Sun. May 22nd, 2022


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Senate Overwhelmingly Passes Bill to Bolster Competitiveness With China

5 min read

WASHINGTON — The Senate overwhelmingly passed expansive legislation on Tuesday that would pour nearly a quarter-trillion dollars over the next five years into scientific research and development to bolster competitiveness against China, as Republicans and Democrats banded together to endorse the most significant government intervention in industrial policy in decades.

Lawmakers overcame their traditional partisan differences over economic policy to back expansive federal investments in a slew of emerging technologies and manufacturing, including in the semiconductor industry. The 68-32 vote reflected a bipartisan sense of urgency about countering Beijing and other authoritarian governments that have poured substantial resources into bolstering their industrial and technological strength.

The lopsided margin of support for the more than 2,400-page bill was the result of a series of political shifts have generated a rare moment of consensus on the issue. Jolted to action by the coronavirus pandemic, which prompted shortages of crucial goods that highlighted the country’s dependence on its biggest geopolitical adversary, policymakers in Washington have moved to try to increase domestic production capacity. Passage of the legislation came hours after the Biden administration announced new steps to strengthen American supply chains.

“Whoever harnesses the technologies like A.I. and quantum computing and innovations yet unseen will shape the world in their image,” said Senator Chuck Schumer, the Democratic majority leader and a longtime China hawk who helped spearhead the bill. “Do we want that image to be a democratic image? Or do we want it to be an authoritarian image like President Xi would like to impose on the world? Either we can concede the mantle of global leadership to our adversaries or we can pave the way for another generation of American leadership.”

The legislation, the core of which was a collaboration between Mr. Schumer and Senator Todd Young, Republican of Indiana, would prop up semiconductor makers by providing an emergency injection of funding for a $52 billion subsidy program with few restrictions, sending a lifeline to the industry during a global chip shortage that shut auto plants and rippled through the global supply chain.

It would sink hundreds of billions more into scientific research and development pipelines in the United States, creating grants and fostering agreements between private companies and research universities across the country to encourage breakthroughs in new technology.

“When future generations of Americans cast their gaze toward new frontiers, will they see a red flag planted on those new frontiers that is not our own?” Mr. Young said during a speech on the Senate floor. “Today, we answer unequivocally, ‘No.’ Today we declare our intention to win this century, and those that follow it as well.”

While the centerpiece of the legislation is focused on bolstering research and development in emerging technologies, it also includes a major trade measure. That measure would reauthorize a lapsed provision allowing for the temporary suspension of tariffs on specific products imported into the United States, and would call on the Biden administration to impose sanctions on those responsible for forced labor practices and human rights abuses in and around Xinjiang.

Whether the legislation can meet its ambitious goals remains to be seen. With Mr. Schumer intent on using his newfound power as majority leader to push the legislation through and lawmakers eager to attach personal priorities to the bill, the package moved swiftly through the Senate, picking up provisions as diverse as a fresh round of funding for NASA and a ban on the sale of shark fins.

It is likely to face stiffer headwinds in the House, where top lawmakers have expressed skepticism about its focus on bolstering emerging technologies. That debate played out in the Senate, which ultimately watered down the original concept of the legislation.

Eager to steer money to existing programs in their states, lawmakers shifted much of the $100 billion that had been slated for a research and development hub for emerging technologies at the National Science Foundation to basic research, as well as laboratories run by the Energy Department. The amount for cutting-edge research was reduced to $29 billion.

Members of the House science committee have signaled a desire to continue in the same vein, introducing their own bill that eschews the focus on technology development in favor of financing fundamental research in a series of less prescriptive fields, including climate change and cybersecurity.

“Rather than having faith that unfettered research will somehow lead to those innovations needed to solve problems, history teaches that problem-solving can itself drive the innovation that in turn spawns new industries and achieves competitive advantage,” Representative Eddie Bernice Johnson, Democrat of Texas and the chairwoman of the House Science Committee, wrote.

Some House Democrats have also derided the parochial projects that were inserted into the Senate bill in a bid to win broader support. While many of them were added after extensive hearings, such as a round of funding for NASA with terms that are likely to benefit Jeff Bezos’s space venture, several were attached to the legislation with little or no debate, such as a provision to double the annual budget of a Pentagon research agency.

The concerns in the House, paired with complaints among some Senate Republicans who argue that the legislation was rushed and did not take a tough enough stance on China, mean that knitting together a compromise bill that can garner enough support in both chambers is likely to be difficult. Negotiating such a deal is all but certain to prompt yet another frenzied round of lobbying on a bill that is one of the few considered likely to be enacted this year.

But the overwhelming vote on Tuesday reflected how commercial and military competition with Beijing has become one of the few issues that can unite both political parties — and how deeply lawmakers are determined to override legislative paralysis to meet the moment.

That consensus has emerged as Republicans, following the lead of Donald J. Trump, have dropped their customary skepticism of government intervention in the markets and embraced a much more activist role to help American companies compete with a leading adversary.

Senator John Cornyn, a conservative Texas Republican who has been critical in the past of government funding of industry, said the semiconductor subsidies had become a necessity.

“Frankly, I think China has left us no option but to make these investments,” he said.

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