Influencers with Andy Serwer: Gina Raimondo

In this episode of Influencers, Andy sits down with U.S. Commerce Secretary Gina Raimondo as they discuss the causes of this period of inflation, why business leaders see Omicron as a 'short term' threat, and the Commerce Department's work on climate and broadband internet.

Video Transcript

- In this episode of "Influencers," Gina Raimondo, US Secretary of Commerce.

GINA RAIMONDO: The president has been very clear with us, we have to use every tool in our toolbox to help the American people and reduce inflation.

We can't make nothing in America. You know, we have to-- the balance is out of whack. We've taken our eye off the ball. To be a strong, vibrant, global power, we need a strong, vibrant, advanced manufacturing industry in the United States of America.

I really believe 20, 30 years from now when we look back, or maybe even 10 years from now when we look back at COVID and we look at what are all the lasting negative impacts, the biggest one will be what happened to our kids.

[MUSIC PLAYING]

ANDY SERWER: Hello, everyone, and welcome to "Influencers." I'm Andy Serwer. And welcome to our guest, US Secretary of Commerce Gina Raimondo here at the Department of Commerce. Secretary Raimondo, great to see you. Thanks so much for taking the time to speak with us.

GINA RAIMONDO: Thank you. Happy new year.

ANDY SERWER: Happy new year to you. I want to jump right in and ask you about chips and the semiconductor shortage. I know this is top of mind for you. And understand where things are, but also to ask you about the connection between the shortages of chips and these reports of very high inflation that we've seen lately.

GINA RAIMONDO: Yeah. Yeah. Thank you. There's a direct correlation. I mean, the inflation numbers came out yesterday. And higher, I think, that anybody would want to see.

But if you get under the covers of the numbers, you realize that a third of the increase in inflation is due to car prices, which is stunning. A third is due to car prices. Why is that? Because last year, auto production of cars was down by almost eight million cars-- 7.7 million cars.

So supply is down, prices of cars are up 20%. And the single reason or biggest reason that car production is down so much is because car companies can't get their hands on enough chips. And they will tell you that. If you go to production facilities of cars, and trucks, by the way, you will see many, many cars fully assembled but for chips.

So it's pretty simple supply and demand. I'm thinking back to X-10, which I took 30 years ago-- it's like we need to increase the supply of cars so prices will come down. And in order to do that, we need increase in semiconductor chips. So there's really a direct link between the two, and we need Congress to act so they can fix the problem.

ANDY SERWER: And so there is the Chips Act out there. And I'm wondering where that stands right now and then how that would address this problem.

GINA RAIMONDO: Yeah. So it's kind of stalled in Congress, to be very honest. The Senate worked hard, got the Chips Act passed I think last summer. And it's been a little bit stuck in the House. Speaker says she's for it. I mean, she does support it.

But we need to move it. And so why does it matter? Essentially, it's incentives that the Commerce Department could provide to chips manufacturers so they will make chips in America. If you ever have time for kind of a really scary read, you should learn more about how dependent the United States is on other countries, especially Taiwan, for our supply of semiconductors.

Like right now in the United States, we make zero, none, of the most sophisticated semiconductor chips-- none of them. And we get the majority from Taiwan. So apart from the fact that we need to make chips in America so we can make more cars, reduce inflation, create jobs, it's a national security issue as well.

We cannot be a secure nation economically or nationally secure if we get 60%, 70% of all of our chips from a single company in Taiwan. So in any event, Congress needs to move. They need to take action now. It'll send money to the Commerce Department. We'll set up a program here where we work in partnership with semiconductor companies, asking them to set up shop in America, making chips in America.

ANDY SERWER: And so would this bill, then prospectively help Nvidia, AMD, Intel, Micron-- those US companies set up fabs here in the United States, which cost $1 billion? They're very expensive.

GINA RAIMONDO: Yeah.

ANDY SERWER: And also, would there be money for foreign companies as well, say, like Taiwan Semiconductor, to build facilities here?

