How Biden's 'Buy American' initiative plans to 'build back better'
Speaker 1: Hi, I'm Connie GMO and I'm editor turn chief of CNET,
Speaker 2: And I'm Maggie ridden a senior reporter at
Speaker 1: CNET, Maggie and I today are gonna be talking to Celest Drake. She's the first ever director of maiden America, a new office that it was set up by president Biden to do what the name says, promote the idea of goods manufactured in America. Thank you so much for joining us today. Celeste [00:00:30] Drake.
Speaker 2: Thanks Connie. It's great to be here. This is a really exciting initiative and I'm excited to be the first ever made in America director and so excited that president Biden created this office.
Speaker 1: Well, so then let's talk about that. What is your job day to day? We know that it's obviously part of it is to, uh, follow through on his initiatives and you know, his agenda, but can you give us a sense of what is your job? What do you do
Speaker 2: Well to, I mean, to say it most plainly, [00:01:00] we wanna make sure that at taxpayer dollars, when they're spent for purchases for the government or they're used for grants for other works such as building up our national broadband network, that, that as much of those taxpayer dollars as possible go toward us firms so that we're creating more jobs for us workers and really boosting up us communities and that, and that's, there's a lot of different ways to do that such as the [00:01:30] by American proposed rule that we issued a couple of weeks ago. It's also looking at where those by American rules are waived and seeing if we can reduce the need for waivers. And it's also looking at a lot of other spaces, identifying gaps in our supply chains and trying to do what we can to build up manufacturing, where we've got those gaps.
Speaker 1: So, so let's talk about that. Um, for most people who will read about the made America director that, um, president Biden signed, [00:02:00] it talks about federal procurement, which I think is what you're alluding to here. The federal government buys a lot of products and you want those products to be substantially made or manufactured in the United States. And I know he recently upped the percentage of those products that are required to be made in the us. So just give us a quick, uh, sense of how much money we're talking about, uh, and what those rules just generally speaking are. Yeah.
Speaker 2: So when we talk about government [00:02:30] procurement, that's just a fancy way of saying the stuff that the government purchased and the federal government annually purchases about $600 billion. And about half of that is for goods. So when we're talking about manufacturing, making things in America, we're looking at about that amount of money. So some of that we buy American. Some of it is waived. And even when we buy American, the current rule says [00:03:00] only 55% of the content has to be made in the USA. So the proposed rule that the president announced on July 28th will change that 55% to 60% initial initially. And then over time it will go up to 75. So we're gonna make sure when we're spending money on goods that are made in America, more of it is made in America and that's going to help support our communities, create jobs, all of those [00:03:30] things.
Speaker 2: We're also gonna take initiatives in that role to measure the content better to, in other words, make sure when the contractor says it's 75%, we have a better sense that it definitely is 75% and use a little bit of those tools. As I mentioned before, to try to fill those gaps and make sure that really important things that we wanna make sure are made in the United States are made in the United States. And that's why we're given incentives [00:04:00] and price incentives so that entrepreneurs will have an incentive to invest in America rather than producing overseas so they can win those contracts.
Speaker 1: Okay. So let me just follow up on that and just ask you one other question, which is the government put out a number I believe it's from, um, 2018, the already 96% of what the federal government buys is made in America. According to the existing definitions at the time 2018, you're [00:04:30] now proposing to change it. So I dunno, 90, sorry, 96%. That seems like a lot already. So is this really gonna move a needle
Speaker 2: When you're talking about these very large numbers, like I mentioned, 600 billion in procurement. So even if you have a small percentage of that, that's real significant spending. And the other piece is what that means is 96% of the time waivers weren't issued. But if you were buying [00:05:00] goods that were 55% made in America, and you're changing those to 75% made in America, you are gonna make a real difference because that additional 20% that's new opportunities for small businesses, new opportunities for medium size businesses to get into that supply chain. And that's all, all jobs and economic activity and communities across the country, in every corner of America, including minority owned [00:05:30] businesses, other underrepresented businesses, it is gonna make a difference. And it's gonna be combined with other elements of the president's American jobs plan to really support our economy and make sure that we become roaring back from the coronavirus pandemic.
