Harris to Pitch U.S. Manufacturing Revival in New Economic Speech

The Washington Post / Jeff Stein, Cat Zakrzewski

13:03 JST, September 25, 2024

Vice President Kamala Harris is expected to call Wednesday for new federal incentives to spur domestic manufacturing, according to two people familiar with her plans who spoke on the condition of anonymity to describe matters not yet made public.

In a speech on the economy slated for Pittsburgh, Harris will try to contrast former president Donald Trump’s plans to impose trillions of dollars in new tariffs with her proposals to spur U.S. production through targeted tax incentives. Advisers have in particular eyed tax benefits to bolster advanced domestic manufacturing, such as biotechnology, shipbuilding, semiconductors, data centers and forms of clean energy production beyond the incentives in Democrats’ 2022 climate law, the people said. It’s still unclear which of these will be included in the speech’s final version.

Harris is also expected to express support for federal proposals for universal childcare and paid family leave, the people said. On Sunday, Harris signaled support for cryptocurrencies at a fundraiser with New York City donors, but that subject is not viewed as likely to be mentioned in her speech Wednesday in Pittsburgh.

Harris’s coming embrace of industrial policy – though it’s unknown whether she will use that specific term – reflects the renewed popularity among Democrats of major federal investments to support specific industries. Such measures remain controversial among economists who traditionally oppose favoring specific sectors through federal subsidies.

The address may also deepen the uncertainty about Harris’s chief economic priorities; she has endorsed major federal action on issues including housing, the child tax credit and capital for small businesses. Even before Wednesday’s announcement, Harris’s campaign pledges were estimated to cost more than $4 trillion, and it’s unclear whether she plans to introduce new tax hikes on the rich or corporations to offset their impact on the deficit.

Trump has proposed more than $7 trillion in new tax cuts and said how he would pay for only a fraction of those measures.

A Harris campaign spokesman declined to comment on forthcoming policy announcements. Harris told reporters Sunday that she would give a speech to more fully define her vision for an “opportunity economy” – her campaign’s tagline on economic matters. Reuters also previously reported that Harris was planning to unveil new policies to “help Americans build wealth and set economic incentives for businesses to aid that goal.”

“I’m going to be giving a speech this week really to outline my vision for the economy,” Harris said, according to a pool report. “In short form, it is about what we can do more to invest in the aspirations and ambitions of the American people while addressing the challenges that they face.”

President Joe Biden approved one of the largest investments in domestic manufacturing in decades through the 2022 Inflation Reduction Act, which has pumped hundreds of billions of dollars into domestic clean energy production. These federal subsidies were enacted in part to fight climate change, but Democrats have also pitched them as a way to bring jobs and investment back to parts of the country that have lost in the transition away from coal.

Harris’s extension of tax credits for advanced manufacturing could build on that effort, in an approach widely seen as the handiwork of Brian Deese, a top Harris adviser who was also Biden’s top economic policymaker. Biden also signed the Chips and Science Act, bipartisan legislation to encourage the production of semiconductors domestically.

Trump has also vowed to revive domestic manufacturing through a combination of tax cuts and trade restrictions. The Republican has proposed trillions in tariffs that would insulate U.S. firms from foreign competition. Trump earlier this month proposed cutting the corporate tax rate from 21 percent to 15 percent on “companies that make their product in America,” although he has said little to define that plan. The idea would “once again turn America into the manufacturing superpower of the world,” Trump told the Economic Club of New York this month.

Economists say neither effort is likely to bring back the heyday of U.S. manufacturing. At one point during World War II, close to 40 percent of all U.S. workers were in the manufacturing sector – a number that has steadily declined to close to 8 percent today. Manufacturing employment is back under Biden to its level before the coronavirus pandemic, but it remains far from where it was in the 1990s. Many of the investments sparked by Biden’s legislative agenda will take years to turn into manufacturing jobs.

Harris’s campaign has just weeks to flesh out her vision on the economy before the November election. Although support for expanding the safety net and domestic manufacturing aligns with Biden’s approach, cryptocurrencies have emerged as a key point of distinction for the vice president.

Mark Cuban, the billionaire owner of the Dallas Mavericks who has become a key surrogate for the Harris campaign among the business community, said Harris’s campaign has been in close communication with crypto industry executives, entrepreneurs and investors and is “paying close attention” to their feedback. Anthony Scaramucci, a former Trump spokesman and global investment firm founder, said last week that he is advising the Harris campaign on its crypto policies.

Harris said Sunday that she supports a “safe business environment” for artificial intelligence and digital assets, while also pushing federal guardrails to protect consumers.

“They recognize that Gen Z, Gen A and Millennials are heavy users and investors in crypto. That young people see it as a way to build their net worth. They don’t want to hold them back,” said Cuban, who emphasized in an email that he did not know what the Harris campaign would ultimately propose. Cuban said that the Harris campaign is focused on protecting crypto users from “dishonest companies” but that “they are for all tech innovation, including AI and Crypto. They want us to continue to be the country that dominates tech at all levels.”

Crypto represents a tricky political issue for the Harris campaign because the subject pits party factions against one another. Democratic economists and party technocrats tend to view cryptocurrencies such as bitcoin as worthless for generating economic growth and likely to lead vulnerable investors to being ripped off.

But venture capitalists and cryptocurrency executives have accused the Biden administration of stifling the sector through regulation and litigation. They have focused their ire on Biden-appointed Securities and Exchange Commission Chair Gary Gensler, who has led a sweeping legal assault against Coinbase and other high-profile cryptocurrency exchanges and companies. Gensler’s litigation against cryptocurrency companies has contributed to a political shift among some top Silicon Valley investors to Trump.

Tech lobbyists are hopeful that Harris’s extensive ties to Silicon Valley will result in improved relations between the tech industry and Democrats, following years of escalating tensions.