Watch the full event
Director, National Economic Council
President and CEO, Atlantic Council
Associate Editor, Financial Times
FREDERICK KEMPE: Good morning, good afternoon, good evening to our audience all around the world. I’m Fred Kempe, president and CEO of the Atlantic Council, and I’m delighted to welcome you to the latest edition of Atlantic Council Front Page, #ACFrontPage, our premier platform for global leaders.
Today, we’re honored to welcome Brian Deese, the White House director of the National Economic Council, to provide special remarks on the administration’s vision and plans on US industrial policy, a critical topic for the future of not only the American but also the global economy. From supply chains to semiconductors to manufacturing, this issue crosses borders and goes to the heart of the Atlantic Council’s mission of shaping the global future together. We are proud that the GeoEconomics Center has been a leader on this issue since its launch last year under the capable leadership of its director, Josh Lipsky, and Deputy Director Julia Friedlander.
Some may question the need for a US industrial policy, but we all know something has to change. Pandemic-induced trade disruptions and ongoing product shortages have caused real economic damage. The strain on our system has sparked debates about the proper relationship between the public and the private sector.
There’s no one better equipped to explain the administration’s thinking on this issue than Brian Deese. Director Deese has a track record at the forefront of strengthening our economic system. Throughout his career, Director Deese has been dedicated to questioning conventional thinking and taking bold action to ensure the US economic system delivers. During the Obama administration, he worked on rescuing the economy during the global financial crisis and he worked on negotiating the Paris Climate Accords. He held roles including deputy director of the National Economic Council, deputy director of the Office of Management and Budget, and senior advisor to the president. In short, he knows his stuff.
It was Director Deese who helped manage the administration’s successful effort to rescue the auto industry, and his tireless work saved an essential part of the American economy in doing that. As the United States and its allies grapple with economic disruption, Director Deese has led the National Economic Council in fulfilling President Biden’s vision to build back better. And part of building back better means forging a new approach on industrial policy. So it’s not an overstatement to say that the whole world is eager to hear from him about this crucial topic.
Following Director Deese’s speech, he will participate in a conversation with one of the finest international journalists I know: Rana Foroohar, associate editor and global business columnist at the Financial Times. Rana, as always, it’s a pleasure to work with you. To engage in the discussion please use the hashtag #ACFrontPage.
Director Deese, the floor is yours.
BRIAN DEESE: Well, thank you, Fred, and to the entire Atlantic Council team for having me today. I’m really excited to be here. I’m excited to engage with your global community of leaders and thinkers, and really excited to speak at this topic.
You teed this up, but it is true: We meet today virtually at a unique inflection point for American economic policy. It’s unique in the United States in terms of the speed and the strength of our recovery. Since the beginning of this year, we are seeing rapid progress on constraining the coronavirus. COVID-19 deaths are down 85 percent. We’ve averaged more than 500,000 new jobs per month, and the American economy is growing at the fastest rate in almost forty years. In fact, the US is the only major economy where future growth projections out five years are stronger now than they were in January 2020, before the pandemic hit.
This is a direct result of our vaccination effort, our unique fiscal response, and an economic strategy that is focused on driving growth from the bottom up and the middle out of our economy. At the same time, [this time is] unique because this pandemic exposed economic vulnerabilities that we have yet to fully grapple with: Empty store shelves, shortage of basic medicines, supply chain bottlenecks from computer chips to advanced medical equipment. Some of the depth of that crisis and the fragility of our system can wane quickly. But we’re continuing to see, as the economy comes roaring back, these bottlenecks and these discontinuities persist.
This crisis and this recovery expose a long-term hollowing-out of our country’s industrial base, which happened over years and decades. Today nearly 90 percent of generic active pharmaceutical ingredient facilities are located overseas. And they’ve been moving overseas for the last fifty years. Until the 1980s, the United States was the world’s leader in rare-earth production. Now China controls 85 percent of global refining capacity. The US share of semiconductor production’s fallen almost 40 percent—from almost 40 percent to just over 10 percent over the last forty years. And the list goes on.