Speaker 3: I mean, this is this, isn't a new concept though. I mean, this is, you know, all of this is based on a law from 1933. I mean, it go dates back to Herbert Hoover's era. Um, the Byer act, other presidents have, have pushed this, [00:06:00] this kind of made in America initiative, Reagan Obama, Trump, what is different about it this time with, with president Biden, president
Speaker 2: Biden views made in America as a policy, not a promise. And he's backing up that policy commitment with real actions to improve made in America across the government. So he's created the first ever made in America office with the first ever made in America director. And my job is [00:06:30] to oversee all of the agencies of the government and to make sure that they're applying made in America rules can ly and with clarity. And then we're gonna make sure that all of the waivers from made in America rules are transparent. So the public, in other words, can check our work and have confidence that we are doing the most, that we can to support us families and communities and firms with their taxpayer dollars.
Speaker 3: [00:07:00] So I just wanna press on this a little bit more because I think again, these policies or promises have been around for a long time, but in terms of real jobs, manufacturing jobs in the us, it's been declining since late nineties. Um, so how is this policy going to translate into new jobs and how many jobs do you think it can create?
Speaker 2: So this is the first time that we're ever trying [00:07:30] an initiative as big as this in terms of a whole of government commitment to improving made in America compliance and increasing of standards. And it's true that procurement policy alone, uh, would not bring the manufacturing sector back to the power that it had 50 years ago or even 20 years ago. But this is a very clear commitment on behalf of the Biden administration to ensure that when we are spending [00:08:00] tax payer dollars, we are doing so in a way that boosts American manufacturing, but it is a piece of the larger build back better agenda, where we are looking at a series of issues, gaps in critical supply chains and, and figuring out what are the policy tools to fill those gaps that go far beyond just procurement at looking at tax policies and other economic policies.
Speaker 2: We are looking at why there's been a pattern of the United States [00:08:30] being such a great innovator and inventing so many products that are often not actually made here and trying to figure out how we can fill that policies space. So this is one piece of the president's ambitious agenda that is really gonna end up making sure that we never again are caught in a crisis like the COVID 19 pandemic and without access to really critical goods, because we've let supply chains not only go overseas, but become concentrated in one place [00:09:00] where they're not resilient. And then we have real problems accessing everything from semiconductors to PPE. Those things are gonna be fixed.
Speaker 3: So let's talk about that supply chain. I mean, what are are some of the, the issues that you see? I mean, obviously labor costs are, are a big factor. Um, you know, you have products like the, the iPhone, for example, which is simply, you know, not made in the us and is, is [00:09:30] made overseas in Asia and the CEOs of, of, of that company, Steve jobs initially, and, and Tim cook have said that it's just too costly to bring some of that manufacturing back. So from your perspective, what do you see the issues are?
Speaker 2: So certainly the United States has costs that don't exist everywhere in terms of wages, environmental comp clients, um, and other issues. But the United States also has a lot of [00:10:00] advantages to producing here in terms of our transportation system, in terms of our justice system. And the idea is not to go back to the 1950s, the idea is to capture the industries of the future, and that's why the presidents were work on critical supply chains is so important and his work on tackling climate change is so important because the clean energy industry, as it will look 10 years from now, or 20 years from now [00:10:30] doesn't even exist yet. And what are the incentives that we can put in place to find out where this is gonna go and to grab that new innovation and the new manufacturing and procurement will definitely be a part of it because the United States government is going to be on the cutting edge of procuring electric vehicles of ensuring that we are leading in clean energy. So
Speaker 3: You mentioned though that there are gaps in the, um, supply chain. [00:11:00] So what do you see as those critical gaps and how can the government fill those gaps? And, and then I'll, I'll have another follow up question, cuz I, I wanna know how long this is gonna take you. Uh,
Speaker 2: So, so the president, uh, one of his first executive orders after the Maden Erica executive order was the executive order on critical supply chains. And it identified six key areas, including Infor, um, information and communication technology, [00:11:30] national defense, and a hundred day report came out, identifying some critical gaps in recommendations there. And then there's a longer one year review and that will become a review on a regular basis to take a strategic look at our industry and say, these are the things that we must have. We must have national defense. We must have a secure public health system and looking to identify very specific gaps in figuring out [00:12:00] the best way to go about creating resilient supply chains. And so that resilient supply chains have built in redundancies. This is not about bringing every far flung supply chain back to the United States, but it really does take a lot of work to identify the critical components and to figure out how we can incentivize making those critical components here and where we're also gonna work with our allies and our trading partners [00:12:30] to make sure that we have that redundancy and resiliency so that we're not vulnerable to these problems when there is a pandemic when there's a natural disaster.
