In a compelling address to the Economic Club of New York, Deputy Secretary of the Treasury Wally Adeyemo shared insights into the Biden-Harris Administration’s groundbreaking investments aimed at unlocking the United States’ untapped economic potential.
A Unique Set of Economic Challenges
Mr. Adeyemo began by acknowledging the unprecedented economic challenges the nation has confronted over the past three years. The backdrop includes a global pandemic and Russia’s unlawful invasion of Ukraine, which together contributed to mounting global inflationary pressures. Despite these headwinds, the United States stands out as a beacon of economic resilience. It boasts a remarkable feat of outpacing other G7 nations in economic growth while maintaining lower levels of inflation.[1],[2]
The administration’s unwavering focus remains on a two-pronged mission: tackling inflation while nurturing a robust labor market.
Unlocking Economic Potential Through Targeted Investments
The cornerstone of this strategy revolves around channeling investments to unleash the untapped potential within the U.S. economy. At its core, this commitment is underpinned by a dedication to extend economic opportunities across the nation. It aims to halt the troubling surge in economic inequality that has persisted over the last four decades and rejuvenate marginalized communities, which have long been excluded from prosperity.
Closing the Opportunity Gap for Economic Growth
Income data tells a stark story of growing economic disparity. From 1979 to 2021, the average annual wages of the top 0.1 percent of earners skyrocketed more than 16 times faster than the bottom 90 percent.[3] To address this, the administration is intensifying efforts to bridge this opportunity gap, emphasizing that doing so through investments in these communities is not only consistent with moral principles but is also vital for sustained economic growth.
Investing in People for Economic Momentum
Historical data demonstrates how investments in human capital can drive economic prosperity. In the latter half of the 20th century, as educational attainment levels increased across America, this contributed significantly to productivity growth.[4] Enhanced opportunities for women and Black men to access skilled jobs accounted for up to 40 percent of U.S. GDP growth from 1960 to 2010.[5]
However, despite these evident economic advantages, opportunities remain concentrated in a select few zip codes. The challenges faced by urban neighborhoods, including those in New York City, are well-documented. Still, there’s often inadequate attention given to the lack of opportunity for the one in five Americans residing in rural communities.
Addressing Rural Economic Disparities
Historically, rural areas have grappled with higher unemployment rates, lower labor force participation, and reduced wages compared to urban counterparts. The impact of economic downturns has hit these communities harder. Access to essential resources like broadband also lags in rural areas, with over 22 percent of rural Americans lacking adequate access compared to about 6 percent of the entire population.[7]
Nonetheless, the Biden Administration’s targeted policies are turning the tide. The American Rescue Plan allocated $20 billion to rural healthcare providers. The Inflation Reduction Act (IRA) represents the largest investment in rural electrification in eight decades, offering $13 billion in incentives for clean energy projects, thereby generating employment opportunities and fostering growth. Furthermore, the administration is funneling $75 billion into providing universal access to high-speed internet, which will significantly enhance rural broadband coverage.[8]
Broadband for All: A Bridge to Equality
These investments aren’t just limited to rural areas; they also address issues facing communities of color. Access to high-speed internet, for instance, is an obstacle both rural and minority communities confront.
Mr. Adeyemo recounted his firsthand experience living on the South Side of Chicago during the pandemic, where many Black and Brown children struggled with their education due to a lack of broadband access. In 2020, one in five children in Chicago lacked such access, disproportionately affecting communities of color.[9] The Biden Administration’s universal broadband investments are rapidly closing this gap, ensuring that children can learn effectively from home and small businesses can seize digital opportunities. These investments are rooted in a fundamental truth: potential exists in every American community, but opportunity is not equally distributed.
Mr. Adeyemo’s focus is now on collaborating with Secretary Yellen to implement the IRA in line with the President’s aim to reduce inequality. Early data suggests they are making progress, with nearly two-thirds of investments in IRA-related sectors targeting counties with above-average poverty rates, lower college graduation rates, and below-average weekly wages.[10]
Securing Shared Prosperity for America’s Future
In closing, Deputy Secretary Adeyemo emphasized how the Biden Administration’s economic strategy, coupled with these momentous investments, harnesses the potential of both people and places to propel the nation toward its economic zenith. He looks forward to discussions on how this approach will pave the way for shared prosperity in America for decades to come.