Our private sector and public policy approaches to domestic production that has prioritized short-term cost savings over security, sustainability, and resilience, are coming to a fore. In short, this was a wake-up call. And we need a new approach. Which is why, as we navigate out of this pandemic, as we drive through a uniquely strong economic recovery, the Biden administration is putting rebuilding for resilience, with a focus on creating good jobs for American workers, at the core of our build back better agenda.
And it’s why today I’m very excited to lay out a vision for a twenty-first-century American industrial strategy—a strategy to strengthen our supply chains [and] rebuild our industrial base across sectors, technologies, and regions of this country. I want to start by noting that national industrial strategies are not new—certainly not new globally and not new in the United States either. In the early nineteenth century when this country was transitioning from an agrarian to an industrial economy, we subsidized transportation and created a national bank. In the post-World War II era, we as a federal government made strategic investments in emerging technologies from microelectronics to telecommunications and biotechnology.
But at the same time, today’s global economic environment is very different. The pace of technological change, this idea of a Moore’s law for everything, is upending production processes, transforming supply chains, and transforming the modern workplace and the meaning of work. The pace of climate change is accelerating. It’s threatening to transform economies, migration patterns, supply chains, [and] the security and stability of economies and regions of the world.
Persistent inequality in the United States is slowing economic growth and risks fracturing the democratic stability upon which our economic success depends. And the approach of our competitors and our allies has changed rapidly. We should be clear-eyed that China and others are playing by a different set of rules. Strategic public investments to shelter and grow champion industries is a reality of the twenty-first-century economy. We cannot ignore or wish this away.
That’s why we need a new strategy, one that draws from the best lessons of our past but also leans into the challenges of the future. Our view is this strategy needs to be built on five core pillars: supply-chain resilience, targeted public investment, public procurement, climate resilience, and equity. I want to speak about each of these briefly.
First, the pandemic made clear that resilient supply chains must be at the center of a twenty-first-century economic strategy and industrial strategy. Earlier this month, we in the administration released the results of an all-of-government one-hundred-day sprint to study and assess our supply-chain vulnerabilities. The key takeaway: We need a new and broader toolkit.
We need to leverage the Defense Production Act authorities in new ways, like investing in advanced pharmaceutical manufacturing technologies in the United States.
We need to be tougher in tying innovation that is produced with funding from the US government, tying that to domestic manufacturing and employment at home by American workers.
We need to make strategic investments to build domestic supply-chain capacity in areas like computer chips, where bipartisan work in Congress is advancing a historic fifty-billion-dollar investment in the domestic semiconductor industry, which is sorely needed. We need to get that done.
And we need to work with allies and partners. This is an important point. It’s neither feasible nor advisable for us to re-shore all of our supply chains. Resilience does not mean closing ourselves to the rest of the world. Partnerships with our allies that promote more stable access to key inputs while improving environmental sustainability and workers’ rights is essential. And you saw the president in his recent trip prioritize and succeed in bringing many of our allies to this strategy.
In all of this, we are going to need new models of public-private collaboration. The public sector can’t discern when to intervene on its own and the private sector is struggling to manage through rapidly changing demand for products in highly concentrated markets—supply chains with multiple chokepoints and bottlenecks that have been unexpected and unanticipated to date.
As many economists have pointed out, and as the literature has deepened in recent years by the work of Dani Rodrik and others, this coordination between the public and the private sector is critical to solving these asymmetries of information, getting the right investment outcomes, spurring the right kind of private sector innovation. That’s the problem we’re trying to solve for, which leads to the second public investment.
There is a unique, compelling, and urgent economic need to make a one-time capital investment in this country. This is about strengthening the public systems that connect manufacturers and researchers and workers and small businesses: public investment in our roads, our bridges, our ports, universal access to high-speed Internet, affordable high-speed Internet, a modernized power grid, a transportation system and power system that work together toward a zero-carbon future, new schools and childcare facilities that allow—that are the elements that allow people and parents to work.
