The United States is at an economic inflection point. After an extraordinary recovery from the costly disruptions of the COVID-19 pandemic, the country is better positioned to succeed than most developed economies. But its ability to deliver long-term growth and improve Americans’ quality of life hinges on whether it can build at scale.
Building physical capacity—housing, energy generation, transmission lines, factories, data centers—is more critical to the U.S. economy today than it has been for decades. After 15 years of insufficient housing construction, the lack of affordable homes is lowering the country’s annual economic output, potentially by hundreds of billions of dollars. After 25 years of stagnant investment in energy networks, an inability to meet rising electricity demands risks increased consumer costs and more frequent blackouts. And for decades, the United States has failed to properly invest in the industrial capabilities necessary to build important infrastructure, including semiconductor factories, nuclear power plants, and critical supply chains. In the process, it has ceded some technological ground to China and other adversaries at a time of intensifying global competition over new technologies.
Meeting this imperative to build is not only essential for the United States’ success; it can define a pragmatic and politically successful economic policy. In recent years, the United States has enacted legislation that can help support more rapid and ambitious building. But now is the time to double down, by eliminating barriers imposed by all levels of government, embracing an environmentalism that prioritizes building, and delivering on a clear-eyed, pro-building industrial strategy to support critical national and economic security priorities.
Many of these goals are consistent with the rhetoric of President Donald Trump and some members of his administration. But the economic policy approach that the administration seems intent on pursuing will make it harder to unleash a building boom, with tariffs driving up costs for construction and manufacturing materials, political and economic uncertainty limiting investment, and massive tax cuts further ballooning the deficit and raising borrowing costs.
For those seeking a more constructive policy path forward, the answer is not just to resist and repair the damage from Trump’s policies. It is to craft a clear and compelling alternative vision of building in the United States and to create new coalitions to make this vision a reality. In economic terms, this means shifting the focus from the demand side to the supply side. Tools such as tax incentives and grants—although they may be necessary in many places—are not sufficient to overcome the web of procedural hurdles that drives up the cost of building. Nor can deregulation on its own reform the deeply embedded market structures that inhibit competition and keep costs high. In political terms, it means recognizing that both progressives and conservatives have contributed to these barriers and that solutions will require overturning entrenched bipartisan biases against building. An increasing number of voices on both the left and the right are identifying how policymakers at all levels of government have failed on this front, which is an important step. But reversing decades-long trends will require not only accurately diagnosing the problem but advancing practical solutions.
TRAILING BEHIND
It has become too hard and too expensive to build physical things in the United States. Construction productivity has fallen 40 percent in the past 50 years, and infrastructure construction costs are now more than double the Organization for Economic Cooperation and Development average. Partly as a result, the United States is no longer a leader in many cutting-edge manufacturing industries. Regulatory challenges further exacerbate the difficulties: it takes years to complete the federal permitting process for projects requiring an environmental impact statement—the most comprehensive form of environmental review—and years in some cities to permit a multifamily housing project. In California, environmental-review lawsuits have sought to block the permitting of nearly half of all proposed housing units.
Building is often mistakenly treated as a second- or third-tier macroeconomic issue. In an economy fueled increasingly by services and intellectual property, it’s commonly thought that growth and innovation are driven by advances in knowledge-based sectors. But expanding the United States’ capacity to build is not just about bricks and mortar. Making enough affordable housing, generating sufficient electricity, and supporting cutting-edge technology development are necessary for innovation and productivity growth. As the economist Ed Glaeser has said, “Restricting construction ties cities to their past and limits the possibilities for their future.” Scaled to a national level, the consequences are enormous.
Increased building is key to lowering prices for American consumers. The United States needs as many as five million more homes. This undersupply raises housing prices and prevents many Americans from becoming homeowners. It exacerbates regional inequality and curtails Americans’ ability to move to pursue better jobs—thus undermining their productivity—or provide their children with greater opportunities.
This housing shortage coincides with one in the energy sector. Driven by the electrification of buildings and transportation, increased domestic manufacturing, and the energy needs of artificial intelligence, national electricity demand is expected to grow more than 15 percent in the next five years. But the United States lacks the transmission infrastructure and generating capacity to meet it, which could result in increased consumer prices and ultimately threaten the supply of affordable, abundant power that supports the country’s industrial competitiveness.
Increased building is key to lowering prices for American consumers.
