President Biden has proposed a highly ambitious plan to revive U.S. manufacturing, which includes about $1 trillion in federal manufacturing spending over eight years. This includes investments in electric vehicles ($174 billion), semiconductor fabrication and research ($50 billion), bridges, highways and roads, all of which will require United States-made steel and cement ($115 billion), and research in manufacturing-related new technologies, such as artificial intelligence and computing ($180 billion).
These are critical programs — critical to the U.S. jobs base, critical to economic and national security and critical to our international competition against China.
But one question has not been fully addressed and needs to be. How will a long-term manufacturing plan of this size and complexity be successfully managed? It’s hard not to think of a much smaller government investment in manufacturing, President Obama’s investment in solar manufacturer Solyndra, which ended up in bankruptcy and finger-pointing.
In thinking about this question, it’s perhaps important to ask how we got here in the first place. Why have we lost five million manufacturing jobs, and why are we so far behind where we should be on semiconductor manufacturing? Why do we have an enormous trade deficit in manufactured goods, including a very large one in advanced manufactured products? Why are there whole manufactured product lines we do not make any more, or make very little of, such as computers, servers, smart phones, PPE and apparel?
One answer is that the federal government has never had a central figure (or a central department) in charge of manufacturing, someone who wakes up every day, or even lies awake at night, thinking about the key manufacturing questions. We need a Cabinet-level official who is responsible for ensuring that we remain at the cutting edge of manufacturing technology, that we have significant market shares across all manufacturing sectors, that we have the right training for manufacturing workers and that our manufacturing job base grows. After all, the secretary of defense is responsible for the defense of our country, the secretary of agriculture is responsible for our farmers and agricultural sector, and the secretary of energy is responsible for nuclear power and other energy resources. It certainly can be argued that we have done better in these areas of government endeavor.
Who in the federal government is responsible for manufacturing? There really has not been anyone. Responsibilities are now so diffused throughout the executive branch that no one feels it is their legacy to either succeed or fail to rebuild U.S. manufacturing. The president has no Cabinet officer he can call and ask why we are doing so badly on a particular product line or in some manufacturing job sub-sector who cannot simply pass the buck.
The program described by President Biden is enormous and complex. This cannot be run by lower-level officials. Managing it will require a great deal of creativity, dedication and substantial resources. The eight-year budget proposed by the president far exceeds the yearly military budget.
Finally, this program will extend over years, ultimately perhaps over decades. We need a long-term bipartisan manufacturing policy. This cannot be achieved without a department dedicated to this goal, and without the personnel resources necessary to administer such a program. There have been proposals to create a White House manufacturing adviser, and from time to time such advisers have been put into place.
Such a position in the White House can be very helpful. But the United States cannot run a trillion-dollar manufacturing program out of a small White House office. This would be like having a national security advisor at the White House but no Department of Defense. Also, many of the decisions at the White House are (spoiler alert!) political. We cannot run a program of this size, and with this level of spending, on a political decision-making basis.
Creating a brand new department is not a simple thing to do and requires major budget changes as well as changes in congressional committee jurisdiction (perhaps an even more difficult challenge). I think the best way to do this would be to change the name of the Department of Commerce to the Department of Commerce and Manufacturing and change the title of the secretary of commerce to the secretary of commerce and manufacturing. This change could be inserted into the bills now being considered by Congress in the American Jobs Plan. I would also recommend that an under-secretary of manufacturing be established at Commerce to assist with this enormous task.
Gilbert B. Kaplan was formerly under-secretary for international trade at the U.S. Department of Commerce, and is currently chairman of the advisory board of the Manufacturing Policy Initiative at Indiana University and a senior adviser at CSIS.