We have proposed the largest civilian investment in public R&D on record, $180 billion, as well as a $100 billion investment in America’s workforce, including a targeted and sectoral-based approach to workforce development. Now these may sound like large numbers, but, in fact, these are among the most prudent and modest investments that this country could make, a capital investment in ourselves. The reason is straightforward: Markets on their own will not make investments in technologies and in infrastructure that benefit an entire industry. We know that when the benefits of innovation are broadly shared, no one firm has incentive to invest in the kind of game-changing technologies or the kind of connecting infrastructure that fosters long-term economic competitiveness at the industry, the region, and the nationwide level.
And these are not your typical market failures. These failures require a different role for government, one where public R&D lays a foundation for breakthrough technologies, but the government also looks to pull forward the deployment and the dispersion of innovation, works to work with the private sector to overcome those barriers of information and communication that have stymied private—prior efforts. That’s why we are targeting high-value public investment that we know have worked and that will accelerate innovation.
And I just want to make a final point on this. The proposals on the table are large, but in—but they are in—spread out across time, our proposals are to do an eight- to ten-year investment. In aggregate, it would be about a percent of GDP a year. If you look at that in the international context, it is the minimum necessary to actually make a capital investment that could propel our economy forward.
Connected to that and third, we need to reimagine public procurement policy. The federal government is the largest buyer in the world, spending over $600 billion in contracts annually, and one of the unique approaches that President Biden has been talking about since the campaign is we need to think about how to leverage this purchasing power strategically to shape markets. This is a through line for President Biden across all of his economic strategies.
And we know firsthand that federal purchasing can help achieve momentous goals in innovation. NASA is perhaps one of the best examples. When I worked previously in the Obama administration at the Office of Management and Budget, one of the things that we worked to do was to try to create outcome-driven models where NASA’s procurement was partnering with the private sector, setting milestones and goals to meet mission needs while pulling forward the kind of innovation and advancement in technologies that we know are necessary. Those types of contracting—the approach to public procurement—has opened up new innovation and is just a glimpse of the power that a comprehensive procurement policy brings. That’s why we’ve proposed a fifty-billion-dollar investment, for example, to pull forward demand in new clean-energy products and prioritize buy American so procurement supports US-based manufacturing and American jobs.
Fourth, we need an industrial base that drives our effort to address the existential threat of climate change. We need an industrial base that is resilient to the increasing reality of a climate-affected world. That requires a fundamental shift in how we produce and how we power the economy.
The scale, complexity, and urgency of the climate challenge gets to the heart of why having a forward-looking industrial strategy is so important. Public-sector policy and investment [are] needed to help unleash the ingenuity of private markets, rapidly mobilizing resources toward decarbonization. And our twenty-first-century approach to rebuilding industrial strength puts investments in decarbonization at the forefront in the power sector, in the transportation sector, in the industrial sector, and the built environment, supporting research, development, and deployment in these sectors as well as supply-side production incentives that drive private-sector growth and increase US market share.
This is not just about winning domestically. We know that globally clean energy is going to be one of the fastest-growing markets, whether in vehicles or in the production of clean technologies. Our strength and the robustness of our industry at home will dictate how much of that global market share we can win, and export markets means more US investment and more US jobs.
Fifth, and finally, equity must run through everything that we do. We must learn from our historical mistakes. Prior economic transformations in the United States have not brought everyone along. By doing it different this time, we will enhance our economic competitiveness. We know that by prioritizing racial and gender equity we can reduce the yawning gaps in wealth and opportunity and unleash stronger growth. We know that by investing in all of America, particularly in those regions that have suffered from decades of deindustrialization, we can avoid further geographic entrenchment and polarization and unlock more of our innovative capability. And by ensuring labor standards for all and incorporating worker voice into the process, American industry will be more resilient for the long term. From investing in HBCUs and MSIs, in our R&D, to investing in regional manufacturing hubs, technology hubs, Manufacturing USA, ways to align investment in R&D, education and training, working with the private sector and bringing innovation to all areas of the—of the country, this is what it is going to take to build an economy from the bottom up and the middle out.
