Source- Reuters
Private Investment Boom in Red States Linked to Biden’s Legislation
Republican states in the United States are reaping the rewards of private investments spurred by President Joe Biden’s signature legislative achievements, despite every Republican in Congress voting against them. The $3.5 billion battery plant in South Carolina by battery recycling company Redwood Materials is just one example of this trend. The plant, expected to create 1,500 jobs and power over a million electric vehicles annually, cites the 2022 Inflation Reduction Act (IRA) as a key factor in its decision to build.
Red States Lead in Investment Flows
An analysis by Fitch Ratings reveals that 51% of investments directly linked to incentives from the IRA and the CHIPS and Science Act are flowing to Republican states, compared to 20% to Democratic states. Fitch defines red states as those where former President Donald Trump secured over a three-percentage-point lead in 2020. Another 29% of these investments are going to swing states, decided by fewer than three points in 2020, including Arizona, Georgia, Nevada, North Carolina, Michigan, Pennsylvania, and Wisconsin.
Job Creation and Economic Impact
Approximately 50% of jobs resulting from investments linked to the IRA and CHIPS Act are expected to be in red states, compared to 17% in blue states, according to Fitch’s analysis. An additional 33% is anticipated in swing states. While manufacturing jobs have been gravitating to the South and West for decades due to cost-effectiveness and skilled workforces, these legislative acts are accelerating the trend.
Examples of State-Specific Wins
Idaho, a state that strongly favored Trump in the 2020 election, is a major beneficiary of the CHIPS Act, with Micron beginning construction on a new memory manufacturing plant in Boise. Texas, which does not have a corporate income tax, is attracting significant investments, with 20% of funds linked to the IRA and CHIPS Act flowing to the state. Samsung’s $17 billion chip factory in Taylor, Texas, and other projects exemplify this trend.
Political and Economic Landscape Impacts
Despite political differences, blue states are also benefiting from these legislative acts. In New York, IBM announced a $20 billion investment in the Hudson Valley Region, while Micron pledged up to $100 billion in Central New York. Colorado, another blue state, benefits from the clean energy boom, with wind tower manufacturer CS Wind’s $200 million facility expansion in Pueblo tied to the IRA.
The private investment boom in Republican states challenges political expectations, with economic impact taking precedence. The Biden administration plans to emphasize these successes in the upcoming Investing in America tour, reinforcing the message of delivering jobs and investments across political divides.
