Biden’s big manufacturing incentives are starting to have a big impact

Joe Biden made bringing manufacturing jobs and investment back to the U.S. a cornerstone of his presidential campaign in 2020. While he has yet to formally announce a widely expected reelection bid, the president will likely lean heavily into two major legislative wins during his term that unlocked billions to support new U.S. manufacturing—last year’s Inflation Reduction Act and the CHIPS and Science Act.

Together, the two landmark acts inject over $400 billion into clean energy technology and semiconductor manufacturing in the form of government incentives and subsidies, as well as create thousands of new jobs. It’s been less than a year since the two packages were passed, but the fresh funds appear to be accomplishing some of Biden’s goals already.

U.S. companies have committed over $200 billion to new manufacturing projects since the bills passed, according to a Financial Times analysis Sunday. The largest investment has been in clean tech and semiconductors, where new financing is almost double what it was in 2021 and nearly 20 times above 2019 levels. The number of large projects that have attracted more than $1 billion has also exploded, up from four in 2019 to 31 currently, the FT found.

The key stipulation in the legislation that has attracted more investment is that manufacturing must be done in the U.S., a ruling that hasn’t gone down well with traditional allies including France and South Korea, which have criticized the Biden administration for advancing a protectionist agenda. Some Republicans have also slammed aspects of the large spending packages, including the IRA’s $80 billion provision to strengthen the IRS, and criticized the CHIPS Act for being “woke,” because it prioritizes funding for companies that provide childcare and use labor union agreements for construction. 

Despite the backlash, Biden and Democrat officials have championed the growth of U.S. manufacturing jobs, recently comparing it favorably to job growth under former President Donald Trump. 

“The last administration talked a lot about bringing jobs back to America, but failed to take real action. President Biden is taking action and delivering results—creating good-paying manufacturing jobs at home,” Jeff Zients, the White House’s chief of staff, said of the recent jobs boom in a statement to Fortune, adding that the government’s current leadership is eyeing more growth in the future.

An American manufacturing boom

Job creation has been a key selling point for the Biden administration, and could become more important during Biden’s likely reelection campaign. 

The White House claimed in December that the U.S. had added over 750,000 new manufacturing jobs since Biden took office. And while much of that boom in 2022 was due to manufacturing jobs rebounding from pandemic-induced historic lows, the spending packages are likely to drive more job growth in the sector.

Over 100,000 new jobs in clean tech, including EV mechanics and wind turbine construction workers, were added in the six months since the IRA and the CHIPS Act were passed in August, according to a January study by the nonprofit group Clean Power, largely owing to businesses tapping new government resources to expand operations.

Some in Congress have continued to criticize the spending package, including Democrat Sen. Joe Manchin, whose signature was vital to the Inflation Reduction Act’s passing last year. Manchin, who has subsequently been critical of the IRA’s tax credit provision for electric vehicle buyers, claimed in a Wall Street Journal op-ed last month that the law had been distorted to “advance a partisan agenda” and risked increasing “clean-energy spending to potentially deficit-breaking levels.”

While the packages have already helped boost U.S. manufacturing, the spending involved has come under renewed criticism recently for higher-than-expected costs. Last month, Goldman Sachs analysts found that subsidies from the Inflation Reduction Act would actually cost around $1.2 trillion, three times as much as what had been originally earmarked. Conservative observers criticized the higher price tag, although the Goldman analysts added that the subsidies would also trigger $3 trillion in private sector investment.

Investment in semiconductor research and production is the other big recipient of new funding from the legislation, according to the FT. The Biden administration has said semiconductor manufacturing is important for national security too, warning that slowing technology research puts the U.S. at a disadvantage to rivals like China, while a reliance on international supply chains puts the country at risk of supply shocks in the event of global economic disruption caused by war or a pandemic.

Last week, U.S. Commerce Secretary Gina Raimondo told CNBC that over 200 companies from different sectors had expressed interest in CHIPS Act funding. Several U.S. chip companies have already received billions to expand their operations, including projects for massive new plants in North Carolina and Syracuse, N.Y.

Overall during the past eight months, companies making semiconductors, electric cars, batteries, and renewable energy materials have announced plans for nearly 75 plants worth over $100 million, according to the FT report. 

The spending packages passed last year have “catalyzed” expansion of private sector jobs and manufacturing capacity in the U.S., a Department of Commerce official told Fortune, adding that the department projects more growth as more companies start tapping government funding.