GINA RAIMONDO: Yeah. So yes and yes. Yes and yes. They cost many billions of dollars, as you said.

ANDY SERWER: I'm dating myself. I remember when they cost $1 billion. It's a lot more than that, right? Yeah.

GINA RAIMONDO: It's multiple billions of dollars. And, look, these companies could be building more fabs-- fab is just a word for a semiconductor facility where they make chips-- they could build them now in Malaysia, Taiwan, lower cost settings. We want them and need them to build them in America hiring Americans to make this stuff on our shores.

And by the way, yes, we hope that once Congress does its job and gets us the money, we hope, you know, Samsung, TSMC, companies that are not American but in allied countries will be eligible if they put their facility in the United States of America.

ANDY SERWER: And just one more question about that-- I mean, do you think companies really get it that the supply chain, which was optimized for cost, needs to be optimized for other factors as well like security?

GINA RAIMONDO: Yeah, I think they get it now. I think they get it now. As you say, so well said by you, I mean, there's been an obsession for decades with just in time-- obsession with efficiency. And we're realizing that in a world of severe climate change events, where storms can take out a manufacturing facility, or pandemics, or other kind of disruptions, you need redundancy. You need resilience.

Quite frankly, you need stuff near you and near your customers, not all of it in Asia. So I think that, absolutely, they've learned a very painful lesson. I mean, if you talk to folks who run auto companies or trucking companies, it's been a really brutal year. I mean, like I said, their production is down so significantly.

They've had to lay off workers. They have whole facilities filled with half-built cars and trucks. They can't finish them just because they can't get chips. So yeah, it's been a huge wake-up call for the private sector around how to build in resiliency, redundancy just in case to their supply chain.

ANDY SERWER: Does all that speak to a decline in globalism? And you're the US Commerce Secretary, and I don't know what your thinking is on that. I mean, obviously, you have China on your mind as well. And there are the political considerations that impact supply chain. So what is your thinking on that?

GINA RAIMONDO: Yeah, I don't think it does. Listen, I think globalism is and should be alive and well. In fact, you speak of China, I mean, the president is very clear on this-- we have to work with our allies as we confront the threat and competition from China. And we have to actually do a better job of that-- working with our allies in the Indo-Pacific, with our allies in Europe.

That being said, look, we have-- the United States over decades has just watched our manufacturing base wither-- quite literally just wither. We've lost, I think, 30% of small and medium-sized manufacturers in America have gone out of business in the past few decades. So you know, there is a balance.

We need to work with our allies. These supply chains are enormously sophisticated and global, and they should be. I was in Malaysia at the end of last year and I visited the semiconductor packaging facility of an American company. It's sophisticated, it's huge, thousands of Malaysians work there.

That is a good thing, but we can't make nothing in America. You know, it's just-- we have to-- the balance is out of whack. We've taken our eye off the ball. To be a strong, vibrant, global power, we need a strong, vibrant advanced manufacturing industry in the United States of America with a workforce who can do those jobs. And that is a critical element.

ANDY SERWER: Is it part of your mandate to work with those allies that you were talking about in terms of countering China, for lack of a better phrase, or competing with China? Is that part of what you do?

GINA RAIMONDO: 100%. Yeah, that's why I went-- I was in Japan, I was in Malaysia, I was in Singapore just fortifying those relationships. I've spent time in Europe. We were able to resolve the steel and aluminum tariffs with Europe. That's critical.

You know, we have to have stronger than ever relationships with countries all around the world who share our values, who believe in freedom, democracy, transparency, the rule of law. And so the president's been very clear with me, with his team that when you say America is back, that's not a slogan. That's real. That means working with our allies in the way that you describe.

ANDY SERWER: You mentioned British steel tariffs, isn't there something going on with that? What's the latest with that?

GINA RAIMONDO: We want to resolve them. You know, we were able to get that done last year with the EU. I'm negotiating now with Japan. And we'd like to start negotiating with the UK also to mend fences-- and see if we can find solutions.

