Commerce chief faces test in U.S. tech effort
WEST LAFAYETTE, Ind. — The Commerce Department, under Secretary Gina Raimondo’s leadership, is poised to begin distributing nearly $100 billion — roughly 10 times the department’s annual budget — to build up the U.S. chip industry and expand broadband access throughout the country. How Raimondo handles that task will have big implications for the U.S. economy going forward.
Many view the effort as the best — and only — bet for the United States to position itself in industries of the future, such as artificial intelligence and supercomputing, and ensure that the country has a secure supply of the chips necessary for national security.
But the risks are similarly huge. Critics of the Biden administration’s plans have noted that the federal government may not be the best judge of which technologies to back. They have warned that if the administration gets it wrong, the United States may surrender its leadership in key technologies for good.
“The essence of industrial policy is you’re gambling,” said William Reinsch, a trade expert at the Center for Strategic and International Studies, a think tank. “She’s going to be in a tough spot because there probably will be failures or disappointments along the way,” he said.
The outcome could also have ramifications for Raimondo’s political ambitions. In less than two years in Washington, Raimondo, 51, has emerged as one of Biden’s most trusted Cabinet officials. Company executives describe her as a skillful and charismatic politician who is engaged and accessible in an administration often known for its skepticism of big business.
Raimondo says she is eager to lead the Commerce Department through its next chapter as it tries to build up America’s manufacturing sector. While the scale of the task is daunting, it so far has not fazed her. Colleagues and a family member describe her as having little aversion to conflict and say she is drawn to messy policy problems by an impulse to fix them.
Raimondo grew up in Rhode Island in a close-knit Roman Catholic family, raised partly by a brother 13 years her senior who recalled wrestling with her and throwing her in the water at the beach.
She was “afraid of pretty much nothing,” said her brother, Dr. Thomas J. Raimondo, a pulmonologist in Warwick, R.I. “I think because we brought her up tough, but No. 2, she’ll enter a conflict figuring out, ‘How am I going to fix this?’”
In sixth grade, she was also deeply influenced by watching her father lose his job at the Bulova watch factory as American manufacturers began sending jobs overseas. The job was a source of her father’s pride and allowed him to provide for his family, and the loss sent him into a funk for years, Raimondo said in an interview. Her mother had shone in a job in human relations at U.S. Rubber, Raimondo said, but she was dismissed when she became pregnant, a common policy at the time.
As Raimondo grew up, manufacturers such as Timex and U.S. Rubber shut their doors, and she saw Rhode Island’s schools and infrastructure begin to fray. The significance of these closures would resonate when Raimondo studied economics as an undergraduate at Harvard, where her professors fed her a “steady diet” of how trickle-down Reaganomics had hollowed out the U.S. economy, she said.
It was also this decaying system — specifically, Rhode Island’s decision to slash public bus routes and library hours when budgets fell short — that ultimately drove Raimondo to leave a lucrative job in venture capital and run for state treasurer in 2010. There, she made changes to shore up the state’s pension system, clashing with unions and progressive Democrats in the process.
She was elected as the state’s first female governor in 2014. In that job, she introduced free community college and all-day kindergarten, repeatedly raised the minimum wage and cut business taxes. She also courted controversy by proposing a toll on commercial trucks to rebuild the state’s roads and bridges. In 2016, 18-wheel trucks circled Rhode Island’s State House for months, blasting their horns in protest and rattling the nerves of Raimondo’s staff.
Biden, then vice president, came to her defense. He traveled to Providence to applaud her efforts and inspect a local bridge that he said was being held up by “Lincoln Logs.”
“Let the horns blow,” Biden said. “Fix the bridges and the roads.”
At Commerce, Raimondo has taken an active role in trade negotiations, at times overshadowing the Office of the U.S. Trade Representative, which traditionally crafts the country’s trade deals. She played an outsized role in some of the administration’s major legislative victories, including reaching out to executives to win their support for the infrastructure bill and leaning on her relationships with lawmakers and executives to get funding for the semiconductor industry put into law.
Raimondo has also presided over the most aggressive use of the Commerce Department’s regulatory powers in a generation. While the department is well known for its role in promoting business, it has an increasingly important role in regulating it by policing the kind of advanced technology that U.S. firms can share with China, Russia and other geopolitical rivals.
In February, her department moved swiftly with allies to clamp down on technology shipments to Russia after its invasion of Ukraine. And in October, the department issued sweeping restrictions on advanced semiconductor exports to China in an attempt to curtail the country’s access to critical technology that can be used in war.
But Raimondo has also received some criticism on that front. Republican lawmakers and others say she has not moved forcefully enough to stop U.S. companies from enriching themselves by selling sensitive technology to China. In particular, critics say that the Commerce Department has issued too many special licenses that offer companies exemptions to the restrictions on selling to China.
In an interview, Raimondo said the claim was “just not true” and that exemptions were based on technical specifications, not political considerations.
The restrictions the Biden administration issued on China’s semiconductor industry last month are “the boldest, most coherent strategic set of policies that the Commerce Department has ever rolled out with respect to export controls,” Raimondo said.
When it comes to overseeing industry, Raimondo has said she sees reasonable regulation of business as a necessity, saying corporations left to their own devices will “get greedy.” And she has been outspoken about improving living conditions for the poor, often decrying an economic system where many women and people of color can work 60-hour weeks but still live in poverty.
But unlike some progressive Democrats, Raimondo clearly does not see an issue with being labeled “pro-business.”
“I come from a place in my politics that, fundamentally, Americans are pro-job, pro-business, pro-wealth,” she said. “Americans want to make money and feel like they can make money.”
She added: “American entrepreneurship is the envy of the world. We cannot snuff that out.”
While she came from humble beginnings, Raimondo and her husband, Andy Moffit, a former executive at McKinsey & Co. who is now chief people officer at a health care technology platform, have amassed a net worth of between $4 million and $12.5 million, according to government disclosure forms.
As her department turns to funding semiconductor projects, Raimondo has promised to use tough standards to evaluate company applications, including prohibiting money from being used for stock buybacks or to make investments in advanced technology in China. The department is expected to lead the work of reviewing and approving grants, but any awards to companies of more than $3 billion will be approved by Biden.
At an event held by the Atlantic Council in September, Raimondo acknowledged that people were watching closely and that the administration’s credibility was on the line.
“Did you get it right? Did you meet the mission? Was it impactful?” she asked. “And if the answer is yes, I think we will be able to convince Congress and others to do more.”