Climate change and manufacturing converge at Elizabeth Warren campaign stop – Toledo Blade

Climate change and manufacturing converge at Elizabeth Warren campaign stop - Toledo Blade

Elizabeth Warrens latest big idea is economic patriotism

DETROIT — Senator Elizabeth Warren of Massachusetts on Tuesday proposed an economic program of aggressive intervention on behalf of American workers, suggesting that as president she would invest $2 trillion in climate-friendly industries over a decade, create a new cabinet-level Department of Economic Development and even manipulate the dollar to promote exports.

Unveiling a campaign theme of economic patriotism, Ms. Warren promised to announce further plans under that banner over the next several months, on issues like trade and Wall Street regulation.

National Association of Manufacturers CEO Jay Timmons on how the U.S.-China trade war and the potential tariffs against Mexico are affecting the manufacturing industry.

By pledging to intervene in markets to support American manufacturing and promote job creation, Ms. Warren laid out a goal that President Trump has also pursued, albeit by different means, like imposing tariffs on imports from China and Mexico.

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The new proposals were further evidence that Ms. Warren believes that her policy-first message is helping her stand out in the Democratic presidential primary. Her announcement was timed to coincide with a trip to Indiana and Michigan, where she will hold campaign events this week as she tries to extend her recent political momentum.

Still, challenges remain in Ms. Warrens bid for the nomination. Former Vice President Joseph R. Biden Jr. remains the races pacesetter in polling and fund-raising, and Ms. Warren must still shake the perception that her nomination would pose problems for Democrats in the general election.

The Treasury Department is required to report to Congress twice a year on whether any countries are manipulating their currencies to gain trade advantages over the U.S. In the latest report, the Trump administration decided not to label China or other countries as currency manipulators, but put China and eight other countries on a monitoring list.

In remarks Tuesday afternoon at a job training center on the northwest side of Detroit, Ms. Warren said the plan would benefit the citys manufacturing sector, which has experienced hardship in recent years.

She says that to create and defend quality, sustainable American jobs, she would establish a new agency called the Department of Economic Development that would replace the Commerce Department and consolidate other existing agencies like the U.S. Trade Representative and Small Business Administration.

The bottom line is — if they can make a nickel by sending your job somewhere else, theyll do it, Ms. Warren said. Ill tell you, these corporations may not fight for American workers, but Im willing to do it.

Presidential candidates Elizabeth Warren, Jay Inslee campaign in pivotal Michigan

And she said her focus on domestic jobs, particularly through investment in climate change, would help revive American economies.

The centerpiece of Ms. Warrens program, a $2 trillion spending package over 10 years for environmentally sustainable research, manufacturing and exports, is intended to help achieve the ambitious targets of the Green New Deal, Ms. Warren wrote in a policy paper.

The climate crisis demands immediate and bold action, Ms. Warren wrote. Like we have before, we should bank on American ingenuity and American workers to lead the global effort to face down this threat — and create more than a million good jobs here at home.

The ICE U.S. Dollar Index DXY, -0.02% which is a measure of the U.S. currency against a basket of six major rivals, was up 0.07% at 97.21 in recent action. For the year to date it is up nearly 1.1%.

The proposal contains echoes of President Barack Obamas $840 billion stimulus law, passed during the first year of his administration, which pledged over $90 billion for so-called green jobs in the installation of wind, solar and energy efficiency projects. That spending came under attack after the failure of Solyndra, a solar company that went bankrupt after burning through $527 million in federal loans. But economists have noted that most of the projects and companies funded by the stimulus survived and contributed to the economic recovery.

Warren, a Massachusetts senator, on Tuesday released what she called a plan for economic patriotism as well as a $2 trillion blueprint to help the U.S. lead the clean-energy sector.

Many of Ms. Warrens spending proposals rely on instituting tax hikes on Americas richest individuals and corporations, and some critics have said she is promising voters things that are undeliverable. At the same time, the tolerance for larger federal deficits has been increasing among political leaders and economists on both sides of the aisle.

Elizabeth Warrens Latest Climate Plan Is a $2 Trillion Investment in Green Manufacturing

The investment plan includes a Green Apollo Plan that would create a National Institutes of Clean Energy, a Green Industrial Mobilization that would push federal spending toward American-made renewable energy technology, and a Green Marshall Plan that would promote those products abroad. The programs would largely be paid for through corporate tax increases, a campaign aide said, and would include provisions that prioritized investments in historically marginalized communities and provided benefits for fossil fuel workers.

Government contracts issued under the initiatives would include more stringent criteria than are currently mandated, by requiring that federal contractors offer a minimum wage of $15 an hour, more than twice the current federal minimum, as well as 12 weeks of paid parental leave.

