Does the U.S. Need a “Clean Energy Marshall Plan”? Harris Advisor Says Yes

WALTER ISAACSON, CO-HOST, AMANPOUR AND CO.: Thank you Bianna. And Brian Deese, welcome to the show.

BRIAN DEESE, ECONOMIC ADVISOR TO HARRIS’ PRESIDENTIAL CAMPAIGN: I’m happy to be here.

ISAACSON: You just wrote a piece in Foreign Affairs Magazine, that place where foreign policy thinkers from George Kennan to yourself try out big ideas. And it’s called “The Case for a Clean Energy Marshall Plan.” As you mentioned, some of us roll our eyes when somebody says, A Marshall Plan for ending poverty, a Marshall Plan for rebuilding Gaza. Why is this different?

DEESE: Well, I think it’s different because of the scale of the opportunity and the US strategic positioning in the world right now. But let me start by just reinforcing your point. I think in general, Marshall Plan analogies are overused, but in this case we’re facing a very complicated international order today. A world that was largely defined by integration for several decades is now being defined by fragmentation. And the US is facing difficult questions about how it is that we maintain our leadership position in the world. And a lot of that is coming down to whether and how we can show up as a generous and genuine partner with allies and partners around the world, in regions of the world where we need to show up more genuinely. And when I back – went back and did some history reading on the Marshall Plan, one of the things that I think is most interesting and often misunderstood is that both Marshall and Truman at the time were motivated principally by trying to answer an important domestic question, which was, in the wake of the World War II mobilization, how do you extend economic gains that had been built across the country, but also do so in a way that advanced our strategic interest globally and were generous to our allies? And what they happened on was to have a system of very active efforts to try to encourage US production of goods and services, particularly for in– for infrastructure development to our European allies in a way that was principally communicated to the American public as an economic development strategy. And today, I think we are similarly positioned with respect to the energy transition, where we are seeing extraordinary growth of US industries today, extraordinary growth in new frontier technologies like nuclear and carbon capture batteries, advance storage. And the question is, how can we extend that economic opportunity and do so in a generous and genuine way with our partners and allies?

ISAACSON: Well, one of the reasons too, for the Marshall Plan was to stop the spread of Russian backed communism in Europe. And it was for strategic reasons like that. To what extent do you think a plan like you proposed is partly there to counter China and its belt and road initiatives?

DEESE: Look, I think we have two very high order strategic challenges as a country that we need a very clear answer to. The first is that climate change is going to accelerate and create accelerated risks to the planet, but also to our security through conflict migration, other issues. That’s why national security experts for years have been identifying this as a serious threat. But also we are increasingly in a period of great power competition. And so the question is, as we work with our allies strategically, what country is capable of actually showing up in a genuine and generous way and a way that actually can scale solutions that other countries are, are looking for? And so I think that we need to be very pragmatic and strategic in answering those questions.

ISAACSON: Let me read you a couple of phrases from your piece. You say that “climate will present the greatest economic opportunity and it will be the largest capital formation event in human history.” If that’s the case, why not just let the market and the private sector lead on this?

DEESE: Well, it’s a great question. I think it goes exactly to the opportunity that we’re talking about here, which is if you think about what is necessary to actually accelerate the energy transition, it’s in many cases whole scale transitions of not only the energy sector, how we produce and distribute electricity, but also our transportation sector, the built environment, where we live where we work, and how those systems operate and inter-operate that creates enormous need for capital, but also opportunity to de deploy that capital at scale. And that is compounded with the intersection of AI and the enormous appetite for data centers and associated energy needs. Creating, turning that challenge into an opportunity is what I think should be at the core of a clean energy marshall plan. But the reason why we need, we need public capital in that context is because the private sector on its own won’t invest quickly enough or at sufficient scale to actually hit the targets we need to avoid the worst impacts of climate change. Many of the opportunities we’re talking about are close to commercially viable, and therefore you could use public capital very efficiently – loans, loan guarantees, other risk mitigation measures that could actually facilitate much larger quantums of private capital in this context.

ISAACSON: Having been a top economic advisor, first to President Obama and then to President Joe Biden, you are now advising the – Kamala Harris’ campaign. Does she endorse this thing?

