Senate Passes Invoice to Bolster Competitiveness With China

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WASHINGTON – The Senate overwhelmingly passed sweeping law Tuesday that would invest nearly a quarter trillion dollars in scientific research and development over the next five years to help build competitiveness with China as Republicans and Democrats teamed up to create the most significant Government intervention in industry policies advocated for decades.

Legislators overcame traditional party political disagreements on economic policy to support expansive federal investments in a range of new technologies and manufactures, including the semiconductor industry. The 68-32 vote reflected a bipartisan sense of urgency to counter Beijing and other authoritarian governments that have invested significant resources in strengthening their industrial and technological strength.

The unilateral support for the 2,400-page bill was the result of a series of political changes that resulted in a rare moment of consensus on the issue. Because of the coronavirus pandemic, which resulted in a shortage of essential goods that highlighted the country’s dependence on its greatest geopolitical adversary, Washington policymakers sought to increase domestic manufacturing capacity. The bill was passed hours after the Biden government announced new steps to strengthen American supply chains.

“Those who take advantage of technologies such as AI and quantum computing as well as previously unknown innovations will shape the world in their own image,” said Senator Chuck Schumer, the democratic majority leader and long-standing China hawk who headed the bill. “Do we want this picture to be a democratic picture? Or do we want an authoritarian image, as President Xi wants to impose on the world? We can either give our opponents the cloak of global leadership or we can pave the way for another generation of American leadership. “

The legislation, which was at its core a collaboration between Mr. Schumer and Indiana Republican Senator Todd Young, would prop up semiconductor manufacturers by providing emergency funding for a $ 52 billion subsidy program with few restrictions and a lifeline for the industry during one global chip shortage that closed car factories and ran through the global supply chain.

It would pour hundreds of billions more into scientific research and development pipelines in the United States, creating scholarships, and promoting agreements between private companies and research universities across the country to promote breakthroughs in new technology.

“When future generations of Americans look to new borders, will they see a red flag planted on those new borders that are not our own?” Said Mr. Young during a speech in the Senate. “Today we answer clearly: ‘No.’ Today we declare our intention to win this century and those who will follow it. “

While the core of the legislation is aimed at promoting research and development in new technologies, it also includes an important trade measure. This move would re-authorize an expired provision allowing the temporary suspension of tariffs on certain products imported into the United States and call on the Biden government to impose sanctions on those responsible for forced labor practices and human rights abuses in and around Xinjiang.

It remains to be seen whether the law can achieve its ambitious goals. With the intent of Mr Schumer to use his newfound power as the majority leader to enforce the legislation, and lawmakers keen to give the bill personal priorities, the package quickly moved through the Senate, garnering provisions as diverse as a new round of funding for NASA and a ban on the sale of shark fins.

It is likely to face stronger headwinds in the House of Representatives, where leading lawmakers have expressed skepticism about its focus on promoting emerging technologies. This debate played out in the Senate, which ultimately diluted the original concept of the law.

Updated

June 8, 2021, 7:00 p.m. ET

To channel money into existing programs in their states, lawmakers shifted much of the $ 100 billion allocated to a research and development center for new technologies at the National Science Foundation to basic research and laboratories at the Department of Energy. The amount for cutting-edge research has been reduced to $ 29 billion.

Members of the House of Representatives Science Committee have signaled a desire to move on along this line by bringing in their own bill that avoids the focus on technology development in favor of funding basic research in a number of less mandatory areas, including climate change and cybersecurity.

“Instead of believing that unconstrained research will somehow lead to the innovations needed to solve problems, history teaches that problem-solving itself can drive innovation that creates new industries and gains competitive advantage,” said Eddie Bernice Johnson , A Democrat from Texas and the chair of the House Science Committee, wrote.

Some Democrats in the House of Representatives have also mocked the church projects that were incorporated into Senate law in an attempt to gain broader support. While many of them were added after extensive hearings, such as a round of funding for NASA with terms likely to benefit Jeff Bezos’ space company, some were added to legislation with little or no debate, such as a provision to double the annual budget of a Pentagon research agency.

Concerns in the House of Representatives, coupled with complaints from some Republicans in the Senate who argue that legislation is rushed and not tough enough on China, mean that it will be likely to put together a draft compromise that can find enough support in both houses heavy. Negotiating such an agreement will almost certainly spark another frantic lobbying round for a bill that is one of the few expected to be passed this year.

But Tuesday’s overwhelming vote reflected how commercial and military competition with Beijing has become one of the few issues that can unite both political parties – and how determined the legislature is to override legislative paralysis in order to do that Moment to meet.

That consensus arose when, along with Donald J. Trump, Republicans abandoned their usual skepticism about government intervention in the markets and assumed a much more active role in helping American companies compete with a leading adversary.

Senator John Cornyn, a Conservative Republican from Texas who has historically criticized government funding for the industry, said subsidies for semiconductors had become a necessity.

“In all honesty, I think China leaves us no choice but to make these investments,” he said.