So this is our five-pillar strategy and our approach.
And to conclude, I want to make a final point. This strategy, and indeed all of President Biden’s economic agenda, rests on the core belief that American capitalism and American democracy can deliver for our people and our future. At this moment, the stakes could not be higher. We need to demonstrate that American capitalism can work to benefit everyone, not just shareholders. In the face of persistent cynicism, skepticism, and doubt, we need to show that smart public investment can help unleash innovation, unleash the capacity of our private sector, and deliver strong, resilient, and inclusive growth; and must show that our democratic system of government can serve working people in this country better than any other form of government.
We are off to a strong start, a uniquely strong American economic recovery. But we have a lot of work to do and no time to lose. As the president has said, years from now our children will look back at this time as the moment when America had the chance to win the twenty-first century. Let’s seize this moment together. Thank you very much.
Read Brian Deese’s prepared remarks
RANA FOROOHAR: Well, Director Deese, thank you so much for that speech. A lot in there, and a lot for us to dig into in the next twenty to twenty-five minutes or so. Let me start by saying I really like the way that you set up the historical precedent for American industrial policy because, as you say, this goes way back. In some people in the international community would say that some of the best things China has done in recent decades has been out of the Alexander Hamilton playbook. You know, this is—this is something that has gone back and forth between countries. The US is unique, really, amongst developed countries these days in not using any kind of official industrial policy. So this is really a big change.
I’m wondering if you can help people to understand how an industrial strategy could bridge and re-moor the gap between income growth and productivity growth, because that’s really what’s been broken in the last few decades. That’s why we’ve seen so much growing inequality, we’ve seen the politics of inequality. But historically when you have the public sector saving the private sector to create, you know, great new technologies—the railroads, the internet, now possibly climate change—you do get that bridging of incomes going up while productivity goes up. And maybe you can talk about how that could happen now.
BRIAN DEESE: Yeah, thank you. Thank you for that. I think that—look, I think that, to your first point, there’s a lot of—you know, there’s been a lot of debate around the term “industrial policy.” Is it a term to be embraced? Is it a dirty word? What does it mean? And part of what we’re trying to communicate is that there are realities of the post-pandemic global economic environment that we have to acknowledge, and we have to embrace. And those—we have to in some sense put those debates in the past. We don’t operate in a global stylized free-market equilibrium, particularly when we’ve got a counterpart economy like China that operates the way that it does.
And so we need to be clear-eyed in having a strategy that actually positions the US economy for success in that environment. One key element of that is the point that you made, which is how do we actually generate economic growth in the US that not only unleashes our innovative capacity, but where more of those benefits flow to workers and we start to—we start to reduce those inequities. And at the core for us is public investment in those areas that we know are drivers of increasing our productive capacity and, importantly, in increasing participation by all workers and more power for those workers in the marketplace.
So to give you an example, investments—equalizing investments, like bringing high-speed, affordable internet to all parts of the country. Today, 35 percent of people who live in rural areas of the United States have no access to high-speed internet. Without access to high-speed internet today, you can’t be a full participant in the American economy. But by making that type of public investment over the course of the next several years, by bringing that tool to all of America, we’re going to put a lot of people in the position where they can innovate, they can create small businesses, they can get online, and they can engage. They can compete for jobs without having to move place.
That’s equalizing in an important respect. Likewise, our investments in education. The president has talked about now being a moment where, like the early twentieth century, we need to expand four years of public education. Two on the front end with universal preschool for three- and four-year-olds, and two on—at least two on the back end with access with access to free community college. That’s an equalizing investment where we know that access to education is one of the biggest—and achievement of education—is one of the biggest drivers of future wages. So those are the kind—so as we think about public investment we think about them in an equalizing way, but in opening the productive capacity of our people.