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Mr. Biden also issued a plan to combat climate change on Tuesday, including a pledge to invest $1.7 trillion in green energy programs over 10 years.

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As another element of her plan, Ms. Warren proposed more actively managing our currency value to promote exports — a reference to measures that could weaken the dollar. Mr. Trump has also complained that the dollar is too strong.

The announcement on Tuesday, as Ms. Warren visited states with major manufacturing industries, continued her habit of connecting new policy proposals to her campaign stops. In West Virginia, for example, she touted an idea to invest in curbing the opioid addiction crisis.

By introducing her economic patriotism series in the Midwest, Ms. Warrens campaign is zeroing in on the working-class voters who soured on Hillary Clinton in the 2016 presidential contest. She is also courting many of the voters who, in the 2016 Democratic presidential primary, backed Senator Bernie Sanders of Vermont, who made his support of a more protectionist trade policy a key campaign issue. Mr. Sanders and Ms. Warren are now racing to lock down support from the liberal wing of the party.

Warren calls for replacing Commerce Department in jobs plan

While Ms. Warrens sprawling jobs, energy and environmental plans have stirred enthusiasm among left-wing activists, they also draw on ideas that have attracted strong bipartisan support in the past. A push to scale up apprenticeship programs and the mandate that the federal government buy American-made goods when possible echo efforts by the Trump administration.

The apprenticeship model, though successful in Germany, has often been viewed skeptically by high school students and parents who have been bombarded by the message that a college education brings the greatest economic rewards.

The federal Government Accountability Office found in a December 2018 report that the effect of existing Buy American initiatives, some of which date to the Great Depression, was relatively minor because of waivers, exemptions and treaty constraints.

In another proposal aimed at American workers, Ms. Warren said the Commerce Department under her administration would be revamped and renamed the Department of Economic Development, and would be required to create a national jobs strategy every four years. The new department would also be responsible for all trade programs.

Warren says the Green New Deal needs a $2T innovation boost to work

Such long-term economic planning would be akin to efforts in countries like China and Germany, Ms. Warren said. Some Republicans, including Senator Marco Rubio of Florida, have also talked about the need for the United States to have an economic plan.

In a post on Medium, Ms. Warren criticized previous administrations, Republican and Democratic, for putting the interests of corporations above the American people.

We should put all of these offices and programs in the same place, she wrote, to make it clear that the unified mission of the federal government is to promote sustainable, middle-class American jobs.

Warren Calls for Actively Managing Dollar Value to Boost Jobs

Astead W. Herndon reported from Detroit, and Patricia Cohen from New York. Coral Davenport and Ana Swanson contributed reporting.

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Donald Trump fused his anti-immigration politics with his love of tariffs to create a politics of nationalism that worked well for him in some traditional Midwestern states. One possible response to that would be for Democrats to embrace a new role as the party of cosmopolitan globalism. But Warren, a 2020 candidate, wants to essentially redouble on themes that previous high-profile Democrats have only dabbled in.

The specific policy initiative is about green manufacturing (shes unveiling the plan ahead of a campaign trip to Michigan and Indiana), and its just one plank in a larger economic patriotism platform. Shes describing the vision in broad outlines, and her team says she will flesh it out with more specific initiatives in the weeks to come.

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Warren puts it this way: American companies show only one real loyalty: to the short-term interests of their shareholders, a third of whom are foreign investors. If they can close up an American factory and ship jobs overseas to save a nickel, thats exactly what they will do — abandoning loyal American workers and hollowing out American cities along the way.

One specific bullet point on Warrens policy agenda is to create a unified Department of Economic Development that would combine the functions of the Commerce Department with the Small Business Administration, the Patent and Trademark Office, various job training and R&D programs scattered around the bureaucracy, and the export and trade agencies including the Office of the US Trade Representative.

The bureaucratic reorganization, however, is basically just to set the stage for a mission statement: the new Department will have a single goal: creating and defending good American jobs.

All administrations frame their policy agenda in terms of job creation. Warrens specific idea is that economic policy should be more oriented toward promoting domestic manufacturing and domestic export-oriented industries.

The prevailing view in Washington — from both political parties — has been that our government should not aggressively intervene in the markets to boost American workers, she writes, before proclaiming that this approach has failed spectacularly.

She calls instead for a multifaceted economic development policy approach thats loosely modeled on Germany, Japan, and China.

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This is all broadly speaking industrial policy, a concept that (largely under the influence of academic economists) went out of fashion in policy circles, but thats been making a comeback in recent years largely thanks to the success of a number of East Asian countries. The International Monetary Fund even recently released a paper called The Return of the Policy That Shall Not Be Named: Principles of Industrial Policy, as if to officially mark industrial policys return to orthodoxy.

