Meet the author of Biden's industrial strategy

In this episode, Brian Deese, outgoing director of the National Economic Council and an influential advisor to President Biden, discusses the opportunities and challenges in Democrats’ new focus on industrial policy.

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David Roberts

Brian Deese has had a remarkable two years. As President Joe Biden’s top economic advisor and director the National Economic Council, he has played a key role in defining and implementing Biden's policy approach.

In April of last year, he delivered some “remarks on a modern American industrial strategy” that laid out a vigorous approach to investing in economic sectors deemed important to national and economic security.

And by all accounts Deese played a pivotal role in seeing the strategy into law, through the Infrastructure Investment and Jobs Act (IIJA), the CHIPS and Science Act, and the Inflation Reduction Act, which together amount to the greatest reinvestment in US infrastructure and manufacturing — and, specifically, clean energy industries — in generations.

The pivot to unapologetic industrial policy is a big change for Democrats. Deese has moved in those circles for a long time — ten years ago he was a young wunderkind advisor to Obama, making The New Republic’s list of “Washington's most powerful, least famous people” — so as he prepares to depart the administration, I was eager to talk with him about what the shift to industrial policy means, why the US needs to onshore key supply chains, and the work ahead for Democrats in implementing their new laws.

All right, then. Brian Deese, welcome to Volts. Thank you so much for coming.

Brian Deese

Oh, I'm really happy to be here.

David Roberts

I had, I'll say, a little banter, maybe a couple of jokes scheduled here for the front end of the pod. But then I looked at my list of questions for you, and we don't have time for any jokes, Brian. We don't have time for any banter.

Brian Deese

Very serious, very quick.

David Roberts

We got to get deadly serious right off the bat here. So let's start here in 2012. Ten years ago, you were the deputy director of the NEC under Obama. And in 2022, ten years later, you were the director of the NEC under Biden. And I'm just curious how things have changed, how America's sort of strategic economic outlook has changed in that ten years. And specifically, I'm curious whether the sort of vigorous investment in industrial policy that we're going to talk about here in a little bit, the kind of stuff that has been going on under Biden, whether you were recommending that to Obama at the time, or whether there's something importantly unique about this present moment.

Brian Deese

Well, look, I think a lot of the world has changed since that period, both in policy and economic terms. If you think back to 2012, we were both right on the back end of a historic and transformational policy accomplishment in the enactment of the Affordable Care Acts, which changed the fabric of our economic and social safety net in important ways right on the front end of that implementation. And at the same time, in a period of very challenging and slow recovery from the Great Recession that was made worse by a failure of policy, a failure of the ability for Congress to overcome Republican opposition at the time, to invest more, to try to help to drive a stronger recovery. You look over those ten years, we live through a period that a number of people have characterized as secular stagnation where our output was constrained and that had a lot of impacts on quality, on labor markets.

And then of course, we lived through this once in a century event of the global pandemic and in many ways historically unprecedented in modern human history. And I think that that helped to bring to the forefront a set of economic challenges that had persisted over that decade and much longer. But we're now really to the floor, particularly the vulnerability of supply chains and the weaknesses in our industrial capacity as a country. And so those things together helped to crystallize the economic strategy that Biden as a candidate put out in 2020 and really have been pursuing, that in some important ways have similarities to things we were promoting at the time.

Significant investment in physical infrastructure is something that has been clearly necessary for a long time, but in some ways have important differences. I think we've got a different approach to clean energy and clean energy deployment at scale, which I'm sure we'll get into here, but also the prioritization of key geostrategic priorities like rebuilding semiconductor capacity here in the United States. So I think the landscape looks very different now economically both because of some of these significant economic changes but also policy changes as well.

David Roberts

What you're talking about and sort of what's come to the fore over the last ten years policy wise goes under the umbrella term of industrial policy. There's been a lot of kind of hype and talk lately about kind of the return of industrial policy. But I'm not totally sure that average listeners really have a sense of what that means. So maybe just let's just start by saying what do we mean by having versus not having an industrial policy? And where has industrial policy been for the last like two or three decades versus the last two or three years which has seen a really vertiginous sort of pivot around this subject.

So maybe let's just start by defining what we're talking about.

Brian Deese

Yeah, sure. And look, I use the term industrial strategy, which is obviously very similar to industrial policy, but a bit broader in ways that I'll explain. And I think at its core, the idea behind an industrial strategy is that the private market on its own, private actors operating to maximize their own utility, will end up under investing in areas of the economy that have strategic and economic significance and that by using targeted public investment you can unlock greater economic opportunity and crowd in greater private investment in those areas. And so an example of this is in physical infrastructure that allows you to unlock productive capacity of the economy.

And we have a great history of this in the United States, from the interstate highway system to the intercontinental railroad, where public investments in laying the foundation for private capital helped unlock greater productivity, greater innovation across the United States. I think what happened is that in the late 1970s, early 80s, there was a broader philosophical push around what now people talk about as trickle down economics that basically at its core had the view that any government or intervention was by definition going to pervert markets and crowd out private capital. And so the dominant paradigm became one of tax cuts, often skewed toward the highest income folks. Thus, the trickle down but