RANA FOROOHAR: So the education point is very important because two-thirds of jobs being created right now actually don’t require a four-year degree. They require two years of community college, as you say, which is important.
Let’s talk a little bit about the timeframe for this. You made a point both in terms of the budget—which seems—the headline numbers seem big, but as you say this is being stretched out over eight years, ten years. It also takes a decade to really build up a semiconductor industry, which is something that the administration is committed to doing and, reading through the executive summary of the supply chain report, you have a real plan for. Talk about timeframe. What can we expect to happen in the short term, in the next one or two years? And then where are we going to be in five years, ten years if we can stick with this plan?
BRIAN DEESE: So it’s a great point. And we do need to separate out the timeframe. In the short term, our economic strategy is focused on driving strong growth out of this crisis. And we believe that that strong growth, and getting as quickly as possible to full employment, will actually put our economy on a footing where we’re much better positioned to succeed over the medium term. We’ve seen in recent recoveries that a slow recovery, a slow labor market recovery, has extraordinary negative scarring effects for workers, for regions of the country. So in the short term we’re really focused on how do we drive a strong recovery. And that’s what we’re seeing. That’s what we’re seeing right now.
Over the medium term, a lot of these investments are not intended to just be you solve this in a year or two. You’re not going to get high-speed internet to all of America, you’re not going to rebuild countries in this country over the course of one or two years. This is over the course of three, five, eight, [or] ten years, where you have a dedicated investment strategy that helps to unlock that innovative capacity. To your point about semiconductors is a good example. Today we’re living through real-time bottlenecks in the semiconductor industry that have exposed really interesting, but also harrowing, weaknesses in our supply chains.
We’re working to try to resolve those in the very immediate term, but the real answer for the US is to build resilience by building back domestic capability. Not to source all semiconductors here in the United States, but to have enough capacity here, enough innovation here, and enough production here that we don’t find ourselves exposed. That’s going to take years. It’s going to take public investment and it’s going to take coordination between the public and private sector.
But that’s the kind of model that we want to use in other areas as well, being deliberate about the fact that the goal is over five years from now, eight years from now we put ourselves in a situation where when the next crisis, the next set of challenges, inevitably hit, we’re operating from a much stronger foundation.
RANA FOROOHAR: What would you say to some of the critics that have said, all right, well, this is a great idea in theory but it’s going to create inflationary pressures, particularly in the short term, given that we’re at the end of a multiyear period of easy monetary policy which was, you know, depending on where you put the marker, has been going on for decades. You know that this could get the US into a problem. The dollar could be challenged. How do you see all that fitting together?
BRIAN DEESE: Well, I think that the timeframe, to go back to the last question, to answer that question, the timeframe is absolutely essential. When we’re talking about the public investment strategy we’re talking about here, that is a long-term strategy. We are proposing to fully offset the costs of that strategy. So in terms of the impact on aggregate demand, it is spread out across time. And to the degree that people are focused on inflationary pressures in the short term, that really is not the issue.
In the short term, you know, this is a—this is an economy that is recovering very strongly. And we are—you know, we’re looking at the implications of an economy that comes out of a—you know, a policy-induced coma and comes roaring back, in part because demand is so strong because of the success of the ongoing vaccination campaign. Our view is that that economic strength and the speed of this recovery is absolutely vital to be putting our economy in a situation where we can tackle these issues, where we’re not operating from a sluggish position across time.
And I would note that we still have, you know, extraordinary economic challenges. We’re still down seven million jobs from where we were before. We still have, you know, half of the US population that’s not been fully vaccinated. So we still have a lot of work to do in the short term. But over the medium and long term, these are investments that are not about overheating the economy, but actually providing the core elements that are going to allow us to sustain growth across time.
