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Europe’s not happy with Biden’s Inflation Reduction Act


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Europe’s not happy with Biden’s Inflation Reduction Act

As some of the world’s economic policy elite gather in the Swiss Alps ski resort of Davos, here’s something to listen for: Complaints from U.S. allies about President Biden’s biggest legislative wins, like the Inflation Reduction Act and a law meant to increase American microchip making.

Many of America’s closest friends — Britain, France, Germany, Japan, South Korea and others — worry that hundreds of billions of dollars for electric vehicle and semiconductor manufacturing in the United States will siphon investment and production away from their domestic industries.

Yes, Biden’s policies aim to battle the climate crisis while bringing home high-tech manufacturing, away from China, notably.

But friendly countries that make cars or microchips — even when they agree with those goals — fear effectively becoming collateral damage.

  • European Commission President Ursula von der Leyen said today in Davos the commission would lay out green-technology goals in a “Net-Zero Industry Act” meant to help the bloc compete for investment in a world reshaped by the IRA.
  • “To keep European industry attractive, there is a need to be competitive with the offers and incentives that are currently available outside the EU,” she said, according to Reuters.
  • The E.U. plans “decisive steps” in response to the IRA, the bloc’s economy commissioner, Paolo Gentiloni, said during a news conference on Monday, according to Agence France-Presse.

Economic relations had mostly recovered from the vast tit-for-tat transatlantic tariffs of former president Donald Trump’s era when the new American industrial policy upended things. While it’s too soon to pull the “trade war” alarm, the disputes could escalate quickly.

The Daily 202 has warned about these rising tensions on several occasions over the past year. They’re making headlines overseas but have gone largely unnoticed by the general public in the United States. 

When French President Emmanuel Macron made a state visit to Washington in December, the headlines were generally about the warmth of the personal and political relations between him and Biden, or the pageantry of their state dinner in a pavilion on the White House’s South Lawn.

But Macron also delivered a blunt warning about Biden’s economic achievements, saying the IRA and the CHIPS law might “fragment the West” and dry up transatlantic investment unless America and its allies “resynchronize” their economic policies. (Biden’s response was to say he would make “no apologies” for either law while hinting at “tweaks” to fix “glitches” in the IRA.)

In late December, the Treasury Department took steps to help European carmakers benefit from some IRA subsidies. It’s expected to take more steps in March, Politico reported

  • But earlier this month, Macron declared “we need a made-in-Europe strategy,” to defend the continent’s industrial base, create more jobs, be more competitive, and accelerate green-energy production. (He also called Biden’s policies “totally legitimate.”)

On Monday, senior European Union official Thierry Breton said the IRA “is of course front of everybody’s minds” and that Europe’s response to American or Chinese industrial policy “cannot only be about short-term temporary solutions.”

  • “Europe needs its own plan, not only to accelerate the deployment of clean technologies, but also to develop the necessary manufacturing base,” wrote Breton. “It’s not about a subsidies race. It’s a matter of ensuring our security of supply, competitiveness, export ability and job creation.”

And French Finance Minister Bruno Le Maire warned Mondaythere is no time to lose in establishing a new European industrial policy to support green industry and encourage industries to relocate to European territory.”

Government subsidies race?

Le Maire pushed for simplifying the process of allocating government aid to industry, making assistance speedier and on a much larger scale for clean-energy sectors.

“EU nations hope to agree on a way forward before a summit next month in a bid to avoid European businesses rushing to invest in the United States where energy is cheaper,” Agence France-Presse reported Monday. “But some members fear a hardline response by the EU to the IRA could provoke a trade war, while others worry a subsidy race within the bloc would benefit wealthier nations.”

Asked what the White House made of Macron’s “made in Europe” push, national security council spokeswoman Adrienne Watson said in a statement: “As the president said: We will harmonize our economic and trade approaches, create good paying jobs and tackle the climate crisis — and not at each other’s expense.”

See an important political story that doesn’t quite fit traditional politics coverage? Flag it for us here.

China’s first population decline in 60 years sounds demographic alarm

China’s population dropped last year for the first time since 1961. The historic turn marked the start of a looming demographic and economic crisis. (Video: Reuters)

“China’s population shrank last year for the first time since a devastating famine in the Mao era, in a clear sign that the country is facing a looming demographic crisis worsened by decades of coercive policy that limited most families to a single child,” Christian Shepherd reports.

  • The numbers: “The National Bureau of Statistics on Tuesday announced a decline of 850,000 people to a new total population of 1.4118 billion — the first such decline in 60 years. The birthrate reached its lowest level on record at 6.77 per 1,000 people, down from 7.52 in 2021.”

Turkey’s top diplomat to travel to U.S. amid troubled ties

“Turkey and the United States will aim to smooth out a series of disagreements between the NATO allies when the Turkish foreign minister visits Washington this week. But expectations that outstanding issues can be resolved are low,” the Associated Press’s Suzan Fraser and Andrew Wilks report.

In first, top U.S. general meets Ukrainian counterpart near Polish border

Gen. Mark A. Milley, chairman of the Joint Chiefs of Staff, spent a couple of hours with Gen. Valery Zaluzhny, the top officer in Ukraine’s armed forces, said Col. David Butler, a U.S. military spokesman. The meeting was arranged after it became clear that Zaluzhny would not be able to attend a meeting Wednesday of senior NATO military officials in Brussels,” Dan Lamothe reports.

