Defense Production Act of 1950, passed to streamline production during Korean war, was last used during Covid pandemic
The White House has announced it plans to use a cold-war era law to ease supply chain issues that the administration argues are contributing to higher inflation – a key electoral challenge to Joe Biden’s re-election chances next year as polling consistently suggests voters are not buying his Bidenomics pitch.
In a statement, the White House said Biden will use the Defense Production Act to improve the domestic manufacturing of medicines deemed crucial for national security and will convene the first meeting of the president’s supply chain resilience council to announce other measures tied to the production and shipment of goods.
“We’re determined to keep working to bring down prices for American consumers and ensure the resilience of our supply chains for the future,” said Lael Brainard, director of the White House national economic council and a co-chair of the new supply chain council, in a separate statement.
The Defense Production Act of 1950, which was passed to streamline production during the Korean war, was last used in early 2021 during the coronavirus pandemic to accelerate and expand the availability of ventilators and personal protective equipment.
The supply chain council is set to address issues ranging from improved data sharing between government agencies, supplying renewable energy resources and freight logistics.
Jake Sullivan, the White House national security adviser, will be co-chair of the council, which includes the heads of cabinet departments, the administration’s council of economic advisers, the US director of national intelligence, the Office of Management and Budget, and other agencies.
Monday’s announcement arrived as the US economy appears to be doing well on paper. But the White House has acknowledged that improving economic picture is not shared by consumers, and the administration has explicitly tied the economy to the president by calling it Bidenomics.
A recent Economist/YouGov poll found that only 39% of voters approve of Biden’s handling of jobs and the economy. And a separate Reuters/Ipsos poll puts the economy as the most important issue to Americans for the past two years.
Even as the pace of inflation has slowed, consumers are shouldering an economic burden they had not experienced in years. Prices have risen as much in the past three years as they had in the previous decade, according to a report by Bloomberg, and it now costs almost $120 to buy the same goods and services a family could afford with $100 before the pandemic.
According to Bloomberg, groceries and electricity are up 25%, used car prices have climbed 35%, auto insurance 33% and rent roughly 20% since January 2020. Housing affordability is at its worst on record. Auto-loan rates and credit card interest rates are also at a peak.
As a result, many Democrats say it is time for Biden to adjust the economic message ahead of the 2024 election.
In a statement, the White House said that “robust supply chains are fundamental to a strong economy”.
“When supply chains are smooth, prices fall for goods, food, and equipment, putting more money in the pockets of American families, workers, farmers, and entrepreneurs,” the statement added.
“Supply chain stress has eased measurably over the past year and the Biden administration’s announcement is another step in the right direction,” the Moody’s economist Jesse Rogers said.
Rogers added: “While unlikely to resolve some of the more complex issues plaguing supply chains in one go, measures targeting pharmaceuticals, climate infrastructure, data security and logistics will bolster resilience and get the ball rolling on smart infrastructure and global cooperation.”
In addition to domestic production measures, the administration said it will work to strengthen global supply chains internationally, including by developing early warning systems with allies and partners to detect and respond to supply chain disruptions in critical areas.
Those include measures “to improve the weather, water, and climate observing capabilities and data-sharing” with countries “needed to produce global climate information and minimize impacts upon infrastructure, water, health, and food security”.