such as the “Inflation Reduction Act”, which isn’t really about inflation (and certainly won’t reduce it). What matters, though, is that these bills will together lead to spending of $2trn on remaking America’s economy.

The idea is that, with government action, America can reindustrialise itself, bolster national security, revive left-behind places, cheer up blue-collar workers and dramatically reduce its carbon emissions all at the same time. It is the country’s most ambitious and dirigiste industrial policy for many decades. In a series of articles beginning this week The Economist will be assessing Joe Biden’s giant bet on transforming America. 

The president is taking an epoch-making political gamble by acting on so many fronts. But the only way to build a majority in Congress was to bolt a Democratic desire to act on climate change on to hawkish worries about the threat from China and the need to deal with left-behind places in the American heartland. On its own, each of these concerns is valid. But the political necessity to bind them together has led America into a second-best world. The goals will sometimes conflict, the protectionism will infuriate allies and the subsidies will create inefficiencies. 

* relating to a system in which a government has a lot of control over a country’s economy 

From: The Economist  4 February 2023