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Newly elected House Speaker Kevin McCarthy (R-Calif.) and Senate Minority Leader Mitch McConnell (R-Ky.) have a nearly 25-year age gap and political styles that are described by their colleagues as polar opposites, with one a glad-handing leader and the other a more sphinx-like strategist,” Liz Goodwin and Marianna Sotomayor report.

“But the ability of the two Republican leaders — who associates say have a good, professional but not close relationship — to work together now takes on new significance as several high-stakes fiscal showdowns loom in Congress.”

What the Jan. 6 probe found out about social media, but didn’t report

Congressional investigators found evidence that tech platforms — especially Twitter — failed to heed their own employees’ warnings about violent rhetoric on their platforms and bent their rules to avoid penalizing conservatives, particularly then-president Trump, out of fear of reprisals. The draft report details how most platforms did not take ‘dramatic’ steps to rein in extremist content until after the attack on the Capitol, despite clear red flags across the internet,” Cat Zakrzewski, Cristiano Lima and Drew Harwell report.

ICYMI: New details link George Santos to cousin of sanctioned Russian oligarch

George Santos, the freshman Republican congressman from New York who lied about his biography, has deeper ties than previously known to a businessman who cultivated close links with a onetime Trump confidant and who is the cousin of a sanctioned Russian oligarch, according to video footage and court documents,” Isaac Stanley-Becker and Rosalind S. Helderman report.

Andrew Intrater and his wife each gave the maximum $5,800 to Santos’s main campaign committee and tens of thousands more since 2020 to committees linked to him, according to filings with the Federal Election Commission. Intrater’s cousin is Russian billionaire Viktor Vekselberg, who has been sanctioned by the U.S. government for his role in the Russian energy industry.”

How restaurant workers help pay for lobbying to keep their wages low

“For many cooks, waiters and bartenders, it is an annoying entrance fee to the food-service business: Before starting a new job, they pay around $15 to a company called ServSafe for an online class in food safety,” the New York Times’s David A. Fahrenthold and Talmon Joseph Smith report.

The company they are paying, ServSafe, doubles as a fund-raising arm of the National Restaurant Association — the largest lobbying group for the food-service industry, claiming to represent more than 500,000 restaurant businesses. The association has spent decades fighting increases to the minimum wage at the federal and state levels, as well as the subminimum wage paid to tipped workers like waiters.”

TikTok tries to win allies in the U.S. with more transparency

“ByteDance is trying to walk a fine line in talks with U.S. officials. Its goal is to maintain ownership of TikTok in the U.S., but also make the app’s operations more transparent and silo it off in a separate unit overseen by U.S. government-approved employees. TikTok is trying to convince lawmakers that with these measures in place, the app won’t pose a threat to U.S. citizens,” the Wall Street Journal’s Georgia Wells and Stu Woo report.

No visitors logs exist for Biden’s Wilmington home, White House says

The White House on Monday said it does not keep visitors logs for President Biden’s personal residence in Wilmington, Del., where his lawyers have discovered at least six documents with classified markings,” Yasmeen Abutaleb reports.

‘Unforced errors’: A White House facing a fresh crisis

“Behind the scenes, sources said Biden’s grown frustrated at how the saga has played out, particularly the way his administration’s handling of the story has overtaken what had been a positive stretch,” CNN’s MJ Lee and Kevin Liptak report.

People close to the White House say there is currently a mood of quiet resignation among Biden aides — an ‘It is what it is’ mentality — as they, too, wait to learn if news of more misplaced classified documents will surface in the coming days.”

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“The White House said in a statement Monday that the president would visit with first responders and state and local officials, survey recovery efforts and assess what additional federal support is needed,” the AP reports.

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“Even after six atmospheric river-driven storms, a majority of the state is still in a drought that began three years ago. Why rain alone doesn’t solve dry conditions has much to do with what happens to that rain once it falls and how climate change is disrupting that cycle,” Daniel Wolfe, Szu Yu Chen and Laris Karklis report.

Why Harris world thinks she may be the biggest winner of the midterms

“After spending much of her time in office managing bad headlines, staff turnover and persistent questions about her portfolio and position in Biden world, the vice president is in a better place, her allies and aides say,” Politico’s Eugene Daniels reports.

“She no longer is tied to the whims of an evenly split Senate, where she had been called to cast more than two dozen tie-breaking votes. And they say she no longer feels her every move is being eyed in the context of a potential 2024 Harris presidential campaign since her boss is highly likely to seek another term.”

Thom Tillis emerges as a bipartisan dealmaker as lawmakers fear dysfunction looms

“Over the past year, Tillis has muscled his way to the heart of nearly every major bipartisan effort to emerge from the evenly divided Senate, taking a lead role in negotiating legislation on hot-button issues including gay rights, guns and immigration all without drawing much attention to himself,” Liz Goodwin reports.

“It’s a politically tricky trifecta that few Republicans — many fearing primary challenges from the right — would want to touch. But Tillis’s willingness to find compromise despite the political blowback is desperately needed, his colleagues say, as a wave of retirements has taken many more bipartisan-minded lawmakers out of the chamber just as it needs to find a way to compromise with a narrow and fractious House Republican majority that barely managed to elect a speaker earlier this month.”

Biden and Vice President Harris will have lunch at 12:45 p.m.

At 2:45 p.m., Biden will host the Golden State Warriors at the White House.

The only logical next step

Thanks for reading. See you tomorrow.

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