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Biden aims to repair places left broken by previous economic strategies

MILWAUKEE - President Biden, speaking Wednesday in a community that he cited as a painful example of racist urban policy, highlighted a new economic strategy aimed at revitalizing places that for decades have been cut off from the nation’s growing prosperity.

Biden spoke at a Boys and Girls Club of Greater Milwaukee in a largely Black and Latino neighborhood where 17,000 homes and 1,000 businesses were destroyed in the 1960s to make way for an interstate highway. The president’s trip, which includes a stop in Michigan Thursday, is part of an effort to court minority voters in states that are key to his political future.

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In conjunction with the Midwestern swing, the White House unveiled $3.3 billion in federal grants to remove or retrofit highways that separate minority neighborhoods in many cities from jobs, entertainment centers, hospitals and other services.

“Too many communities across America faced the loss of land, wealth and possibilities that still reverberate today,” Biden said. “Today we’re recognizing that history to make new history.”

Milwaukee is one of 132 communities in 40 states that will benefit from the Transportation Department program, which is among a number of new federal initiatives designed to aid places suffering long-term economic ills, officials said.

“For communities too often left behind, we’re rebuilding the roads, we’re repairing cracks in the sidewalk,” Biden said. “We’re creating places to live and play safely and to breathe clean air.”

Biden’s embrace of strategies aimed at spurring development in specific locations marks a significant shift in U.S. policy, part of the broadest government intervention in the economy in at least four decades and one with significant political overtones. States such as Wisconsin are critical to Democratic hopes in November, and Biden’s appeal to Milwaukee’s large number of Black voters may decide his fate there.

The administration’s “place-based” approach aims to use a mix of spending and tax credits to spread prosperity more evenly, rebuild communities devastated by the loss of factory jobs and prevent blight in areas that otherwise would suffer during the transition to cleaner energy sources.

If it succeeds, the effort could in theory help heal an economic divide that has fueled political resentment and convinced millions of Americans that Washington has abandoned them to decay.

“People and capital are trapped in places where the prospects are not that good,” said Simon Johnson, an economist at the Massachusetts Institute of Technology. “This is a big country with a lot of space. Let’s have economic development where people want it.”

Transportation Secretary Pete Buttigieg, previewing the program earlier in the week, told reporters that “the very fact that American English has the phrase ‘wrong side of the tracks’ tells you everything you need to know about our awareness in this country of how infrastructure can divide just as sure as it can connect.”

But in seeking to focus federal power on reviving downtrodden communities, the president is gambling on a set of policies with a mixed track record. Even its supporters acknowledge that Washington may struggle to sustain the decades-long effort that some distressed areas would require to heal.

“This is just not something that happens overnight. We should be thinking of this in a multigenerational context,” said John Lettieri, chief executive of the Economic Innovation Group, a bipartisan think tank that, among other things, focuses on economically distressed areas.

The political stakes for Biden’s visit to Milwaukee were also evident. His campaign announced this week that it was basing its Wisconsin operation in Milwaukee, the most racially diverse city in the state, part of an effort to consolidate the coalition that helped Biden win Wisconsin by nearly 21,000 votes in 2020.

Biden has made addressing racial inequity a key aspect of his presidency, and now his reelection bid. He was elected in 2020, after the killing of George Floyd, amid calls for criminal justice, education and policing reforms.

Biden, facing energetic opposition from Republicans, has failed to push through several bills of widespread importance to Black Americans and other minorities. There has been no sweeping police and criminal justice reform, and efforts to codify voting protections into federal law died in Congress. Biden did sign an executive order in 2022 aimed at preventing and punishing police misconduct.

His aides say the administration has delivered other gains, including historic appointments to the courts, including that of Justice Ketanji Brown Jackson, and the selection of Vice President Harris as the first Black, Asian American and woman in her role. Biden has also said that equity is baked into individual provisions of laws like the Inflation Reduction Act.

