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In economic policy speech, Biden proposes $700 billion in spending, new 'Buy American' rules

In a major economic speech with populist overtones on July 9, former vice president Joe Biden outlined an ambitious plan to invest a combined $700 billion in procurement and research and development (R&D) designed to boost US manufacturers. The plan that Biden outlined, whose details were supplemented by advisers and a fact sheet posted on Biden's campaign web site, would:

• Spend $400 billion in procurement that, together with plans on clean energy and infrastructure, is intended to spur new demand for American products, materials and services
• Invest $300 billion in R&D and breakthrough technologies, such as electric vehicles, lightweight materials, 5G and artificial intelligence
• Revitalize US manufacturers with stronger "Buy American" rules
• Pursue what the campaign calls a "pro-American worker tax and trade strategy" to reverse Trump Administration policies

Biden also said that if elected, he would provide "further immediate relief" to families, small businesses and communities dealing with the coronavirus pandemic.

Speaking at a metal works factory in Dunmore, Pa., Biden said, "This is our moment to imagine and to build a new American economy for our families and for our communities — an economy where every American has the chance to get a fair return for the work they put in, an equal chance to get ahead." A campaign adviser described the plan to reporters as the "largest mobilization of public investments in procurement, infrastructure and R&D since World War II" and that it would help create five million jobs, though neither the speech nor related materials outlined specifically how to pay for it.

$400 billion in government purchases

Biden said that under his plan, during his first term, the federal government would spend $400 billion on additional purchases of products made by American workers, which the campaign said would "power new demand for American products, materials, and services." The proposal is believed to be based on a plan offered by Sen. Elizabeth Warren (D-MA) during her campaign for the nomination. Sources from the campaign told the Washington Post that the proposal was developed in consultation with Warren in recent days.

$300 billion for US R&D

Biden said the plan would also devote $300 billion in R&D spending over four years to a broad range of US businesses and entrepreneurs, including women and minorities, in a bid to spur what the campaign called "high-quality job creation" around the US. The investments would include clean vehicles and clean energy; public health equipment such as ventilators and masks; telecom projects such as 5G cellular networks; and infrastructure materials such as steel, concrete and equipment. The plan would cover all 50 states and would use federal programs such as the National Institutes of Health, the Department of Energy and a proposed Advanced Research Projects Agency for Health, a longtime project of Biden's. The campaign said half of the $300 billion consists of clean-energy initiatives that have already been announced. Biden said the plan would also direct funds toward innovative small businesses and workforce development programs.

Trade and 'Buy American' provisions

In his speech, Biden said he would work with other countries to renegotiate the Government Procurement Agreement at the World Trade Organization (WTO) to make sure the US and its allies can spend taxpayer dollars on growing investment in their own countries. Biden described a "pro-worker" trade strategy where the US will work within the WTO and with allies to address harmful policies by China that have contributed to a decline in US manufacturing. The plan would also tighten rules on which products can be designated as "Made in America," eliminating waivers in Buy American provisions and targeting false advertising of Buy American goods.

During a July 8 conference call with reporters, a senior Biden adviser said Biden will also study current tariffs as well as potential trade agreements he wants to negotiate, Bloomberg reported. Biden's advisers declined to comment directly on what would happen to the Trans-Pacific Partnership (TPP), which Trump abandoned in 2017, or existing tariffs under a Biden administration. "Trade negotiations over big trade deals is something that in sequence will follow a dramatic set of domestic investments," the official said. The official said that after taking office, Biden would be able to answer questions such as whether to withdraw from the preliminary trade deal signed with China or lift tariffs on steel and aluminum imports.

Supply Chains

Part of Biden's speech also dealt with supply chain issues that have come into sharp focus during the health crisis, as states and cities hit by outbreaks have struggled to find medical equipment. The initiatives, most of them previously announced, would prioritize US manufacturing of crucial medical supplies that proved difficult to find on existing international markets. The federal government would launch a 100-day "supply chain review" that could require agencies to buy only medical supplies and other goods manufactured in the United States. These ideas are outlined in detail in a separate campaign fact sheet on supply chains.

A senior campaign official told reporters on Wednesday that Biden "truly believes that this is no time to just build back to the way things were before, with the economy's same old structural weaknesses and inequalities still in place. … This, he believes, is the moment to imagine and build a new American economy for our families and next generation, an economy where every American enjoys a fair return for their work and an equal chance to get ahead," NPR reported.

Pay-fors and tax policy

In a conference call with reporters on July 8, a senior Biden official said the campaign is not ready to detail exactly how the plan's investments would be funded. Recurring programs would be financed with additional tax proposals, but some measures might need to be treated as stimulus to help the economy recover and would be dependent upon economic conditions when Biden takes office, Bloomberg reported. In his July 9 speech, Biden said he will reverse some of President Trump's tax cuts for corporations and impose "common-sense tax reforms that finally make sure the wealthiest Americans pay their fair share."

Biden said, "It's way past time to put the end to the era of shareholder capitalism. The idea [that] the only responsibility a corporation has is its shareholders — that is simply not true, it's an absolute farce. They have a responsibility to their workers, their community, to their country." He added, "It's time corporate America pay their fair share of taxes," and referred to his proposal to raise the current 21% corporate tax rate back up to 28%, which he said would provide hundreds of billions of dollars to invest in US growth. He said that if he is elected, "the days of Amazon paying nothing in federal income tax will be over."

Separately, in the "Made in America" fact sheet accompanying the speech, the campaign said, "Biden will end incentives in the Trump tax giveaway that allow multinationals to dramatically lower taxes on income earned overseas and allow the largest, most profitable companies to pay no tax at all. And Biden will confront global tax secrecy and avoidance, taking on individuals and businesses that stash their profits in tax havens to avoid paying their fair share while tightening anti-inversion rules that Obama-Biden put in place and which Trump has sought to weaken." The summary also says Biden plans to "change the tax code to eliminate the incentives for pharmaceutical and other companies to move production overseas and establish new incentives for companies to make critical products in the U.S. "

Four-part 'Build Back Better' plan

The July 9 speech outlined the first element of a four-part economic strategy the campaign is calling "Build Back Better." The other parts, to be detailed in other speeches and official proposals in the coming weeks, include: (1) building infrastructure and clean energy; (2) advancing racial equity; and (3) modernizing the "caring" economy, such as child-care and elder-care workers and domestic aides. Biden said, "Next week I'll be laying out an updated blueprint of how we can build a modern, safe sustainable infrastructure and the clean energy economy."

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