533. Will the Democrats “Make America Great Again”?

Episode Summary

Executive Summary: The episode centers on Commerce Secretary Gina Raimondo’s expanded role in Biden’s industrial policy, especially the CHIPS Act and the Inflation Reduction Act. Raimondo argues the U.S. must reshore strategic manufacturing, tighten technology controls on China, and use government incentives with strong guardrails to create jobs, boost innovation, and improve national security.

Main Topics: Commerce Department as a new industrial-policy hub (Priority: 5/5): Raimondo explains how Commerce moved from a relatively sleepy department to a central coordinator for infrastructure, chips, clean energy, and competitiveness policy. CHIPS Act and semiconductor reshoring (Priority: 5/5): She details the bipartisan effort to pass the CHIPS Act, its subsidies, and the goal of rebuilding U.S. semiconductor manufacturing and supply chains. Corporate welfare vs. national security investment (Priority: 5/5): The conversation probes criticism that subsidies amount to corporate welfare; Raimondo argues the funding is conditional investment tied to jobs, labor standards, and security. U.S.-China economic competition (Priority: 5/5): Raimondo says the old assumption that trade would liberalize China failed and that the U.S. now must compete while protecting sensitive technology. Inflation Reduction Act and clean-energy industrial policy (Priority: 4/5): Brian Deese and Raimondo frame the IRA as a major climate-and-industrial investment that can lower costs globally while boosting U.S. manufacturing. Government capture, politics, and governance quality (Priority: 4/5): Raimondo critiques dysfunctional politics, lobbyist influence, and non-competes, arguing that public service should focus on serving the public rather than self-interest.

Key Arguments: The Commerce Department now has unusual leverage because major Biden-era laws route large-scale industrial spending through it. The CHIPS Act is justified by national security: the U.S. should not depend on Taiwan or a single foreign supplier for advanced semiconductors. Subsidies are not blank checks; Raimondo says they will come with requirements on wages, labor conditions, stock buybacks, R&D, and unions. The U.S. made a flawed bet that trade with China would lead to openness and reform; that bet is now indefensible. The U.S. should keep trading where beneficial, but block technology transfer that could strengthen the Chinese military. The Inflation Reduction Act is framed as both climate policy and competitiveness policy, with spillover benefits for Europe and global clean-tech costs. Government should be more strategic about return on investment, potentially including shared upside in publicly supported projects. Non-competes are overused and suppress wages; they should be limited or eliminated, especially for low-wage workers. A successful industrial strategy requires careful implementation, not just large appropriations, because the challenge is execution and accountability.

Data Points: Commerce Department budget: approximately $10 billion historically; Raimondo now manages about $150 billion - Used to illustrate the department’s expanded role under Biden-era industrial policy CHIPS Act subsidy pool: $50 billion - Allocated through Commerce for subsidies, tax credits, and grants tied to semiconductor manufacturing and related investments Private capital pledged ahead of CHIPS incentives: about $200 billion - Capital already pledged in anticipation of federal support for chip manufacturing Inflation Reduction Act deficit impact: more than $200 billion deficit reduction over 10 years - Deese says the IRA offsets spending through drug-price reductions and corporate tax reforms Green energy/climate spending in IRA: $430 billion - Described as part of the Inflation Reduction Act’s investment agenda Semiconductor production concentration: around 75% of overall chip production in East Asia - Used to justify reshoring and supply-chain resilience U.S. production of leading-edge chips: 0% - Raimondo says the U.S. currently makes no leading-edge chips domestically Targeted job creation from CHIPS investments: a quarter of a million to a half a million jobs - Raimondo’s estimate for manufacturing and construction employment effects Potential future engineering output: a million electrical engineers a year - Raimondo’s aspirational 10-year success metric for U.S. semiconductor competitiveness China-related semiconductor dependence: 90% of sophisticated semiconductors from one company in Taiwan - Raimondo cites this as a security vulnerability

Pivotal Quotes: "This isn't corporate welfare. This is an investment to achieve a set of national security goals to keep America safe." — Gina Raimondo: Her defense of CHIPS Act subsidies against criticism that they are corporate giveaways "That bet is no longer defensible." — Gina Raimondo: Her assessment of the long-standing U.S. assumption that trade would bring China political and economic liberalization "The minute it becomes about you, you should resign." — Gina Raimondo: Her broader point about public service, politics, and personal motive

Implications: The episode signals a major U.S. shift toward strategic industrial policy, with the government actively steering markets in chips, climate, and supply chains. For listeners and industry, it suggests more subsidies, more conditions, and more scrutiny of China exposure.