Red states are big winners of Biden’s landmark laws

By Matt Egan, CNN

New York (CNN) — Last month, battery recycling company Redwood Materials broke ground on a $3.5 billion battery plant in South Carolina that is expected to create 1,500 new jobs.

The plant aims to eventually make enough battery components to power more than a million electric vehicles a year. Redwood Materials specifically cited the 2022 Inflation Reduction Act, America’s biggest-ever climate investment, as a reason why it decided to build the facility.

This is just one example of a Republican state benefiting from the private investment boom set off by the IRA, a signature legislative achievement for President Joe Biden that every Republican in Congress voted against.

It’s part of a broader trend where red states have emerged as big winners from both the IRA and the CHIPS and Science Act, another signature Biden law that passed with some Republican support in 2022.

Most (51%) of the investments directly tied to incentives from the IRA and the CHIPS Act are flowing to Republican states, compared with 20% to blue states, according to a Fitch Ratings analysis shared exclusively with CNN. Fitch defined red states as those that voted for former President Donald Trump in 2020 by more than three percentage points.

Fitch found that another 29% of the investments linked to those laws went to swing states, ones that were decided by fewer than three points in 2020: Arizona, Georgia, Nevada, North Carolina, Michigan, Pennsylvania and Wisconsin.

About 50% of the jobs announced from the investments linked to the IRA and the CHIPS Act are expected to be in red states, compared with 17% for blue, according to the Fitch analysis shared with CNN. Another 33% are expected to be located in swing states.

Manufacturing jobs have been gravitating to states in the South and the West for decades because it’s often cheaper to operate there and there is plenty of land and relatively skilled workforces, according to Olu Sonola, head of US economic research at Fitch Ratings.

“The reality is manufacturing was migrating to those states even before the CHIPS Act and the IRA. This has just accelerated that migration,” Sonola told CNN.

‘The president of all Americans’

For example, Idaho, a state that voted overwhelmingly in favor of Trump in the 2020 election, has emerged as a major winner from the CHIPS Act, the largest-ever federal funding for semiconductor manufacturing.

In October, Micron started construction in Boise on America’s first new memory manufacturing fabrication plant in 20 years. The facility is expected to create 2,000 jobs and build leading-edge memory chips to be used in cars, data centers and artificial intelligence.

Micron said the $15 billion investment, announced in September 2022, was made possible in part by the tax credits and grants in the CHIPS Act. Eventually, the facility is expected to have 600,000 square feet of cleanroom space — the size of about 10 football fields — to make memory chips.

“We are delivering jobs and investments in red districts, blue districts and everything in between,” Natalie Quillian, the White House deputy chief of staff, told CNN in a phone interview on Wednesday. “President Biden promised to be the president of all Americans – whether you voted for him or not. And that’s what this agenda is delivering.”

The White House plans to continue making that case directly to voters in the coming weeks and months. The administration is kicking off on Thursday a fourth installment of its Investing in America tour, which will feature Biden and top officials showcasing how these investments are helping real people.

A gamechanger for Texas and Arizona

Private companies have been especially eager to invest in fast-growing Texas, which does not have a corporate income tax.

A staggering 20% of all investments linked to the IRA and CHIPS Act is flowing to the Lonestar State, according to Fitch.

For example, Samsung is spending $17 billion to build a chip factory in Taylor, Texas. The project from the South Korean electronics giant is expected to create 2,000 jobs just outside of Austin.

Of course, Texas has a massive economy valued at $2.4 trillion — bigger than that of Russia and Canada.

Relative to the size of their state economies, Arizona, Idaho and West Virginia are the biggest winners from the IRA and CHIPS Act investments, according to Fitch.

Swing states have been big winners from the private investment boom.

For instance, chip makers are scrambling to build new facilities in Arizona, which Biden carried by the thinnest of margins in the 2020 election. In August 2022, Intel unveiled a plan to invest $20 billion by building a factory in Chandler, Arizona. Months later, TSMC, the world’s largest chipmaker, unveiled plans to invest up to $40 billion in Arizona. That project has since been delayed and won’t be operational until 2027 or 2028.

“Arizona is clearly coming out on top. When all is said and done, all of this will be a gamechanger for Arizona,” said Sonola.

New York leads blue state winners

None of this is to say blue states aren’t benefiting from the IRA and the CHIPS Act. They are.

In October 2022, IBM announced plans to invest $20 billion in the Hudson Valley Region of New York over 10 years.

That same month, Micron pledged to invest up to $100 billion in Central New York over the next “20-plus years.” The first phase of investment is expected to be $20 billion by the end of this decade, according to Micron.

Micron cited the tax credits in the CHIPS Act as well as incentives provided by New York state aimed at luring semiconductor companies.

“New York is rolling out the red carpet. They’re going all-out trying to get these investments, too,” said Sonola.

Another blue state, Colorado, has benefited from the clean energy boom.

In November, Biden visited CS Wind, the world’s largest wind tower manufacturer, to highlight the company’s new $200 million Pueblo, Colorado, facility expansion.

Both CS Wind and the Biden administration have directly linked that expansion to the IRA. And Biden noted that Colorado Republican Rep. Lauren Boebert and all of her GOP colleagues voted against the IRA.

Quillian, the White House deputy chief of staff, suggested Biden officials will do more of that.

Quillian said the Biden administration will continue “calling out Republicans who are happy to show up at the ribbon cuttings, take credit for jobs that are created in their districts, but voted against the bills that made those jobs possible.”

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