By Jeff Ferry, CPA Chief Economist
As the Biden administration takes office, our nation is in the grip of bitter bipartisan divisions. However, beneath the superficial rhetoric, there is a surprising degree of agreement on some important issues.
Comments by senior incoming Biden administration officials on the critical importance of rebuilding the American middle class are in harmony with many comments and ambitions of the outgoing administration. The challenge for the Biden administration is to, well, Build Back Better as America struggles past the COVID pandemic.
US Trade Representative-designate Katherine Tai gave a speech recently that was harshly critical of US trade policies before 2016. The new administration, she said, must move to a “worker-centric trade policy.” US trade policy must recognize, she said, that Americans are not just consumers. They are also workers and wage earners, in other words producers.
Separately, in a paper published last year by the Carnegie Endowment, a group of Democrat-leaning policy experts including Jake Sullivan, incoming National Security Adviser, criticized past pro-globalization economic and national security policies for aggravating economic inequality. The paper urged that the new generation of foreign policies must explicitly benefit the middle class, explaining that those people’s “primary economic interests are to create and secure jobs that pay enough to sustain a middle-class standard of living and to protect the economic viability of their local communities and base industries.”
The Coalition for a Prosperous America is a bipartisan organization of domestic manufacturers, labor unions, family farm groups, and ordinary Americans. Since our founding in 2007, we have been fighting for the support and growth of US-based manufacturing and agricultural industries against foreign policies and other policies that harmed middle-class Americans, essential manufacturing industries, and the family farmer. Growing those sectors is the best way to ensure the growth of middle-class jobs and more inclusive prosperity for all Americans of all races and regions of the nation. We welcome this focus of the Biden administration and we offer the following ten proposals as policy initiatives that could quickly set the new administration on the path to building the US economy back better and restoring middle-class prosperity.
- Reshoring – The best way to Build Back Better: President Biden should appoint a White House official to lead a multi-agency effort to build a broad reshoring strategy focused on industries essential to future economic growth, job creation, national security, and US leadership in the world. This effort should focus on essential industries for today and tomorrow, including semiconductors, telecom, 5g wireless technology, medicines, advanced and basic materials, food and renewable energy. Set targets for US-based production in each industry within one, two, and three years. Capitalize on the momentum created by the COVID pandemic.
- Buy American: We support the Biden campaign pledge to open a ‘Made in America’ office within the Office of Management and Budget as well as support for the Manufacturing Extension Partnerships (MEP). Americans want to buy American-made products. Any international agreements that prevent the government from buying USA made goods and, therefore, supporting US producers, should be amended or abrogated.
- The “Strong Dollar” Harm to Working America: The International Emergency Economic Powers Act (IEEPA) should be used to end dollar overvaluation so the US economy can recover from COVID. This would give an immediate and powerful boost to our manufacturing and farming sector, create millions of jobs (5 million according to a CPA economic analysis) and finally begin to put an end to 40 years of trade imbalances and deindustrialization. The Biden administration can do this by acting to moderate capital inflows to move the dollar to a trade-balancing price, a measure supported by Sen. Tammy Baldwin (D-WI).
- China and Strategic Competition: China is an autocratic communist country that seeks to displace the US as the most powerful country in the world. China’s state-directed export machine has deindustrialized America, worsened income inequality and impoverished our working class. The Biden Administration should pivot from engagement towards containment on all levels. This includes decoupling on trade, incoming investment, sales of important technologies, and international institutions. The Biden administration should ban any imports that include products made or mined by forced labor, a widespread, inhuman, and unAmerican practice in Xinjiang province. The administration should also take action to boost domestic industries to replace China imports, creating wealth and rebuilding our working class.
- Re-shore the US pharmaceutical and medical supply industry: Pharmaceuticals are among the most essential industries. The health of every American depends on safe, trustworthy, and efficacious drugs. The FDA should ban the importation of essential medicines, PPE, and other medical supplies from foreign producers, especially in China, that are not inspected as rigorously as in the US, or when dangers are discovered. These bans should take full effect as domestic production is or becomes available. To regain our capabilities in generic medicines, which account for 85 percent of the prescriptions written in the US, an office should be established to promote the development and commercialization of advanced manufacturing processes for essential generic drugs. The office should prioritize critical drugs needed to be fully manufactured domestically. Strict national security provisions should prohibit foreign companies from capitalizing on taxpayer- funded investments.
- International taxation - Sales Factor Apportionment (SFA): The Tax Cut and Jobs Act should be reformed. US corporate tax should be based on Sales Factor Apportionment, to eliminate incentives to offshore profits and production. This will end the preferential tax treatment of multinationals and sophisticated tax avoiders to the detriment of domestic companies who pay their fair share. If the Biden administration imposes a surtax on US company profits earned abroad, it should eliminate any discriminatory effect favoring foreign companies by applying SFA to them.
- Section 232 National Security Tariffs: The use of Section 232 should be expanded to protect essential industries, including industries civilian industries where products and technologies also play a role in national security. We strongly favor continuation of the 232 program in steel and aluminum, which have created thousands of good paying jobs.
- Agro-Industry Strategy: The Biden administration should abandon the “trade your way to prosperity” ideology of the past because it has devastated family farms and ranches through chronically low prices. Past agricultural policies have benefited food processing multinationals at the expense of farmers and the consumer. An agro-industry strategy should be crafted to rebuild family agriculture by ensuring fair prices for agricultural products and humane conditions for agricultural workers. Different strategies are needed for each farm sector. Country of origin labeling for beef and pork should be re-established. America’s food and agriculture policy should not be set in Geneva.
- Stop the abuse of “de minimis” imports by online giants: Every day, over a million packages flood into the US from overseas, mainly from China. These packages, unchecked by Customs, often contain dangerous drugs or unsafe products. The US is the only country in the world to allow imports up to a value of $800 to enter free of any controls. This has cost the US thousands of jobs and decimated thousands of small companies. The Biden administration should work with congress to reduce the $800 De Minimis level to an amount that is reciprocal with other countries and helps our home grown manufacturers. Goods subject to section 301 orders should not be eligible for De Minimis entry. Enforcement of the one person, one day De Minimis rules should be tightened.
- Country of Origin Labeling of Food and Web Product Pages: The Biden administration should work with congress to require country of origin labeling on every web page selling a product. This would put online retailers on the same status as bricks and mortars retailers, who must label their products with country of origin. Country of origin labeling for beef and pork should be reinstated to help farmers and ranchers. These measures would create good jobs across the country, expand transparency, and protect consumer safety.
CPA stands ready to work with the Biden administration to Build Back Better, achieve inclusive prosperity, and strengthen our economy while protecting our national security. Our full slate of proposals are in our Transition Memo for the Biden team here.
 Katherine Tai speech to National Foreign Trade Council Foundation, Jan. 12, 2021. Text available here.
 Carnegie Endowment, Making US Foreign Policy Work Better for the Middle Class, 2020. Available here.