Biden-Era Industrial Investment Reached the Right Places, But Grants Need to Go Out Much Faster

The Infrastructure Investment and Jobs Act (IIJA), the CHIPS and Science Act (CHIPS), and the Inflation Reduction Act (IRA) distributed grants and tax credits to support industries and build a stronger, cleaner economy. Between 2021 and 2024, the federal government made $255.2 billion worth of grant obligations and incentivized $693 billion of investment in the clean economy through tax credits.¹

A significant part of this funding was designed to rebalance the economy and revitalize less-fortunate areas of the country. “We’re investing in all of America—in the heartland, and coast to coast,” President Joe Biden declared on the first anniversary of the IRA’s passage. However, this is no mean feat: Some areas of the country have high-wage economies abound with employment opportunities; other areas have been left behind, characterized by weak social mobility and multigenerational low educational attainment and employment (Figure 1).

Biden-Era Tax Credits Pushed Considerable Investment to the Poorest Areas

The Biden administration succeeded in distributing tax credits more equitably than the status quo ante provided by markets. Ranking America’s counties by economic output and dividing them into groups of roughly equal population reveals this pattern clearly: The poorest group of counties received more investment in the manufacturing and the energy and industry sectors than all other counties combined (Figure 2).

This is notable, as this funding was independently claimed by project developers and the federal government had little to no discretion in awarding them. These policies did, however, comprise a “layer cake” of incentives, including place-conscious tax credits like the IRA’s “energy communities” bonus. This bonus incentivized clean investment in areas involved in the extraction of fossil fuels (so called “energy communities”). This steering was effective: Companies responded accordingly, and average investment in these places was higher (Figure 3).

This rebalancing was a significant advancement in US policymaking. Prior to 2021, state- and city-led development programs tended to revolve around cash incentives to corporations without specifically targeting disadvantaged areas. (The 1993 Federal Empowerment Zone program and the Obama-era Partnerships for Opportunity and Workforce Economic Revitalisation (POWER) initiative constitute two rare exceptions.)

More evidence is needed to understand whether federal investment in low-income areas will boost economic outcomes in the long term, though evidence from other programs gives reasons for hope. The Empowerment Zone program noted above helped boost employment and wages, and California’s Enterprise Zones (established in 1984 and repealed in 2013) and 2017’s federal Opportunity Zones may have helped employment (though the effect of Opportunity Zones is not conclusive, necessitating further research).

Grant Spending Disproportionately Went to Underserved Communities

Alongside subsidizing private investment, Biden-era industrial policies distributed a considerable number of grants throughout the United States (Figure 4). By design, the federal government had more control over the recipients of these investments, and many contained provisions that encouraged their distribution in economically disadvantaged areas.

Importantly, to respond to the United States’ profound spatial inequalities, the Biden administration instituted a number of changes to the way federal funding was distributed. Foremostly, the Justice40 mandate required at least 40 percent of the benefits of grants to go to disadvantaged communities, including communities with poor education, income, and health outcomes. Companies applying for grants from the Department of Energy were also ranked according to a community benefits plan detailing how they would create high-paying, accessible opportunities and help Justice40 communities. This worked: Per capita grant spending was higher across disadvantaged communities than other places (Figure 5).

This marked a substantial shift in funding priorities. As researchers at the Urban Institute note, the Department of Energy increased its funding to disadvantaged counties by more than 4,000 percent between 2016 and 2025 (from $80.7 million to $3.7 billion). As designed, these policies helped bridge the gap between the richest and poorest areas; in the words of National Economic Advisor Lael Brainard, to “[invest] in the communities that were left behind by trickle-down.”

Future Industrial Investments Must Be Made Quickly

While many states have benefited from sizable grants across all three major Biden-era industrial policy programs, the actual outlays remain far lower than the obligations (Figure 6).

Future industrial policies should outlay grants as soon as possible—including by instituting practices like those discussed in Roosevelt’s recent Building Up in 2029 report. As of September 2026, only half of the grant funding promised during the Biden administration has been spent.² The IRA’s Solar for All program was illegally canceled by the Trump administration, which in Michigan has delayed $156 million of grant funding intended to bring solar power to low-income Michiganders in places like Kalamazoo, Lowell, and Detroit. In Texas, $0 has been outlayed of a $3.3 billion IIJA grant to expand broadband access for the 7 million Texans who currently lack such infrastructure, primarily in the rural eastern part of the state. And in Georgia, no money has been outlayed from the $258.5 million of IRA Grid Infrastructure Deployment and Resilience grants obligated to the state.

As policymakers consider the next round of federal investment, they should recognize that Biden-era grants and tax credits brought new jobs and training opportunities to left-behind places. While Trump’s victory in the 2024 election cast doubt on the political efficacy of targeted investment, recent research suggests that areas with new clean manufacturing facilities rewarded climate champions, showing that visible benefits can increase political support. Moreover, the recent permitting deal in the Senate seems to include a deal to unstick stalled wind and solar projects, which could help bring down energy prices (one of Americans’ top priorities currently). Future industrial policy must build on the successes of this investment and ensure it reaches those communities that need it—and quickly.

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