RANA FOROOHAR: You made a point towards the end of your speech about the economy needing to not just serve shareholders, really, but a broader range of stakeholders. Given that some of the problems you’re trying to address come from the period in the 80s and the 90s in which there was a lot of financialization of the economy, there was a lot of pressure on multinationals—American multinationals—particularly relative to state competitors in places like China to make short-term decisions to please Wall Street quarter by quarter. How can or should any kind of financial reform—changes within the SEC, changes coming from the markets—kind of support what you’re doing?
BRIAN DEESE: Well, I think what we’ve seen across the American economy and the American private sector is a realization over the last few years that the model of sole focus on the short term and the primacy of the shareholder above all else does not actually serve to generate long-term sustainable profit over the long term. And so we’ve seen businesses acknowledge and, in fact, embrace the idea that having a strategy that actually supports your stakeholders more broadly—whether it’s your employees, the communities that you operate in—is actually integral to succeeding over the medium to long term. That’s happening in the private market, and there’s a lot of enthusiasm for that. There’s skepticism for that in some quarters, and I think it’s incumbent on the businesses that believe that to actually demonstrate that in action.
With respect to policy, there’s a couple things that are critical. One is providing better and clearer information to the public and to investors about how companies are actually operating against those goals. So if a company is setting targets to try to reduce emissions or to reduce its environmental footprint, is there data—if we believe those things are material to a company’s success, is there data that is comparable and that can be assessed between companies? That’s where, you know, the SEC and other regulatory bodies have an important role to play.
This is also a place where climate change comes squarely into the picture. We released an executive order on the climate-related financial risk recently that said that across government we need to be better assessing and measuring and monitoring and mitigating those real risks that climate change poses to the financial system and to the operations of companies therein. So there’s a lot of work to be done on the public-policy side of that as well.
RANA FOROOHAR: You know, something I hear a lot speaking to multinational CEOs [is that] they agree that we’re at a pivot point, a unique inflection point as you put it, in a sense that, you know, in the neoliberal era American multinationals were meant to simply go out, make money wherever you can. Most of them get about 50 percent of their revenues from overseas. Until quite recently, China has been a key market for many. The Chinese themselves are now shutting off several strategic markets, making them much more favorable to national players. That’s something that’s been developing and will continue to develop. That’s an explicit part of their own five-year plan. But if you’re a multinational CEO—if you’re an American CEO, you know, of a company like Qualcomm, for example, which gets half its money from Apple and half its money from China, what’s the message to these leaders? How should they be thinking about this new future?
BRIAN DEESE: Well, in the conversations that I and we have with American CEOs, CEOs of multinational companies, and CEOs of global companies that are investing and operating in the US, there’s two things that I’m hearing over and over again. The first is the rethinking of the balance between competitiveness and cost versus resilience. That’s true with respect to supply chains, that the resilience of a supply chain is more valuable in a world in which we’ve gone through this shock and we’ve seen the destruction of value that can come if you have a very-low-cost, just-in-time supply chain that is not resilient to idiosyncratic risks. So that’s—so number one—but resilience of the business model as well, and resilience to geopolitical and other risks.
The second is attracting and retaining trained workers. And I think that this is also an interesting shift, where having an educated and trained workforce at the ready is something that I think businesses across the board are identifying as one of the key ingredients for their success going forward. And I think there’s a growing recognition that there needs to be, from the perspective of the businesses themselves, more explicit investment—investment of dollars, but also investment in creativity in training those workers—in making it attractive to come and work. And I think that we’re going to start to see that is sort of what we’re seeing in the economy now, is a dynamic where when employers have to compete more for workers as opposed to workers competing for jobs that are scarce, that also encourages companies to up their games, and I think that training is a place where we’re going to see more companies put emphasis. But that, like many of these things we’re talking about, requires coordination between the public and the private sector, between government and training programs and the private sector and what they need to do as well.
