The Inflation Reduction Act and Other Industrial Policy is Working
President Biden signs the Inflation Reduction Act at the White House on Aug. 16, 2022. Photo courtesy White House

Don’t believe the weird pushback that emerged this week. President Biden’s industrial policy has spurred a whole lot of manufacturing construction growth — but we need to maintain the momentum.

On Monday, the Financial Times published a lengthy report examining the status of the various factory construction projects that have been announced thanks to funding from the Inflation Reduction Act (IRA) and CHIPS and Science Act. Along with the Bipartisan Infrastructure Act, the two laws are the hallmarks of the industrial policy that has advanced thanks to what the Biden administration calls its “Investing in America Agenda,” which it reports has spurred, at last count, $898 billion in corporate investments.

Weirdly, the Financial Times deployed quite a pessimistic framing in its piece, with the headline noting that 40% of major IRA projects have been delayed and putting into question the feasibility of Biden’s entire industrial policy legacy. Not only does that bizarre take downplay the fact that the majority of IRA projects are on track and some are even already operational, it also fails to consider that construction projects often face delays, as Johns Hopkins School of Advanced International Studies Associate Professor Jonas Nahm pointed out on X (formerly Twitter):

Heck, anybody who has undertaken a home renovation project, let alone built a solar panel manufacturing facility from scratch, knows that these things run into delays. As Nahm points out, the most important thing is that the vast majority of projects funded by the IRA are still underway, and there’s a lot of money left to be doled out to get even more production up-and-running.

In fact, one of the biggest hurdles for the Biden administration’s industrial policy thus far has actually been awarding funding and other incentives provided in these laws. “Of the $1.1 trillion in federal infrastructure and pandemic relief spending passed through Congress since Biden took office, just $125 billion had gone out the door as of this past April,” writes Kate Aronoff in The New Republic.

That too is not surprising, however. It takes time for companies to find the right site for new projects of this scale, along with all the other pieces that need to fall into place for shovels to go in the ground. High interest rates haven’t helped, either, and indeed have plagued the entire manufacturing sector as a whole, keeping factory employment stagnant despite the construction boom underway.

Still, when lawmakers put the IRA and other industrial policy into place, they knew they were playing the long game. This is a generational-type endeavor.

“The nation’s energy mix won’t transition overnight, factories for all the equipment needed for that transition won’t be built overnight, consumer choices to upgrade to green technologies won’t be made overnight, and so the bill’s programs were designed to take effect over at least a decade,” writes David Dayen in The American Prospect.

But even with a lot of work left to do, a lot has already been done. Aronoff reports that the IRA and CHIPS and Science Act alone have led to “some $400 billion in building up domestic clean energy and semiconductor industries,” while the White House says there have been $395 billion in private investments for semiconductors and electronics and $81 billion in private investments in clean energy since Biden took office in January 2021. Add in electric vehicles, batteries, clean power, and a few other industries, and you hit $898 billion and counting.

And projects are being announced all the time. Just on Friday, the Biden administration said it will award Texas Instruments $1.6 billion in grants via the CHIPS and Science Act to build out three new facilities, two in the Lone Star State and one in Utah. A week ago, it was announced that SK Hynix will be awarded up to $450 million in grants to build a new chip facility in Indiana, meaning all five of the world’s top chipmakers have now invested in the United States.

The IRA also continues to spur investment. The Biden administration in July unveiled $4.3 billion in grants for a slew of projects nationwide, for example. Meanwhile, the United Steelworkers (USW) on Friday announced that they had reached a union neutrality agreement with Convalt Energy, a solar manufacturing company.

“Building out our domestic solar manufacturing capacity – from production of solar cells, modules and panels to the installation, maintenance and repair of solar energy equipment – must have a Made-In-America solution,” said Dave McCall, the USW’s international president. “We look forward to working with employers like Convalt as we ensure long-term success across this sector.”

This is one of those moments when it’s important to take a step back. When I first started at the Alliance for American Manufacturing back in 2014, there wasn’t a lot of reason to believe that the United States ever would put policy into place to grow a critical industry, let alone several at once. Much of our work centered on trying to shore up the factories that had somehow made it through decades of the misguided mentality that offshoring should be the priority, no matter if it cost millions of U.S. well-paid, often union jobs.

It took the massive supply chain shortages that stemmed from the Covid-19 pandemic to wake many U.S. policymakers up to the fact that we had sent far too much production overseas. Our ability to make the things we need must be paramount, especially in critical industries like energy and semiconductors, which are needed to make, well, virtually everything these days.

The fact that the United States is now prioritizing its domestic production — and many of the new jobs that are created as a result could very well end up being union-represented — is quite the vibe shift.

The important thing now is that we see it through. The United States spent decades shutting down its factories and offshoring production; it’s going to take more than a couple years to get things up and running. We should not throw in the towel when a minority of construction projects run into some delays.

Instead, the U.S. should focus on the kinds of other things we can do to help strengthen our domestic manufacturing capabilities beyond the IRA, CHIPS, and other incentive-focused programs.

An important piece will be trade enforcement, as countries like China remain focused on dominating global industries and running U.S. manufacturers out of business. The U.S. must not hesitate in enforcing its own trade laws, and policymakers must pass new legislation like the Leveling the Playing Field Act 2.0, which will create new, modern tools to make it easier to take on some of the most egregious trade cheaters. Reinstating the Section 421 import surge protection is another must-do, as it will address “market disruptions” from import surges caused by China’s massive overcapacity in various sectors. Utilizing additional remedies like Section 301 and 232 also will be beneficial.

Exactly two years after Biden signed the IRA into law, it is safe to say that it has been a success. Now, we need to see all of these projects through — and put policy into place to ensure that they will continue to be a success in the years to come.





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