By Victor Reklaitis
Top White House economic adviser Brian Deese on Wednesday defended some of the Biden administration’s long-term spending plans, characterizing the proposed outlays as not connected to current inflation concerns — and as relatively modest.
Deese’s remarks came as he gave a speech on President Joe Biden’s industrial strategy during an Atlantic Council event. He said the COVID-19 crisis has served as a “wake-up call,” and Biden’s strategy is built on “five core pillars: supply-chain resilience, targeted public investment, public procurement, climate resilience and equity.”
When asked after his speech about critics who have voiced inflation worries, Deese emphasized that he was talking about outlays that would occur over a number of years.
“The public investment strategy we’re talking about here — that is a long-term strategy,” said Deese, whose title is director of the National Economic Council. “So, in terms of the impact on aggregate demand, it is spread out across time. And to the degree that people are feeling inflationary pressures in the short term, that really is not the issue.”
“We still have, you know, extraordinary economic challenges. We’re still down 7 million jobs from where we were before,” he added.
“So we still have a lot of work to do in the short term. But over the medium and long term, these are investments that are not about overheating the economy, but actually providing the core elements that are going to allow us to sustain growth across time.”
Regarding the price tags for some spending plans, Deese, a former BlackRock Inc. /zigman2/quotes/207946232/composite BLK -1.10% executive, argued during his speech that they shouldn’t be viewed as too large.
“We have proposed the largest civilian investment in public R&D on record — $180 billion, as well as $100 billion investment in America’s workforce,” he said.
“Now these may sound like large numbers, but in fact, these are among the most prudent and modest investments that this country could make — a capital investment in ourselves. The reason is straightforward: Markets /zigman2/quotes/210599714/realtime SPX -0.47% on their own will not make investments in technologies and infrastructure /zigman2/quotes/200238288/composite PAVE -0.35% that benefit an entire industry.”
“The proposals on the table are large, but they are spread out across time,” Deese added. “Our proposals are to do an 8- to 10-year investment in aggregate. It would be about a percent of GDP a year. If you look at that in the international context, it is the minimum necessary to actually make a capital investment that could propel our economy forward.”
Deese’s comments come as White House officials work to make a deal on a bipartisan infrastructure plan that features $579 billion in new spending and an overall price tag of $1.2 trillion over eight years. Momentum appears to be growing for a two-step approach to infrastructure spending , in which first the bipartisan plan would get enacted, and then Democrats would go it alone to pass a much bigger spending package through a process known as budget reconciliation.