The United States needs to build more to unlock growth from innovation. The digital age birthed most of the businesses that define the current U.S. economic landscape; only five companies that were on the Fortune 100 list in 1990 are still on it today. Infrastructure investment in telecommunications, including fiber optic cables, enabled that shift to digitization. Today, a new set of technologies—in artificial intelligence, advanced computing, biomanufacturing, and energy—present even greater innovation potential. But this can only be enabled by physical infrastructure: data centers, semiconductor factories, transmission lines, and more. Around the world, countries will have to build twice as many data centers in the next five years as they built in the past two decades to meet growing demand. To maintain a technological edge in AI, the United States must keep pace with this expansion. More than at any other moment in the past half century, the United States’ potential to innovate will be limited by its ability to build.
The country must overcome these hurdles to enhance its economic and national security. Amid growing political fragmentation and economic competition, particularly from China, the United States cannot solely count on other states to supply it with essential goods and materials, including semiconductors and critical minerals. The country’s success will increasingly depend on whether it can recover the type of industrial muscle memory—the ready capability to manufacture what it needs—that it has lost over the past two generations.
There has been some notable progress in recent years to address this problem. Congress and the Biden administration, where I served as the director of the National Economic Council, passed three laws that provided historically large long-term incentives to build: the Bipartisan Infrastructure Law, the Inflation Reduction Act, and the CHIPS and Science Act. Early signs indicate they are delivering important benefits. Real investment in manufacturing construction has increased 130 percent over the past four years. Companies have invested billions of dollars in domestic semiconductor manufacturing; a “battery belt” has sprouted up across the Midwest and Southeast to produce batteries for electric vehicles and energy storage; and the country has broken ground on 18 economically significant bridges and ten high-capacity data-transmission projects. Under the Biden administration, the typical time to complete an environmental impact statement fell by about eight months. But these laws are designed to support long-term investments; their ultimate effect will depend on what comes next.
ALL-OUT EFFORT
As the New York Times writer Ezra Klein has noted, the federal government “is extremely good at making building difficult.” Housing is an urgent example. For decades, the U.S. housing shortage has been growing ever more acute, a car crash in slow motion. By 2024, nearly three-quarters of Americans polled said they were very concerned about the cost of housing. The United States should set an ambitious goal to build millions of housing units in the next decade and take on the federal, state, and local barriers to reaching that target. To do so, it needs to employ sticks, not only carrots that have proved increasingly insufficient.
States and municipalities that impede reasonable housing construction with restrictive land-use and zoning regulations should lose access to federal resources. This should include highway and transportation funding as well as their share of the $15 billion in tax credits that the federal government provides each year to encourage construction of low-income housing. The government should also expand the scopes of Fannie Mae and Freddie Mac, the government-sponsored companies that together guarantee most U.S. mortgages, so that they encourage more housing construction in places that get zoning right.
Creating a government that can build also requires taking on the political processes that uphold the status quo. The United States has what could be called an infrastructure-industrial complex, wherein members of Congress from both parties fight vigorously to resist competition in building to preserve funding for their constituents and protect special interests. In practice, this results in the government funding infrastructure projects by using predetermined formulas to award grants directly to states, which then often select projects through opaque processes and offer costly contracts to a shrinking number of construction firms. This system keeps costs high and construction timelines long. Such a dynamic was on display during the creation of the Bipartisan Infrastructure Law, which I helped negotiate. Although the law succeeded in prioritizing projects with greater returns on investment—such as the first competitive programs for rebuilding economically significant bridges—every effort to introduce cost-effective considerations was vigorously fought by special interests, including industry lobbyists and standards organizations.
The United States needs to break this mindset. Taxpayer resources should only be used to pay for performance. This means calling out those across the political spectrum who try to prop up a system that is failing to meet the building imperative and challenging a long-standing attitude across the construction industry that building things in this country is destined to be slow and expensive. It will require prioritizing projects of national economic significance—for example, interstate bridges and energy transmission lines—over narrow local concerns as well as radically improving planning capacity to avoid constant delays. Another promising solution could be the creation of a national infrastructure bank to find and finance cost-effective large-scale projects. Many of the same principles of infrastructure reform, including more efficient construction and fairer contracting, can apply to other areas of need, too, including housing and clean energy.
American environmentalists should lead this building push. Two generations ago, they built a legal and regulatory framework to solve the greatest environmental challenges of the time: rampant air and water pollution, unchecked industrial development, and environmental degradation. This solution was hugely successful in stopping polluting activity before it happened. But the most pressing environmental threat today is not uncontrolled industrial expansion; it is a collective failure to build the energy capacity needed for a cleaner, more resilient future. The long-term tax incentives in the Inflation Reduction Act are a powerful tool to encourage building energy capacity, but they remain insufficient. Previous decades of environmentalism showed that a well-designed regulatory architecture can lead to profound change. Today, however, progress requires flipping the script and creating a regulatory architecture that encourages building more, not less.
