President Biden is going to IBM's manufacturing plant in New York on Thursday to tout the company's new $20 billion investment in research and development.
It's the second big tech manufacturing announcement this week, following news from Micron that it will spend $100 billion on a new computer chip plant.
According to the White House, the announcements are part of a manufacturing boom fueled by the CHIPS and Science Act, which Biden signed into law in August.
A high-powered group will meet at the White House for the first time to discuss how to get that money out the door while Biden is in New York.
"We need a whole-of-government approach, and we need to get everyone on the same page to figure out how we're going to deploy that $52.50 billion," saidRonnie Chatterji, who is coordinating the implementation of the CHIPS act
Semiconductors are used to run almost everything that has an electronic component.
They are in short supply due to supply chain disruptions caused by the global Pandemic.
The rising power of China is one of the reasons why the Biden administration wants to counter it.
The White House says that the U.S. produces about 10% to 12% of the world's supply of semiconductors, and none of the advanced chips.
The White House would like to change that. This industry was invented in the US. Chatterji, who was chief economist at the Commerce Department, was a member of the Council of Economic Advisers.
Chatterji's team is meeting with top White House officials and cabinet members on Thursday. Chatterji said the goal is to have everyone on the same page.
Chatterji told NPR that surging car prices last year showed the importance of his team's work.
One of the biggest drivers of inflation was that. One-third of the inflation increase in 2020 was due to cars. The chips we needed to build the cars were not available. When you can't get the chips you need to build the cars, you have to pay more.
Concerns about China's economic, technological and military ambitions led to bipartisan interest in investing in America's Semiconductor Manufacturing industry.
The subsidies represent a change in thinking. Government interference in free markets has been opposed by both Republicans and Democrats. There are concerns about overspending.
Sometimes U.S. government investments in private sector companies have gone poorly. Scott Lincicome is a trade economist at the libertarian-leaning Cato Institute.
Sometimes projects end up in politically important regions instead of the places where they make the most sense, according to Lincicome.
The government has good intentions, but ends up backing the wrong horse with industrial policy projects.
The recent shortages of baby formula despite large production capacity in the country is an example of why he doesn't think bringing chipmakers back to the US will prevent them.
Reducing trade barriers would allow global markets to react more quickly to domestic and global shocks.
There are pitfalls associated with industrial policy. He said transparency, goverance, and rigorous measurement of outcomes are important.
He believes the administration can reach its goals if all stakeholders work together.
He said that they have to keep an eye on setting a foundation for all of industry. The way to avoid that critique is to pick winners that are not associated with industrial policy.
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