On Wednesday, he stressed his initiatives that have disproportionately benefited Black Americans, everything from capping the price of insulin for Medicare recipients to increasing the Black employment rate. Trump and his Republican allies, the president said, are trying to undo much of the progress his administration had made in recent years.

Even as he battles for political support, the president is also intent on cementing his economic legacy. His industrial policies, including the place-based efforts, have reoriented Washington toward a more active economic role.

About 20 individual programs in the Bipartisan Infrastructure Law, the Inflation Reduction Act and the Chips and Science Act are likely to sprinkle tens of billions of dollars across the economy over the next half-decade, the largest such geographically focused effort in years.

“This is a sea change,” said Mark Muro, a senior fellow at the Brookings Institution.

Many of the programs, especially those aimed at promoting domestic semiconductor production, enjoy bipartisan support. But lawmakers have not always fully funded them.

The Chips Act, for example, authorized $10 billion in funding over five years to establish 31 tech hubs in communities across the country, an effort to promote technology development outside Silicon Valley and other longtime industry centers.

But lawmakers ultimately appropriated just $500 million for the hubs. In October, the Commerce Department named sites in 32 states as eligible to apply to receive the first implementation grants of $40 million to $70 million each.

Economists long favored targeting people rather than places for government help. But that began to change as the shared growth of the immediate post-World War II era gave way to a more uneven pattern. Some hard-hit areas - like former coal-mining towns and factory communities in the Midwest - have now suffered for years with low employment rates and chronic social ills.

Wednesday’s presidential visit to Milwaukee was part of an all-hands-on-deck administration effort to promote Biden’s economic policies, as the president faces pressure to improve his poll numbers in coming months. Treasury Secretary Janet L. Yellen, for example, traveled to Elizabethtown, Ky., visiting Advanced Nano Products, a maker of materials used in electric-vehicle batteries.

White House officials distinguish Biden’s approach from what they call the failed “trickle-down” policies of the past. Emphasizing low tax rates and deregulation, while trusting the market to allocate capital to worthy projects, resulted in growth, that was markedly lopsided, they said.

An approach centered instead on leveraging the advantages of specific communities will narrow the regional divide in economic outcomes, the officials contend. Over the past few decades, as innovative technologies drove growth, jobs and wealth have become more concentrated in a few coastal cities while other areas languished.

Between 2005 and 2017, according to Brookings, about 90 percent of all high-tech jobs sprouted in five metro areas: Boston, San Francisco, San Jose, Seattle and San Diego.

Americans who once routinely moved in search of opportunity also became significantly less mobile as the high cost of housing in job-rich places often made relocation prohibitively expensive.

In 2022, just 8.7 percent of Americans moved - close to an all-time low and down from more than 20 percent in the mid-1980s, according to the Census Bureau.

“The market failure, we think, is pretty clear,” said a White House official, who spoke on the condition of anonymity to discuss the initiative before it was formally announced.

Biden’s approach seeks to help downtrodden communities by improving outdated roads, bridges and telecom connections; attracting private funds to invest alongside the government; and eliminating physical barriers to opportunities, such as the interstate highways that were plowed through many African American neighborhoods in the 1950s and 1960s.

Officials say they intend to “stack” or combine multiple federal initiatives in individual locations in hopes of overwhelming entrenched problems. In a recent speech, the director of the National Economic Council, Lael Brainard, cited Milwaukee and Allentown, Pa., as evidence of early success.

These place-based strategies echo moments from the nation’s past, such as President Franklin D. Roosevelt’s 1933 legislation establishing the Tennessee Valley Authority, which spurred regional development with electrification and flood control. In the 1960s, the Appalachian Regional Commission helped spur highway construction across one of the nation’s poorest areas.

“TVA and ARC both worked. Of course, they were a sizable amount of resources,” said Tim Bartik, senior economist with the W.E. Upjohn Institute for Employment Research.

Other geographically targeted initiatives have drawn more criticism. President Donald Trump’s 2017 tax legislation created “Opportunity Zones,” which were intended to benefit low-income areas. But critics said they facilitated investments that mostly would have happened in any case.

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