ANDY SERWER: So that would be to reduce them or get rid of them?

GINA RAIMONDO: Yes. Yeah. I mean, we have to negotiate the exact details, but, yes, so similar to what we did with the EU. We changed the arrangement in a way that got rid of the tariffs for a certain amount of steel and aluminum, which is good for workers and good for our relationship.

ANDY SERWER: I want to shift gears and ask you about Omicron and the disruptions that that's causing. And I'm curious whether the business leaders that you talk to consider this to be a long-term problem, a short-term problem. How are they seeing things?

GINA RAIMONDO: It's a very, very good question. I think, look, everybody's done with COVID. Everybody is willing to be done with it-- ready to be done with it, excuse me. I think they see it as short-term. Recently, in fact, just this week, I've been doing a round of check-ins with business leaders beginning in the new year. Folks are beginning to say, it feels like we are peaking and going to start to come down the other side of the curve.

It's anyone's guess how long it will take. Also, we're all hoping that there's not yet another variant. But I think there's a general view of optimism that these vaccines really do work. We have to get everybody vaccinated.

There is increasing frustration from everyone, including business leaders, like, why people still won't get vaccinated. But I think there's a view it's temporary.

ANDY SERWER: And the labor shortages, I know I should maybe be asking Marty Walsh this question but I'll ask you-- how do you see those right now-- getting worse, getting better? And what are business leaders saying to you about that as well?

GINA RAIMONDO: Getting better, but still a significant issue, I would say-- getting better but still a real issue.

ANDY SERWER: And the CDC reduced its quarantine guidance from 10 days to five days. Is that helping, do you think?

GINA RAIMONDO: I think so, yes. I think so. But still, folks got to get vaccinated.

ANDY SERWER: Right. I want to go back a little bit to inflation, Secretary Raimondo, and ask you-- beyond chips, are there other factors? And why is this difficult to address, perhaps? Or what is the best way to address it besides the chip situation?

GINA RAIMONDO: Yeah. So, you know, obviously, the primary lever with respect to inflation is held by the Fed. You know, so Chairman Powell and his colleagues have their work cut out for them. And I trust that they will do the right thing and use the tools in their toolbox to combat inflation.

That being said, the president has been very clear with us, we have to use every tool in our toolbox to help the American people and reduce inflation. Some of that is getting all these supply chain disruptions behind us.

Congestion at the ports has been a huge issue. We've leaned into it. It is much better. You know, the shelves were full for Christmas. But you know, we have to put that behind us. Anything that relates to supply-- again, back to Econ 101-- supply of goods has to go up to meet demand so prices can come down.

So whether that is the actions the president took around meat processing to increase supply of meat, whether that's chips, ports, anything we're doing to increase the supply of goods will fundamentally help to dampen inflation. Also, look, there are provisions in the president's Build Back Better package that will increase the labor supply.

You asked about labor before-- we have to get more folks into the workforce. Women will be able to get back to work if they have affordable child care, if they have affordable care for their elderly loved ones. Now, that's longer term. Build Back Better is kind of investing now for the future.

But the supply matters. Supply side matters. We got to get more folks working. We got to increase the supply of goods so prices come down.

ANDY SERWER: You sound like you're using a lot of your econ knowledge from undergraduate days. Were you an econ major?

GINA RAIMONDO: I was an econ major. Yeah.

ANDY SERWER: Going back. And sometimes they ask you, does any of this stuff, do you ever really use it in the real world?

GINA RAIMONDO: Yeah.

ANDY SERWER: Well, you do.

GINA RAIMONDO: I went on to study-- I wound up getting a doctorate. So I come back to it frequently in this job.

ANDY SERWER: Right, absolutely. You talked about Build Back Better. Are you optimistic--

GINA RAIMONDO: I am.

ANDY SERWER: About it?

GINA RAIMONDO: I am optimistic. I am realistic, I am optimistic. It's going to get-- it has to get done. It will get done. It'll look different. Whatever the president signs-- this is a prediction I'm willing to make-- the final bill the president signs, law he signs, will look different than what he proposed, will look different than what came out of the House.

