What’s Next? Partisan Divides on The Future of Public Investment in US Manufacturing
By Katja B. Kleinberg
January 22, 2025
Significant public investments in domestic manufacturing will be a key legacy of the Biden-Harris administration. Subsidies and tax credits budgeted for domestic production of advanced semiconductors alone are set to approach $200 billion [https://www.piie.com/publications/piie-briefings/2025/industrial-policy-through-chips-and-science-act-preliminary-report], while private enterprises have pledged another $1 trillion, by official White House estimates, in investments in connection with US government incentives.
Subsidies have long been controversial. Republicans in particular have sharply criticized public investments in green technologies. It is an open question whether the new Republican administration—under President Trump and with (albeit small) majorities in both chambers of Congress—will continue these policies.
In July 2024, we asked a representative sample of 2,900 US respondents whether government subsidies for domestic manufacturing should be increased, decreased, or kept at current (summer 2024) levels.
Figure 1. Beliefs about Government Subsidies
More than a third (37%) of respondents said these subsidies should be increased some (30%) or increased a lot (7%). Nearly half (47%) said subsidies should be kept the same, and only a small minority (16%) said they should be decreased.
Support for increased subsidies is greater among Democrats (46%) than Republicans (34%). At the same time, more than twice as many Republicans (23%) as Democrats (10%) would prefer to see cuts in government for domestic manufacturing subsidies. It is noteworthy that pluralities of respondents of both parties support maintaining subsidies at current levels.
Subsidies represent a significant government expenditure. In a follow-up question, we asked respondents who favored increasing subsidies how these should be financed.
Figure 2. Opinions on Subsidy Financing Methods
Of the 1,105 respondents who favored increases, the vast majority (72%) preferred funding new subsidies for manufacturing by shifting funds away from other government programs, and still a fifth of respondents (20%) favored raising new taxes. Only 8% of respondents who supported increased manufacturing subsidies wanted the government to take on new debt to fund them.
Opinions on how to fund greater government subsidies were starkly divided there along party lines. Republicans were more likely to support shifts in existing public spending to support increased subsidies (86% compared to 61% of Democrats), whereas Democrats were more likely than Republicans to favor new taxes (29% to 7%).
Given that government investments under the Biden-Harris administration policies have gone disproportionately to majority-Republican states, and considering that many of these investments will likely create new factories and jobs in the months and years to come, it is unlikely that support for manufacturing subsidies will decline even among Republicans. This reality rests uneasily with the Trump administration’s promises to roll back the CHIPS and Science Act and related legislation.
One argument against government subsidies is their costs may exceed that of other policies that could have been pursued to achieve similar goals. Overall, support for decreases in subsidies was a minority position among our respondents. We asked those who favored cuts what should be done with the savings in public spending that cuts to subsidies might generate.
Figure 3. Opinions on Uses of Potential Subsidy Savings
Of the 484 respondents in our sample who favored decreases, 38% wanted the government to use the savings to lower taxes, with Democrats and Republicans choosing this option at similar rates (40% and 41%, respectively).
A plurality (nearly 45%) wanted the government to use the savings from cuts to subsidies to decrease the national debt, including nearly half of Republicans (47%) in this group and a quarter of Democrats (26%).
Only 17% of respondents who favored cuts wanted the government to spend freed-up funds on other public programs. Here again, partisan divisions emerged: while 34% of Democrats favored using the savings from cuts in subsidies to increase funding for other government programs, only 12% of Republicans chose that option.
Our findings reflect longstanding divisions in American politics over how to balance competing policy priorities regarding taxes, spending, and debt. They likely also reflect differences in opinion about the proper role for government in the US economy and diverging perceptions what how much public investment—compared to efforts by private enterprise—can contribute to achieving policy goals such as job creation and international competitiveness.
Katja B. Kleinberg is an associate professor of political science at Binghamton University, SUNY. She is co-principal investigator of the Foreign Policy in a Diverse Society project, housed in Temple University’s Public Policy Lab.
This research was undertaken as part of the Foreign Policy in a Diverse Society project (DOI 10.17605/OSF.IO/QJR49), which is supported by funding from Carnegie Corporation of New York.