Chinese efforts to dominate supply chains should motivate building.
In the face of growing electricity demand, producing only zero-carbon energy in the near term is neither politically nor technically feasible. But those committed to combating climate change should recognize how competitive clean energies have become. In 2024, almost 95 percent of the generating capacity added to electrical grids across the country came from solar and wind power or from battery storage. This is largely because, at this point, clean technologies are simply better solutions. In the face of active efforts to tilt the playing field against clean energy—including Trump’s unfounded antagonism to individual technologies such as wind power—environmentalists should shift their focus away from keeping all fossil fuels in the ground and toward reforms that enable cleaner energy to compete fairly and win.
This should include eliminating regulations that impede the development of new energy-generating sources and addressing the backlog of projects waiting to be connected to the grid, almost allof which would generate energy from zero-carbon resources. Those who want a cleaner energy future should abandon ambivalence toward nuclear power and instead embrace a bold goal: building at least ten gigawatts of new nuclear power by 2030, enough to power ten million homes. This would involve sweeping reforms of a regulatory framework that currently makes it nearly impossible to build clean nuclear energy because of outdated safety concerns.
This also requires accepting the difficult truth that climate change is already affecting the environment; there is no scenario in which every habitat, species, and community in the United States remains unchanged. Rather than opposing reforms to the National Environmental Policy Act, environmentalists should champion a new approach that replaces outdated bureaucratic barriers with clear, results-driven rules enabling rapid, responsible building. This can happen even as environmentalists rightly push back against Trump’s efforts to undermine core legal protections for clean air and water, such as the ability to regulate greenhouse gases under the Clean Air Act.
Finally, the United States needs a pro-building industrial strategy that meets the geopolitical moment. Current and future national security risks (especially Chinese efforts to dominate supply chains) should motivate building; they justify a sustained U.S. investment in critical materials, nuclear energy, and energy-storage technologies to preserve supply chains and industrial capacity. As the China expert Dan Wang makes clear in his analysis of China’s economic successes, it takes sustained and patient state support to make an industrial superpower.
At the same time, the increased national security considerations in economic policy can also impede building. Higher tariffs and geopolitically motivated export controls on goods necessary for U.S. manufacturing can make the national building effort more costly. Trump’s erratic and over-the-top approach to trade is an extreme example of this. But in all contexts, tools such as tariffs and export controls should be used narrowly within a broader industrial strategy that accelerates American efforts to build. The United States should welcome more foreign investment (including from China) and use tariffs designed to encourage greater building, for instance those based on the carbon footprint of imported goods, which would affect areas where China has dangerously outsized manufacturing capacity and facilitate coordination with trading partners—such as the EU, the United Kingdom, and Australia—that are considering or have already adopted their own carbon tariffs.
THE TRUMP EFFECT
Some of these prescriptions may feel fanciful amid the intensity and uncertainty created by the first months of the second Trump presidency. The painful irony of the administration’s culling efforts through its Department of Government Efficiency is that its approach will likely make it more difficult and costly to build things, not less. In part, this is because DOGE is ideologically driven, fixated more on grievances than on actual productive goals, and is carelessly destroying government capacity without preserving what is necessary. The ramifications extend to building. As Republican Senator Lisa Murkowski of Alaska recently said, the United States cannot “realize [its] potential for responsible energy and mineral development if we can’t permit projects.” Altogether, the economic consequences of Trump’s frenetic first year could be significant, undermining the United States’ strong global position.
But the United States’ need to build can drive the country from its current insufficiencies to where it must go. Building can lower costs for all Americans, fuel economic growth, and concretely solve real problems in a way neither narratives nor vibes can. It can enable new coalitions across party lines, uniting manufacturers, AI innovators, and families concerned about housing affordability or the climate crisis. It can make the United States more secure in an increasingly insecure world.
A focus on building can move the economic conversation away from the conceptual—discussions of political narratives or economic theories—and toward something more practical. Many in the policy world, including me, have too often fallen victim to abstractions when talking about building. “Supply-side progressivism” is a helpful description of the policy direction underlying much of the impulse to build, but it is neither concrete nor inspiring. Even Klein’s term of “abundance” is a kind of shorthand that can veil the stakes of the building imperative more than it reveals them.
At its core, the idea is simple: the United States must build again. Americans want more affordable housing to save money and live where they want to; building millions of housing units can deliver this. They want more affordable and reliable energy; building a cleaner and more resilient energy system can deliver this. They want the United States to be the world leader in innovation; building semiconductor factories and AI data centers can deliver this. An uncompromising and ambitious effort to realize these goals requires fearlessness, not reckless disruption. It is within the country’s reach.
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