Biden's economic plans will shift investment to 'forgotten' US cities

The Biden administration's recently enacted spending plans for green energy, technology and infrastructure will shift investment more broadly across the United States, not just to prosperous coastal cities, Treasury Secretary Janet Yellen plans to argue on Thursday.

In excerpts from a speech Yellen is due to deliver in Detroit, she said the administration's economic agenda is both "pro-growth and pro-fairness."

Yellen has labeled Biden's economic agenda, including earlier, unrealized plans for more spending on child care and education, as "modern supply side economics."

Unlike the Reagan-era term that focused on tax cuts and deregulation to encourage productive investments, Yellen will argue that her version will focus on a range of investments to boost productivity across more "sectors, people and places."

This includes investment in communities previously "forgotten and overlooked" by new and growing industries, which may generate higher returns, Yellen said in the excerpts seen by Reuters.

"We know that a disproportionate share of economic opportunity has been concentrated in major coastal cities. Investments from the Biden economic plan have already begun shifting this dynamic," Yellen said.

"Given its manufacturing focus – and manufacturing's reliance on strong infrastructure and supply chains – we expect to see dollars catalyze innovative investments across cities and towns that haven't seen such investment in years."

Yellen's speech in Detroit, which has suffered from a major shortage of semiconductors that has curtailed vehicle production, is part of a part of a multi-city speaking tour this month to tout President Joe Biden's recent legislative achievements in the run-up to congressional elections in November. 

These include this summer's legislative packages to invest in green energy, healthcare, semiconductors and research, as well as tax enforcement and last year's infrastructure investment plan.

Under the $52.7 billion CHIPS and Science Act, the Commerce Department will spend $10 billion over four years to establish 20 technology and innovation "hubs" that bring together state and local governments, universities, businesses and labor groups to develop local technology intensive industries and jobs. Yellen said these would be geographically dispersed with a priority for "underserved and underrepresented" areas.

"Such dispersal of economic opportunity across the country will mean good new jobs in industries of the future," Yellen said in the excerpts, with "cascading economic progress for local communities."