DEESE: I’ll leave the, the her her, her views and her endorsement on this separately. This reflects my, my, my own thinking. But I would say that one of the things that I think is potentially powerful about advancing a clean energy Marshall plan is it’s about harnessing and accelerating the very significant change that we’ve seen in the United States over the course of the last couple of years, which of course, vice President Harris and President Biden have been at the center at, which is for the first time in decades, we now have in the US a viable industrial strategy where we’re putting public capital behind infrastructure, clean energy development, the development of semiconductors and microelectronics. And as a result, we’re seeing a boom in manufacturing construction, a boom in investment in some of these frontier technologies, which positions the US for the first time to actually play this leadership role.

ISAACSON: A lot of your fellow Democrats, including Vice President Harris, when they talk about inflation, talk about greed-flation or sometimes price gouging. Tell me in your own mind, does that lead to something like price controls or is there a better way to fight that?

DEESE: No, I don’t think it leads to price controls, and I certainly don’t think that that’s what Vice President Harris has been referencing. I think that–

ISAACSON: There are a lot of republicans accusing her of saying she wants price controls, so you’re pretty much saying, no, she’s not in favor of price controls.

DEESE: No, it’s, I think that’s, that’s either a misunderstanding or a deliberate misinterpretation. I think that what she has spoken about is the need to have rules in place so that in periods of emergency or other periods of exigency that there are basic consumer protections in place. Some people don’t necessarily recognize that there are price gouging statutes and frameworks in place in 40 of the 50 states. They have been evoked in various moments including during the pandemic to make sure that at those moments of exigency consumers are not taken advantage of by companies that are willfully trying to use their market position to raise prices. That’s a sensible part of our regulatory environment, and that’s a sensible part of how you protect consumers in those periods. But I would also say neither Vice President Harris nor I think the president have focused on that to the exclusion of other incredibly important policies that would help to continue the progress in lowering prices.

ISAACSON: Another part of the democratic proposal that’s been attacked quite a bit by Republicans is the concept generally of a wealth tax, of taxing not just income, but of wealth and sometimes unrealized capital gains being taxed. What do you think of that and what do you see as the position of the Democrats at the moment on that?

DEESE: Look, I think that the president and the vice president as well have operated from a pretty basic set of principles when it comes to this issue. The first is that we need to reform the way we tax corporations in the United States to make sure that corporations are actually contributing a reasonable amount to our tax base. The 2017 tax law, the Trump tax cut very significantly undermined that brought the top corporate tax rate down significantly and also changed the international incentives in a way that if we don’t actually work globally actually encourages companies to shift production and also IP abroad as a way of avoiding US taxes. So we need to have an approach that both taxes large corporations more, but also smarter so that we are not encouraged, we’re discouraging that type of effort to move production and facilities.

ISAACSON: Well, what about an individual wealth tax or a unrealized capital gains tax?

DEESE: Yeah, I think the other, the, the second core principle is that the very wealthiest Americans should be paying a minimum amount of their income and taxes so that we can avoid the current disparity we have in our tax system, where where the wealthiest Americans actually end up paying a much lower tax rate than typical people whose income is, is coming from from work, and they’re, they’re paying that on their their W2 every every pay period.

ISAACSON: Well, wait, explain to me when you say income, do you also mean capital gains, unrealized capital gains, the investments people have in either their businesses or their homes?

DEESE: Well, so, so for example, the, the president has proposed for some years the, the concept of a a, a billionaire minimum tax, which would impose a minimum tax rate on the wealthiest Americans, those making over a hundred million, those with over a hundred million dollars in in wealth. And the what, what it would do is it would essentially make sure that on an annual basis they were paying some minimum rate. I think that that structure, that concept is reasonable and is the kind of thing that we need to work toward a solution to in in the US because the current system is not only unfair in the sense that the very wealthiest shouldn’t be paying an effective tax rate that is much lower, but it’s also not allowing us to fund the key priorities that we need to as a country, whether it’s to meet our national security needs or to provide more support and relief on prices to lower income families. We were talking about this before, and one of the things that Vice President Harris has talked about is wanting to provide more tax relief directly to working families, folks who are middle income through, for example, an expansion, a permanent expansion of the child tax credit. That is a economically smart thing to do. It would directly address the cost pressures that most people are facing, and we should finance that in a responsible way. So there’s a, there’s a need for this type of tax reform if we’re going to make the investments that we need as a country as well.

ISAACSON: You talk about these tax cuts, I think Penn, University of Pennsylvania, Wharton School has done studies said that that Vice President Harris’s plan would add maybe 1.2 trillion to the deficit over the next 10 years. And of course, Trumps they say would add 5.8 trillion to the deficit over the next 10 years. Have we Americans quit worrying about the deficit as much as we should?