But fundamentally, it will be transformative. It will make these investments in climate, in workforce, in bringing down health care costs that we need. And yes, I think it gets done.

ANDY SERWER: Can I ask you about broadband and expanding access to broadband? And you've kind of got two fronts there-- people in urban populations who can't afford it, don't have access, and then the rural populations where it's an abomination, quite frankly.

GINA RAIMONDO: Yeah.

ANDY SERWER: Where do you stand? I know that's part of your remit as well, right?

GINA RAIMONDO: It is. It is. That's a huge piece of business here at the Department of Commerce. The bipartisan infrastructure law sent tens of billions of dollars to the Department of Commerce.

Our job is to use that to make sure every American has broadband-- rural, tribal, urban. You're exactly right-- the issues are different. In urban areas, it's less about access and more about affordability. I was the governor of Rhode Island. There's no rural Rhode Island. It's urban. It's densely populated.

There's fiber everywhere. But it's not affordable everywhere. So in those places, we have to work harder on affordability, also on providing digital literacy to folks. In the rural areas and tribal areas, we have to lay fiber. And we have to use other technologies.

Right now, it's so heartbreaking, Andy, to spend time, as I've done, in rural America-- there is no broadband for miles-- hundreds of miles. Which means you can't work from home, you can't visit the doctor with telemedicine, your kids can't have virtual school. You know, in tribal lands out West, teachers would literally drive worksheets once a week to their students so the kids could do the work on paper and then, you know, mail it back or drive it back to the school.

So anyway, yeah, we have to do it. We will do it. We'll do it in partnership with the providers. At the end of this mission, every single American ought to have high speed, affordable broadband.

ANDY SERWER: I want to drill down on that point you just made about working with the providers. Because, I mean, that's always key for you-- the private sector. And you've got the cable companies and then you've got things like Starlink.

GINA RAIMONDO: Yes.

ANDY SERWER: With Elon. And are you working with all those? I mean, is Starlink for real, for instance?

GINA RAIMONDO: So I don't want to comment on any particular company, but I will say this-- we want to be technology agnostic and company agnostic. We want to work in partnership with the private sector to get the job done. And by the way, it may not be economical to lay fiber all the way through Alaska, for example.

So we're going to have to embrace different technologies. But what I've said-- I've spent a lot of time so far with service providers from the very biggest to the smallest. We want to work with all of you. We're going to hold you accountable. We need price transparency. We need competition.

And you know, it's a balance. It is a balance. Yes, they will receive money from the government to do the right thing. But it better be affordable. You know, affordability is critical. And affordable isn't $100 a month. And as I said, transparency and competition.

ANDY SERWER: Also want to ask you about tech companies-- big US tech companies and their struggles with the EU. And my understanding, enlisting your help or asking for help from you-- Google, Facebook in particular. Where does that stand?

GINA RAIMONDO: Yeah. So I think everybody recognizes that there is a need for changes in the way we regulate tech companies. That being said, some of the provisions being debated in the EU feel discriminatory. You know, they're specifically designed to only affect three or four companies in the United States of America.

And that-- you know, like, that doesn't feel right. And so what I'm saying is, yes, of course, update regulations. Change regulations. Be pro-competition. Be pro transparency. Be pro privacy.

But don't just specifically take aim at four companies in the world. And also, just have an open ear to some of the legitimate concerns of American and American business.

ANDY SERWER: That must be a tricky balance to strike. I mean, they're not just four ordinary companies, right? I mean, they're pretty remarkable with huge amounts of power, and then there's people like Lina Khan, who have very, perhaps, different perspectives-- perhaps-- but certainly a mandate that would suggest that their power is maybe too large.

GINA RAIMONDO: Yeah.

ANDY SERWER: And so how do you factor that in?