RANA FOROOHAR: Let me ask you two more questions before I hand it over to Julia. Would you like to see as part of encouraging that training changes in the tax code, for example, that would allow the depreciation of investment into human capital rather than just machinery, or the encouragement of R&D tax credits, basically creating an ecosystem in which each company isn’t going at it alone but there is a sense that investment into people can be as favorable as, say, investment into technology?
BRIAN DEESE: So I think that we’re open and quite interested in any idea that would provide a clear foundation and encouragement for companies to up their investment in their workforce and in training and retaining their workers. And I think as part of a corporate tax reform, those are the kinds of ideas that should be in the mix.
I think that what we have seen consistently is that the training that is the most successful actually connects workers with training programs that are close to them in terms of them being able to access them physically, but also in terms of meeting them where they are—but also connected to jobs. And so the best partnerships are one where you’ve got local training capability, whether it’s a community college or a research facility, with employers so that people can see a line of sight to the job that is waiting for them.
We’ve got an extraordinary set of examples across the country where we’re seeing this work well. And one of the things that I think we—hopefully, we’re going to see in this next period is a recognition by companies that they’re prepared to invest more in making this happen, that they recognize that trained workforces are not just going to evolve and it’s not just the public sector’s role. But certainly, where there are ways where we could provide long-term incentives for companies to invest more in this space, it’s something that we want to have an open conversation about. And in the context of reforming our tax code, certainly we want a tax code that encourages more investment in domestic production, more investment in domestic research and development, and more investment domestically in workers.
RANA FOROOHAR: OK. Final question. Buy America sounds good to a lot of people in this country. It makes some allies nervous. How can this need to build demand in areas like semiconductors, which really require demand in order to be viable—how could allies be brought along and sort of be brought into that ecosystem? Where is the low-hanging fruit there to make this not just about the US, but about a new alliance in high-growth areas?
BRIAN DEESE: I’d say two things on that. The first is that the president is—this is an issue that the president feels strongly about—that when we’re using federal taxpayer dollars to purchase or to invest that money should go toward American workers and American production. And we are working hard on a set of reforms to laws that have been on the books since the 1930s. The Buy American Act has been the law of the land for decades but has never really been enforced, has never really been a focus. And the president is committed to actually delivering on the laws as they exist and making sure that that is the case.
At the same time—and I would say that’s an approach that many of our allies take, as well, with respect to their own domestic procurement. It’s true for our European counterparts as well, many of whom, as a share of their economy, their domestic procurement is considerably higher than the United States today.
At the same time, our approach is not one in which we want to bring all production here into the United States. We want to draw lines from our allies, or to suggest that it’s actually the right economic strategy to try to produce everything here in the United States. And that’s why focusing on working with partners and allies is a core part of our supply-chain resilience and supply-chain-strength strategy, that, in fact, by partnering with allies to have more predictable supply, by partnering with allies to actually focus on the challenges of global overcapacity that that threaten economies collectively, we can actually have a multilateral approach to this set of issues.
So while there are some issues where certainly the approach to buy American is one that the president is going to be uncompromising about, I think what we found and we saw, particularly in the president’s most recent trip, is that there’s much more space for us to actually work constructively with partners and allies to solve our shared supply-chain challenges, and so that’s a big priority for us as well.
RANA FOROOHAR: OK. Well, I have many more questions but I know you don’t have a lot more time, so I’m going to now hand it over to Julia Friedlander, who is a senior fellow at the GeoEconomics Center.
JULIA FRIEDLANDER: Thank you, Rana.
And Director Deese, thank you so much, on behalf of the Atlantic Council, for spending part of your morning with us today. It was wonderful to hear you outline the pillars of your new strategy.
My question, I think, is a pretty typical Atlantic Council question… Reviewing some of the public documents that the White House has put out, there’s an explicit link between restoring domestic economic growth and resilience and competition abroad, particularly with China. So in a sort of tactical way, how do you integrate economic policy into foreign policy? Right? They’ve traditionally been rather bifurcated in the US policy sphere. And then maybe to echo what Rana just said: How do you convince our allies that that’s indeed the case, that economics is a tool of foreign policy? Thank you.
