Sen. Elizabeth Warren, D-Mass., a top contender for the Democratic presidential nomination, proposed Tuesday replacing the Commerce Department with an “Department of Economic Development” that would copy China’s economic development policies. The resulting entity would also absorb about a dozen other federal agencies and have the mandate of “creating and defending good-paying jobs.”
“The Department will be responsible for creating a National Jobs Strategy (NJS) every four years, just as countries like Germany and China produce regular strategic plans,” the Warren campaign explained in a proposal posted on the website Medium. “The NJS will be a long-term plan that examines the worldwide economic environment and identifies new risks and opportunities.”
Throughout the proposal, the Warren campaign suggests the U.S. should copy the kind of central planning done by Beijing, chastising the current and past presidential administrations for not adopting this approach in order to “aggressively intervene” in the U.S. economy. “China’s Made in China 2025 plan aims to dominate advanced manufacturing in the coming decades using various incentives and ‘hundreds of billions of euros’ in subsidies. … This is a pretty straightforward idea. But outside of the defense context, the United States has nothing remotely like it,” the proposal said.
The new department would direct federal funding for research and development and mandate that the funding be distributed geographically so that companies in urban areas are not the main beneficiaries.
The government would retain an equity stake in the funding it supports and be authorized to require the companies to pour profits back into domestic production, further research and/or worker training programs. It would also be able to prohibit subsidized companies from engaging in stock buybacks.
Veronique de Rugy, senior research fellow at George Mason University’s Mercatus Center, said the proposal was just “moving the chairs” around. “She certainly isn’t the first or the last to offer to create a new agency to host a slew of ineffective programs,” de Rugy said. “How is she proposing to create ‘good American jobs’? The government has a terrible track record at creating jobs.”
The proposed new department would also absorb agencies such as the Small Business Administration, the Patent and Trademark Office and the U.S. Trade Representative’s Office. The proposal would require a vast expansion of the Export-Import Bank, which provides financing for foreign purchases of U.S. goods, though the bank would remain separate from the new department.
“We must spend more to boost American exports so we can level the playing field for American workers. And while historically a large chunk of the Export-Import Bank’s support has gone to a handful of big companies, our export promotion should focus more on smaller and medium-sized businesses,” the proposal argued.
The campaign does not put a price tag on the proposal, though it said it would increase federal spending on apprenticeship programs to $20 billion, a tenfold increase.