The fundamental concept of industrial policy, as economist Noah Smith described in a recent Bloomberg column, is that by pushing private companies to increase exports of sophisticated products — semiconductors and aircraft instead of soybeans and oil — governments can stimulate productivity gains.

Fans of Hamilton will recall that Alexander Hamilton favored setting a fairly high tariff on imported manufactured goods to encourage Americans to set up their own factories, rather than relying on imports from Britain. Thomas Jefferson, more in line with what youd read in an economics textbook, argued that this would senselessly raise the cost of living for most Americans (who at the time were farmers) to enrich a relatively small cabal of industrialists and bankers. Hamiltons view was that to become a really rich and successful country, the United States had to be at the forefront of global cutting-edge technology — which meant building factories — and not just be a complacent bunch of plantation owners.

Her desire for monetary policy thats more attendant to the needs of American manufacturing implies that most Americans (who these days work in local services like health care, education, restaurants, and other retail locations) will on balance pay higher prices for stuff. The case for doing this is that globally competitive manufacturing industries can breed national wealth over time in a way that non-tradable things like hair salons and child care centers cant.

Similarly, imposing more stringent buy American rules on the federal government will raise costs — implying either stingier services or higher taxes. But in exchange we could be creating the globally competitive industries of the future. Due to the unique sensitivities of the defense industry, the United States already implicitly does this in the realm of aerospace. The Pentagon isnt going to just let the market decide whether or not the United States has an airplane manufacturing industry. And that commitment to American aerospace helps explain why the United States has a globally competitive industry building and exporting civilian airplanes as well as military ones.

Thats the good and the bad — short-term costs in the form of higher prices balanced against long-term gains in the form of nurturing the industries of tomorrow.

The ugly is that in a practical sense industry policy can devolve into narrow interest group politics. One example is the way America treats domestic procurement rules for passenger trains. While Japan, China, and Europe have built up their domestic train industries into globally competitive exporters, the United States has not. We dont use or make passenger trains on remotely the kind of scale that would make that viable.

But we also dont take advantage of European and Asian proficiency to just use their good trains. Instead our domestic procurement policies encourage Amtrak to buy trains that cost double what European railroads would pay, but then politicians send out press releases celebrating the local job creation. Even more alarmingly, you can get a situation like the Boeing 737 Max fiasco, where it appears that the relevant agencies were so committed to the success of a major American manufacturing company that they turned a blind eye to safety problems.

Warrens pitch, obviously, is that she wants the good kind of economic patriotism where you promote forward-looking economic development. And green manufacturing is a promising place to start.

The specific Warren proposal on this score has three parts, a Green Apollo Program, a Green Marshall Plan, and a Green Industrial Mobilization.

The Apollo Program is a ten-fold increase in clean energy R&D funding, the Marshall Plan is a $100 billion program to help foreign countries buy American-made clean technology, and the Industrial Mobilization (which it would perhaps be more natural to call a Green New Deal, were that name not already taken) proposes a massive $1.5 trillion federal procurement initiative over 10 years to buy American-made clean, renewable, and emission free products for federal, state, and local use and for export. Thats roughly the scale of federal spending on defense acquisition and would of course turn the federal government into a huge player in this market.

As a target for industrial policy, clean energy and clean technology make a lot of sense. The threat of climate change and other forms of air pollution gives people around the world a strong motive to want to shift energy production in this direction in a way that is knowable by policymakers.

Similarly, because climate change has a global impact, the American people have an interest in seeing foreign countries shift to cleaner modes of power production, so subsidizing their consumption of American-made clean energy is a very reasonable way of subsidizing American manufacturing. And, most of all, this is clearly about trying to push the frontier forward rather than trying to help politically connected incumbents hang on.

Still, the basic tensions around cost remain. In her Green Industrial Mobilization plank, Warren specifies that contracts will go to companies that meet a $15/hour wage floor with a minimum of 12 weeks paid family leave and that maintain a neutral posture in union-organizing drives. Thats all in line with standard progressive economic policy priorities, but it means Warren is proposing to buy less with her $1.5 trillion procurement drive than could otherwise be obtained.

That in turn underscores some of the differences from industrial policy in developing countries, where the idea is generally to move people off the farm and into the factory, regardless of how little the factory job pays. Its a challenge to make this work in a rich country like the United States where good jobs, and not just industrialization, are the goal. But the nature of these big bets is that if they do pay off and give birth to a series of next-generation industries that sustain communities all across the country, then down the road nobody is going to be complaining about the cost.

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