GINA RAIMONDO: Yeah. And by the way, that's true. You know, the president's been very clear about this. Like, we are pro-competition. We do believe there's-- there's legislation working its way through the House and the Senate in America right now dealing with that. That being said, some of the provisions of what the EU is considering is, you know, as I said, not taking into account some of the very real concerns related to cybersecurity, and privacy, and security that American companies have and we're asking the EU to have an open ear to that.

ANDY SERWER: Right. What part of your portfolio are people not aware of, Secretary Raimondo?

GINA RAIMONDO: It's a big portfolio. Maybe everything we have to do with oceans and climate. So 40% of the Commerce Department is related to the ocean and the atmosphere.

ANDY SERWER: 40%?

GINA RAIMONDO: Yeah, it's big. It's a big piece of business what we do here. And that's all, of course, related to climate. So I spend a fair bit of my time-- I was the governor of the ocean state in Rhode Island.

ANDY SERWER: Ocean state, that's right.

GINA RAIMONDO: Ocean state, I love this-- I really love it.

ANDY SERWER: See it on the license plates.

GINA RAIMONDO: Exactly. The ocean state. I grew up going to the beach, I grew up clamming. I feel we have to preserve the treasure of our coastal lands and our oceans. So in any event, I think people probably don't realize how much the Department of Commerce has to do with resiliency, climate, oceans, undersea efforts.

ANDY SERWER: You talk about being governor of Rhode Island. How is this job different from that job?

GINA RAIMONDO: Yeah, it's pretty different. Rhode Island's a small place, and you can make things happen quickly when you're the governor. So this is obviously, you know, just the building where we're sitting is gigantic. And we have almost 60,000 employees just in the Commerce Department. So I'd say that is different.

In many ways, though, leadership is leadership. You know, you set a vision, you manage your team, you drive to results. So in that way, it's very familiar. Working with the legislature is also very familiar for me. I enjoy it, I like it, it's part of the job. I did that as governor, I'm doing that here.

ANDY SERWER: Right. When you were governor of Rhode Island, you were out front back then saying that schools should stay open. I know you're not Education Secretary, but what is your thoughts on what's going on with our schools right now with the pandemic?

GINA RAIMONDO: I still feel kids need to be in school. You know, these vaccines are safe-- there has to be safety, obviously. We have to keep our teachers safe and our kids safe, no doubt about it. That means good protocols, more testing, everyone has to be vaccinated. But with those precautions, kids ought to be in school.

I really believe 20, 30 years from now when we look back, or maybe even 10 years from now, when we look back at COVID and we look at what are all the lasting negative impacts, the biggest one will be what happened to our kids-- the mental health issues, how they have fallen behind in their education.

And of course, this will just-- this, again, will contribute to the lack of equity in America because it will be the children who didn't have broadband, whose parents couldn't stay home to teach them, who were already a little bit behind who are just so much further behind. So I have religion on this topic, I also have two teenagers, and I see it. We got to get kids in school.

ANDY SERWER: There was a recent article out there talking about your future and being a bright light in the Democratic Party. I wonder what your ambitions are, Secretary Raimondo.

GINA RAIMONDO: To get through the week. I mean, like, I have big, big, big, big job here. We just touched on it. So this is what I'm focused on.

ANDY SERWER: All right. And finally, sort of a related question but a little different, I hope, is what do you see as your legacy here and maybe personally?

GINA RAIMONDO: Gosh. Wow. Here, I think the broadband that we talked about will be, if I do it right, my legacy. This is fundamental. This done properly it will be comparable to any of the biggest infrastructure implementations in our nation's history.

And as I look towards, like, the economy, and the digital divide, and how that plays into the economic and opportunity divide, there's a huge sense of urgency around getting broadband to everyone. So I think in this job, that'll be a big portion of it.

ANDY SERWER: Focus on that.

GINA RAIMONDO: Yeah.

ANDY SERWER: All right, US Commerce Secretary Gina Raimondo, thank you so much for your time.

GINA RAIMONDO: Thank you.

ANDY SERWER: You've been watching "Influencers." I'm Andy Serwer. We'll see you next time.