BRIAN DEESE: Great. Thanks, Julia.
Well, I appreciate the tactical element to the question because I think that it’s important, which is that it’s easier to say that you’re integrating domestic economic policy and foreign policy than it is to do in practice.
One of the things that the president has been talking about for a long time, and talked about it as a candidate, was that he wanted to have a foreign policy for America’s middle class. And so one of the things that we have done from day one is that the National Economic Council, which I lead, and the National Security Council, which Jake Sullivan leads, when we work on these issues, we really work on them hand and glove. So I’ll give you an example: the supply-chain review, the one-hundred-day review that we conducted and which we just released a few weeks ago. Jake and I and our teams worked hand in glove on that. Every meeting we had with the interagency, we partnered and did that together, and we signaled clearly in the work of the teams that ultimately an assessment of supply-chain risks needed to fully integrate our national security and foreign policy equities, as well as our domestic economic and international economic equities as well. It’s hard work and I won’t suggest that we have gotten it completely right but having a strategy to make clear to the interagency and to the agencies that are working on these issues that that’s the approach that we’re going to take is important.
With respect to your question about allies, I think this actually goes to something that President Biden spoke about repeatedly when he was in Europe, which is that the core of our strength as a country, our ability to support and partner with allies, is our economic strength at home, and that’s why, both as a matter of policy, this administration and President Biden have focused—put so much focus and effort early on on having a vaccination strategy to get our hands around this virus but also to pass the American Rescue Plan within the first sixty days in office to deliver the strongest fiscal policy response to this crisis of any country globally and to signal that, in the United States, we’re not only capable but we’re committed to driving an economic strategy where the United States right now, our growth, projected to be about 7 percent this year, is actually having positive spillovers to the global economy.
The OECD, the IMF, the World Bank have all found recently that the pace of the growth in the United States, the increase in growth as a result of our fiscal policies, is actually having positive spillovers for the rest of the world. And that is a—that is a core way that we can help support a global recovery, help support the values that we’re trying to drive with respect to our foreign policy and put us in a position of strength when we are interacting with competitors on issues where we disagree and where we’re going to have—we’re going to have competition.
So that idea of our economic strength and our economic resilience being at the core of our foreign policy is something that really animates how we are approaching a number of foreign policy issues. And you’ll continue to see that as well, the prioritization that we have right now. And today we’ll be up doing a bunch of conversations with folks on the Hill on this. Our focus on infrastructure and investment domestically in this domestic investment agenda, that’s key to our foreign policy success. We view these things as interlinked, and we’re certainly tactically going to continue to try to operate the government with those linkages front and center.
RANA FOROOHAR: OK. I’m going to jump back in and turn it over for final words now to Josh Lipsky, who is the director of the GeoEconomics Center at the Atlantic Council. Thank you, Director.
JOSH LIPSKY: Well, thank you, Rana. And thank you, Director Deese, for coming to the Atlantic Council and laying out this vision with us on industrial policy so clearly and comprehensively during what we know is an extraordinarily busy week for you and the entire team at the White House.
So we, at the GeoEconomics Center, believe that economics, finance, and national security are all interlinked. And as you pointed out in your speech, that is not a new idea. It goes back to our country’s founding. But it is an idea that has been misunderstood, and misapplied, and perhaps overlooked—most importantly—in recent decades.
So we’ll continue to do our part at the Atlantic Council to remind this country and its allies the potential behind that idea. And this is the beginning of the conversation, as you both have said, and it’s not the end. And in fact, tomorrow we’ll start unpacking the speech and vision laid out today in an event with members of the European Commission, and the private sector, and other government officials, to talk about the implications both at home and abroad. And on July 13, we’ll welcome the director-general of the WTO, Dr. Ngozi Okonjo-Iweala, for the next Atlantic Council Front Page.
So thank you everyone for being with us today. Please stay with us and have a great rest of the day.