Speaker 2: So
Speaker 3: On communications, for example, let's, you know, semiconductors was a, a big, uh, missing component that manufacturers in, in everything from refrigerators to computers, to cell phones, you couldn't get their hands on. So if, if the us was to bring that manufacturing back [00:13:00] or into the us, how would you, you know, that's a critical piece of equipment that that needs to be made, but how would the us do that? Would you, you know, we talked about the cost of, of business here is greater. Would the us, um, potentially be providing, um, subsidies to companies? Like how would you actually get some of those components to be made here?
Speaker 2: So, so in semiconductors, [00:13:30] you know, the us with the leader and the innovator on develop semiconductors and in 1990 had about 37% of the global capacity for semiconductors here in the United States. Now we're down to about 12% of global capacity. There is again, there's no need to make every semiconductor that we need for United States products in the United States, but we do need to make sure that we don't have another crisis like we're having [00:14:00] right now, where there is a global problem in accessing semiconductors. So you can incentivize investment in the United States by making sure that you are providing opportunities to sell to the federal go because we are a large purchaser. There are also tax strategies, grant strategies, loan strategies. There is a whole host of things that the federal government can do. The made in America office. Isn't directing all [00:14:30] pieces of the build back better program, but we are one piece and other components through president Biden's administration, as well as working with Congress are going to continue develop a lot of these strategies to build back those critical supply chains. I know we have time for just one last question.
Speaker 1: I'm gonna ask it. It's a follow up really to what Maggie said. Uh, you mentioned the pandemic, all of us have watched over the past year as ventilators were something that was in [00:15:00] the news because they were in short supply, protective equipment, face masks, et cetera. If there were another national emergency of some kind, you know, everything that saying makes sense logically, but from a timing perspective, right? What happens if next year there's a national emergency? What is the timeline that you're looking at to, to make sure that people understand that this can't be something that we discuss for five more years or eight more years? And do you actually see [00:15:30] movement in these supply change? And some of the things that you're talking about in the next 1, 3, 5 years,
Speaker 2: Absolutely. The, the president has already taken action and is working with Congress to take additional action. The, for instance, the Senate just passed its version of the infrastructure and jobs act and also to the budget reconciliation bill and these things implement parts of the president's American jobs plan and the build back better agenda. There [00:16:00] is a COVID task force that is looking for these important needs. You mentioned ventilators, it's also medicines vaccines, personal protective equipment. We are going, going to be ready because we're already continuing to experience these needs with, with COVID 19. Right now it's a long term agenda, but there are also short term gains and we are making a difference.
Speaker 1: I, I guess the bottom line, and maybe this is just a, you know, end up [00:16:30] as a tweet or something. When people think made in a America, a lot of people are behind the concept, but you know, all of the studies show that they're not voting where it matters with their dollars, they're buying less expensive goods. So there has to be some sort of a, you know, public awareness campaign or mind shift that people understand that perhaps buying something made in America might cost you more. We're not seeing reflected in the actual spending. We, the polls say yes, but not the spending. So is there something [00:17:00] you're doing or building into your plan to help fill in that gap?
Speaker 2: So I think one of the benefits of the president's creation of the made in America office is that it really gives the issue a high profile. And it puts it top of mind for contracting officers who are making purchases on behalf of the federal government for Congress and for all of America. I think there are many things that we can do to make sure that we have [00:17:30] the right amount of manufacturing in the United States, and then we're making crew goods. And, and one of those things is the president's use of the bully pulpit. He talks about this all the time. It's really important. It's not just the propaganda point. He believes that American workers and American firms given a level playing field and the right opportunities can accomplish anything. And he is putting his money where his mouth is, and this is a very serious agenda and we [00:18:00] are gonna make a difference.
Speaker 1: All right, I guess we'll leave it there. Thank you so much. Celest Drake, the first ever made in America do rector in the history of the us for taking some time to talk to us about what it means. Thanks.