The Competition and Innovation Act Is Bad Enough. Don’t Make It Worse.

COMMENTARY Budget and Spending

The Competition and Innovation Act Is Bad Enough. Don’t Make It Worse.

May 26th, 2021 2 min read
COMMENTARY BY
Walter Lohman

Director, Asian Studies Center

As Director of The Heritage Foundation’s Asian Studies Center, Walter Lohman oversees the think tank’s oldest research center.
The bill had far too many references to industrial policy, which in some sense is its essence. Nitat Termmee / Getty Images

Key Takeaways

The bill spends well-over $100 billion on research and development that is not only better left to the private sector, but in fact is duplicative.

Some of the amendments out there make the bill better. There are more pending, however, that make it worse.

There is a lot of good in this bill. To preserve that and make it something worth supporting, lawmakers should start by not making it worse.

The United States Competition and Innovation Act, i.e., “the China bill,” continues its sleepy way through the Senate. But don’t be fooled by the long quorum calls and diversions to take care of other business. There are more than 400 amendments filed.

Out of the gate, the bill had far too many references to industrial policy, which in some sense is its essence. It gifts $52 billion to the semiconductor industry and spends well-over $100 billion on research and development that is not only better left to the private sector, but in fact is duplicative of existing government initiatives. It also includes many domestic political riders, like prevailing wage standards, that have nothing to do with the China challenge.

Where it should be strong, for instance, in protecting the very research it authorizes, it falls short.    

Some of the amendments out there make the bill better. There are more pending, however, that make it worse. Here are some of the lowlights:

  1. An amendment to add the secretary of agriculture to the Committee on Foreign Investments in the United States. This would unnecessarily complicate foreign investment in the U.S. agriculture sector. The committee can already avail itself of Department of Agriculture expertise if a truly security-related security issue arises regarding a specific investment.
  2. An amendment to add another $1 billion in spending to create a new grant and cost-sharing program through the Department of Transportation to subsidize the use of alternative fuels by commercial airlines. The Obama administration tried a similar alternative jet fuel program in the military, at great cost to taxpayers. Climate-policy-by-subsidy is a costly approach and reinforces cronyism rather than empowering customers.
  3. An amendment to double the size of Defense Advanced Research Projects Agency. It is not clear that DARPA needs, is requesting or can absorb an additional $3.5 billion per year in new funding.     
  4. An amendment to establish a nonprofit corporation called ‘‘National Fab Lab Network,’’ which among other things, would literally and explicitly seek establish a fab lab in every congressional district.
  5. An amendment requiring a report be conducted on a 2015 World Trade Organization ruling against the United States regarding mandatory country-of-origin labeling for beef, pork, and other meat products. A rethink of this issue is completely unnecessary and undermines already precarious support for principles of free trade. In 2015, Congress repealed Mandatory COOL, and did so for many reasons, including its cost
  6. An amendment instituting a blanket ban on the Thrift Savings Plan investing in “Entities Organized or Established in the People’s Republic of China.” There are reasons to curb U.S. investment in certain Chinese companies, but such a broad designation is unnecessary to get at U.S. security concerns. Politicizing retirement investing to achieve grand foreign policy objectives is no less a mistake than doing so for political and social objectives.

This list is meant to be illustrative, a call for those who care about the China challenge to dig into what is happening in the Senate. There is a lot of good in this bill. To preserve that and make it something worth supporting, lawmakers should start by not making it worse.

This piece originally appeared in The Daily Signal.