DEESE: Well, I can’t speak for all Americans, but I can certainly – I, I, I know that Vice President Harris is quite focused on it. That study that you mentioned was incomplete in that it left out a number of of proposals that she supports that would actually raise revenue. And so if you look at her approach as a whole, her plan would actually reduce the deficit. But I think the thing that is striking that you just raised is how large a gap there is between the approach that the vice president is putting forward, which is to invest in middle class families to raise taxes on corporations in the very wealthiest Americans and do so in a way that doesn’t increase the deficit and what what Donald Trump is putting forward because the, the degree to which he is prepared to expand the deficit is breathtaking and unprecedented for a modern presidential candidate. Some, you know, that analysis found between five and 6 trillion, others have it at more like seven, eight, even $9 trillion. We’re talking about just an extraordinary erosion of our tax base and our fiscal position. And I think that is actually one of the biggest differences economically in this election, is that approach to fiscal discipline.

ISAACSON: One of the things in your piece is the notion of using tariffs very strategically. We’re all back to talking about tariffs again, and you had a plan in which you would base a tariff on the carbon consumption that was caused by whatever product there may be a tariff on. Explain to me how that would work.

DEESE: Yeah, well, I think, look, when I think about where we should evolve this conversation, we need to think about using tariffs in a more strategic way. And I think there’s two ways we could do that. One is to multi-lateralize that effort, meaning try to work with partners and allies to harmonize tariff responses, importantly, when we’re thinking about China, so that we are bringing to bear a broader coalition to try to help change China’s behavior when it comes to some of the non-market and illegal actions they’re taking, including in trying to build this excess capacity. And frankly, we’re already seeing that effort to multi-lateralize happen. We’ve seen the EU and Canada, for example, move to harmonize their approaches to electric vehicles with the United States. We’ve seen countries as diverse as Brazil and Chile and Vietnam raising concerns directly, for example, about Chinese steel over capacity and dumping. So that’s one piece is we need to multilateralize. And the second is, I think we should think about reflecting the carbon content. When we think about tariffs. This, this is a, a relatively straight forward idea, which is if China is producing steel, for example, and doing so in an incredibly dirty and emissions intensive way we should reflect that in the tariff rates that we’re imposing on Chinese steel because, for two reasons. One, to level the playing field but the other is to encourage China to pursue more – less energy intensive and more efficient means of production.

ISAACSON: Yeah. But both parties are now talking about tariffs a lot more than they did before, and you grew up, and I certainly grew up in an era in which free trade was almost a gospel, and yet when you’re looking at all the problems you’ve written about in your piece, part of it is we don’t have as much manufacturing here. We don’t have as much in many factories in the United States. Was it a bit of a mistake to have a tariff and free trade regime that allowed the offshoring of our manufacturing capacity, and should we rethink the whole notion of having some tariffs that would protect our own manufacturing?

DEESE: Well, look, I think we are, we’re fundamentally rethinking that in in real time. I think the first and most important element of that, from my perspective, is that we as a country lost sight of how important it is that we have an industrial strategy to invest in sources of economic strength and building our own capacity domestically. So that’s number one. And we’ve made a ton of progress to correcting that with historic investments in infrastructure, historic investments in clean energy. The second is a more clear-eyed recognition that allowing China to ascend into the global economy by using a deliberate strategy of creating over capacity externally and actually invest under investing domestically is not a is not benign that distorts the global economy. We need a more balanced regime where we have diversified supply chains. And that doesn’t require a strategic effort to try to use tariffs, but harmonize them in areas that are strategic. But I think the third point that is very important is we need to make clear that the goal of that is a balanced regime where we are, we are taking risk out of supply chains and we are creating more diversification. And the goal is not some view of the world in which we, we can fundamentally sort of rip apart economies and and for example, decouple China from the global economy and maintaining that balance and getting ourselves to a new equilibrium that is more clear-eyed about those things is challenging. But I think it is the strategic imperative for the country. And and we are not going to go back to a regime that just sort of presumes that that with the reduction of barriers and the reduction of investments in our own capacity, that we will end up in an economically acceptable outcome. I think we’ve seen that that’s not the case. And I don’t think we’re going back there.

ISAACSON: Brian Deese, thank you so much for joining us.

DEESE: Thanks, Walter.