Georgia Governor Says Biden Grants Hurt US State's Growing Economy

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Georgia Gov. Brian Kemp has rejected White House efforts to credit the investment boom in the U.S., saying the Biden administration's broad cleantech subsidies have fueled inflation in his state.

There is the White House pointed out Georgia's fast-growing economy is an example of a strategy to revitalize American productivity through generous tax breaks embedded in the 2022 De-Inflation Act signed by President Joe Biden.

But Kemp said the bonanza in his state, fueled by market forces, was already underway before the IRA was enacted — and that additional federal stimulus threatens to overheat Georgia's economy.

„A lot of what the IRA did, other than throwing money at something that was going to happen anyway, was heating up the market and causing costs to rise,” Kemp told the Financial Times. „It was really trying to manipulate the market, and the market would move in that direction.”

The comments by Kemp, a moderate Republican who has repeatedly clashed with Donald Trump, come as the White House struggles to convince voters in key swing states like Georgia of its economic vision for America.

The most recent FT-Michigan Ross poll showed that 60 percent of voters disapprove of how Biden is handling the economy, despite historically low unemployment, strong GDP and wage growth and record stock market gains.

Georgia's economy has expanded nearly 8.5 percent since Kemp became governor in 2019, amid an influx of capital commitments in sectors such as electric vehicle batteries, which have become the center of a manufacturing renaissance in the American Southeast.

The federal Treasury Department said this week that Georgia has received nearly $15bn worth of clean energy project investments since the passage of the IRA in August 2022. FT analysis shows that Georgia also tops the list of states for cleantech investment. Nearly all of the projects, including Hyundai battery plants with LG and SK and Hanwha Q Cells' $2.5 billion solar factory expansion, were slated for Republican districts.

Democrat Jon Ossoff, one of Georgia's two U.S. senators, said the state's rise is directly related to policies designed by the federal government.

„What we've seen since the deflation law was passed is rapid growth in Georgia's manufacturing sector,” Ossoff told the FT. It reflects that we have tailored both the infrastructure bill and the manufacturing stimulus to match Georgia's strengths.

Ossoff added that investments in infrastructure since Biden takes office in January 2021 are „the most significant period of improvement since the Eisenhower administration.”

But much of the infrastructure spending in Georgia was happening before Biden's election, Kemp said, citing investments in Atlantic Coast ports like Savannah and Brunswick that were approved „long before any federal aid.”

Georgia has offered its own notable desserts to lure investors, while Kemp has traveled across Europe and Asia trying to secure capital commitments.

Public policy experts say the wave of cleantech investment has come down to a combination of state and federal incentives.

Glencora Haskins of the Brookings Institution think tank said, „It's entirely the federal government's responsibility to invest in or replace EVs. „But tax incentives help companies accelerate investment and ensure manufacturing takes place in America.”

Kemp, who was re-elected governor in 2022, blamed Biden's pandemic stimulus spending for fueling a surge in US inflation, which hit multi-decade highs in 2022.

„[The federal government] „The Biden administration is paying people to stay home at a time when we should be urging people to get back to the workforce,” he said.

Kemp, considered a future Republican presidential nominee, has drawn Trump's ire for rejecting his efforts to overturn the 2020 election and has warned that he could lose the White House race again in 2024 if he continues to make false claims about the former president. .

But he insisted that „every Republican running for office will do better than Joe Biden” in the upcoming election.

As voters across the U.S. remain gloomy about the growing economy, consumer sentiment has recently picked up, with the University of Michigan sentiment index recently hitting its highest level since July 2021.

Additional reporting by Amanda Sue