Politics, Policy & Power | Paradigm Shift: Moving From Consumption to Production

04/05/21 01:16PM EDT

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Politics, Policy & Power | Paradigm Shift: Moving From Consumption to Production - 4 5 2021 1 10 51 PM


Pandemic, geopolitical threats, stunning scientific advances and national mobilization are the stuff of soaring political narrative.

No one knows that better than President Biden.

Helped along by his history muse, Jon Meacham, my former constituent and fellow Nashvillian, Biden has gone full FDR, without the World War. His public remarks until last week carried the signatures of suffering, some of it a little out of sync with the realities of American life. (see e.g. March jobs report) making it politically risky in its bleakness. As it turns out, it was a good set-up, however brief, for what came next.


Before the COVID-19 outbreak there was a lot wrong with the U.S. economy well beyond concerns about a 1% that can throw enough weight around to turn stupid and sometimes dangerous businesses into multi-billion dollar companies.

American manufacturing, FDR’s “great arsenal of democracy,” was declared dead and gone. Low inflation trumped secure food supply chains. Cheap cotton shirts from China became more important that human rights.

Except for the people who, in their lifetime, went from putting together Trane compressors to flipping burgers at the Hardee’s out by the highway, it was a reasonably satisfactory state of affairs. Until, the whole world needed PPE manufactured in just two countries, food supplies were massively disrupted and China, it turns out, was not so benign.

Wrapped in the bipartisan trappings of infrastructure, what the American Jobs Plan attempts to do is realign the economic priorities of the federal government for the first time in a generation.

Its emphasis on rural economic development goes after the disaffected and alienated portions of the country that were animated by Donald Trump. It leverages the massive R&D necessary in response to COVID and extends it into other priorities like advanced manufacturing.

Drawing parallels with the space race, construction of the transcontinental railroad and Eisenhower’s post-war economic programs, on Wednesday, Biden described the American Jobs Plan as “the largest American jobs investment since World War Two.” More than that, it doubles down on the possibilities for American innovation revealed by the swift development and deployment of a COVID-19 vaccine that, for the time being, leaves the rest of the world in the dust.

In a meeting a few weeks ago with historians, convened by Meacham, Biden told them “I am no FDR…” but apparently, he is not ruling it out.

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The largess of the federal government is making the future of health care policy less about a post-COVID roll-over than a massive paradigm shift.

While the ACA gets the attention you would expect from a president that attended its birth, the resources being allocated pale in comparison to outlays for research, diagnostics, therapeutics and vaccinations post-COVID.

The termination of the subsidy cliff for people making over 400% of the FPL for two years cost the federal treasury $22B. By comparison, the American Rescue Plan Act and the year-end appropriations bill allocated about $120B to diagnostics, vaccine development, genetic sequencing, among other things.

To that pile of cash, add $180B to upgrade America’s research infrastructure; $50B to secure supply chains; and $30B for medical countermeasures including development of alternative vaccines courtesy of President Biden’s recently announced American Jobs Plan.

If the Jobs Plan is enacted a large portion of these R&D monies would go somewhere new. Historically Black Colleges and Universities are slated to get about half the money designated for research infrastructure. Currently, you can pretty much count on federal funds going to a short list of research labs at America’s prestigious universities.

Directing funds to HCBUs, which are mostly in the south and frequently in ex-urban communities, has three immediate implications. First, entire new laboratories must be established and outfitted with tools and equipment, including no doubt, a lot of ILMN sequencers.

Second, research institutions will have a new source of competition for talent, funding and ideas. It is no secret that grant awards have surpassed outcomes in importance at many academic centers. Finally, it suggests that investigation into long ignored diseases may finally get some attention.

Last summer, venture capitalist Marcus Whitney and I explored the poor representation of minorities in science and medicine. In light of the Biden’s American Jobs Plan, it is probably worth another look for a perspective on how things might unfold from here.


It would not be full on FDR if Biden does not run into resistance from Congress on his jobs plan. The $2T price tag is enough to scare a few moderates into a compromise.

The corporate tax pay-for, historically one of the least effective taxes in the Treasury’s toolbox, is going to get stout resistance from the Chamber of Commerce and other business groups.

All of that points to passage via reconciliation which carries political risks heading into the 2022 elections when the benefits of the American Jobs Plan will be less discernible while the price tag will be very apparent.

Unlike the Trump-era tax cuts and the ACA, the parts of the American Jobs Plan that are likely to make it through the Byrd Bath – and they are many – should have a positive impact. Encouraging U.S. manufacturing and innovation seem like a better place to put your chips down than the health insurance focused naval gazing that has permeated Washington for years, especially if you are a president that wants to be the next FDR.

Certainly, cutting taxes for the highest brackets may have once been a positive for consumption, the last year makes clear that a production focused economy is critical to national and economic security. Tax cuts just seem very 1985.

If Biden is right, and his plan will usher in a new century of American innovation, reconciliation may be a risk worth taking.

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