DPA: A Potent Solution to Gridlock and Climate Needs

At the Year One mark for Biden and a gridlocked Congress, it’s time to turn to executive powers to address the climate crisis and other pressing needs.

Ergo, I give to you our latest @RooseveltInst brief on the Defense Production Act. Thread👇 (rooseveltinstitute.org/publications/p…)

The DPA was first passed in 1950, but it is based on older precedents from the world wars. It has been renewed over 50 times on a bipartisan basis, and blessed repeatedly by the courts — most recently in December 2021. (chicagolawbulletin.com/judge-upholds-…) The Act gives the president powerful tools to intervene on both the demand and supply side of the economy. Among its purposes are to promote:

- A broad definition of the national defense, including a healthy civilian economy
- Emergency preparedness, including resilience across 16 critical economic sectors from health care to telecom

- Small business and regional resilience throughout the US to fight economic concentration at home and abroad, and
- Smart industrial policies, including particularly in energy industries

The DPA is used 100s of thousands of times a year — primarily by the Defense Department. It has also been used to:
- Keep electricity flowing during the 2000 California energy crisis
- Help start-ups over the “valley of death”
- Promote renewable fuels (energydigital.com/renewable-ener…)

Over the last few years, DPA use has upped still more, helping:
- Scale up testing and alternative care centers
- Transition the government to telework and more COVID-safe facilities
- Onshore medical supply chains
- Increase civil aircraft flights to aid in the Afghan evacuation

The DPA has a wide range of applications to fight COVID, the climate crisis, and other challenges. In a blog also released today, we explore two: expanding domestic solar panel production, and greening the domestic steel industry. (rooseveltinstitute.org/2022/01/20/how…)

In the coming weeks, Biden will have to decide whether to extend tariffs (technically called safeguards) on imported solar panels. (pennlive.com/opinion/2022/0…) The stakes are high: China has come to dominate global solar panel production, partly on the backs of forced labor. In contrast, there is no US production of some key types of solar panels. (foreignpolicy.com/2021/07/14/us-…) The solar importer association opposes the tariffs, saying the cost of using US workers is too high. They favor, however, subsidies in Build Back Better. (solarpowerworldonline.com/2021/11/u-s-in…)

The DPA gives Biden a tool to “yes, and” the solar importers. Namely, he could gift equipment and other costs of production to domestic, small, and Black-owned businesses willing to produce all over the US. Coupled with the price supports offered by the safeguard, it’s a win-win.

The DPA could also be used to further drive down carbon emissions in the domestic steel sector. Recall that, last fall, the administration announced a historic Green Steel Deal with the EU. While the terms are still being hashed out, it envisions using market power to drive down emissions. See me and @bentleyballan on how this deal made history. (washingtonpost.com/politics/2021/…) However, some have argued the deal could simply lock in current levels of emissions in the US steel sector, which is clean compared to China’s, but not 0. In that reading, incumbent industries get a pass and climate gets 0. See me & @Tim_L_Meyer here👇 (ielp.worldtradelaw.net/2021/11/respon…)

The DPA provides a vital domestic complement to the international steel deal. As with solar panels, the Act allows free installation of zero carbon equipment in US steel mills. This technology exists — and is already in use. (cnbc.com/2021/08/19/fir…)

These expanded uses of the DPA meets the call of @PramilaJayapal @USProgressives and others who are calling on Biden to Build Back Better through executive action. (progressives.house.gov/press-releases…) It represents a way for Biden to further shift the governing philosophy of the US away from neoliberalism and towards socially embedded liberalism, with countervailing powers to check the rich, as @FeliciaWongRI and @EzraKlein have recently written about. (foreignaffairs.com/articles/world…) It offers a chance to address the failings of our anti-democratic institutions (see this piece out today from @SuzMKahn) by using long-established democratically delegated powers.

There are ways to make the DPA more streamlined and effective, which we discuss in the brief. That could include making certain findings and declarations that could unlock more of the DPA.

Thanks for your read. This marks the second in our ongoing issue brief / blog series on a Distinctly American Industrial Policy. Stay tuned for more installations to come! (rooseveltinstitute.org/2021/10/26/dis…)

(Adapted from this thread.)

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Director, Industrial Policy & Trade, Roosevelt Institute / Roosevelt Forward. Teach, Johns Hopkins. PhD. Political scientist researching economic transitions.

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Todd N. Tucker

Director, Industrial Policy & Trade, Roosevelt Institute / Roosevelt Forward. Teach, Johns Hopkins. PhD. Political scientist researching economic transitions.