There Is No Salvaging Congress’ Current Effort to Compete With China

COMMENTARY International Economies

There Is No Salvaging Congress’ Current Effort to Compete With China

Feb 4th, 2022 4 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.
Speaker of the House Nancy Pelosi talks to reporters at a news conference in the U.S. Capitol Visitors Center on February 03, 2022 in Washington, D.C. Chip Somodevilla / Getty Images

Key Takeaways

The bill does everything imaginable but make America more competitive—let alone deal with the breadth and depth of the China threat.

These and other amendments pull Congress away from the sort of things it could do to actually confront the China threat.

While this bill is unsalvageable and reconciling it with the Senate bill is unlikely to fix it, there is a way forward.

The House of Representatives is considering the America COMPETES Act, a 3,000-page House response to the Senate’s United States Innovation and Competition Act. The $318 billion bill’s ostensible purpose is to address the wide-ranging challenge that China poses to America’s homeland, economy, global interests, and values.

The bill does everything imaginable but make America more competitive—let alone deal with the breadth and depth of the China threat.

And it is darn expensive. The only way to get a viable bill that actually enhances the interests of the nation is to start over.

Thursday’s debate on the House floor is not going to save this bill. Most of the amendments that the House Rules Committee has allowed (it disallowed far more) to be offered are small ball. The amendments that are of any significance will make the bill worse. Some of the bad ideas in this bill include:

  • Doubling down on wasteful energy spending. The bill includes a proposal to require the U.S. government to build 30 gigawatts of offshore wind energy by 2030. Another proposes to expand the already bloated federal research and development infrastructure with a new agency on ocean research. There is an amendment to create a Freight Rail Innovation Institute to develop zero-emissions trains, and an amendment establishing yet another climate education program and grant to indoctrinate schoolchildren on global warming.
  • Enshrining in U.S. policy a demand that African countries eliminate the use and extraction of fossil fuels. The U.S. should be helping African countries, all of which urgently need cheap, reliable energy to power their economies and improve the health and well-being of their citizens, to create the mix of energy solutions appropriate to their desires and contexts. Depriving Africa of this will stir resentment among our African partners and hobble American efforts to respond swiftly and as effectively as possible to the energy crisis in Africa.
  • Micromanaging the movements of empty shipping containers. The bill enacts the Open Shipping Reform Act, which, among other things, will further disrupt supply chains by slowing container movements, thereby driving costs and risks to shippers bringing in goods or factory inputs.
  • Imposition of major new reporting requirements on private securities offerings, including Regulation D offerings. Regulation D offerings are the most important means of raising capital in the U.S. and central to maintaining dynamism and innovation in the U.S. economy.
  • An amendment expressing the sense of Congress that it is the national interest of the United States to join the United Nations Convention on the Law of the Sea. This is wrong on policy. If anything, the last decade has shown how little the treaty restrains aggression in the Pacific. But it is also important to point out that ratifying this agreement is the job of the Senate, and it has refused to do so, now for more than 25 years.  
  • An amendment to repeal the 25% cap on U.S. contributions to U.N. Peacekeeping. This is pending a “written commitment from the Under-Secretary-General of Peace Operations that they will engage regularly with the US on peacekeeping reforms.” The U.S. is already charged more than the combined assessments of 186 other countries. 

These and other amendments pull Congress away from the sort of things it could do to actually confront the China threat. Yet, even as members push back on them, it is important to stay focused on the costly, non-China-related provisions already baked into either this bill or its Senate precursor.

The reason why the amendments on offer are so meager is because the intent is just to get into negotiations with the Senate and pass and get signed into law the things in the underlying bill. Examples include:

  • The America COMPETES Act dramatically expands controversial Trade Adjustment Assistance from a roughly $500 million program to a more than $3.3 billion program to give wasteful handouts to well-connected workers, unions, firms, communities, and community colleges. This is always a hard-fought issue in the Senate, generally involving Republicans trading support for it in exchange for a Democrat concession toward free trade. With the concept of free trade now dying on Washington’s vine, no such compensation is in the offing here.
  • The House bill gives almost $100 billion to well-connected businesses without regard to their ties to China. The best advertised part of this funding will go to the semiconductor industry, but it’s actually more than this. The bill authorizes an additional $45 billion for virtually any other manufacturing that can meet an overly loose definition of “critical,” as well as $2 billion especially for low-end auto-related chips.
  • The Senate’s Innovation and Competition Act offers National Science Foundation research grants worth more than $190 billion to a list of government-determined areas of focus. None of it, or the additional $160 billion in research funded by the House bill, is sufficiently protected from being stolen by China.

The ideas in the America COMPETES Act most egregiously irrelevant to the China challenge are summarized in the president’s official Statement of Administration Policy.

His support for this purported attempt to help Americans compete with China hinges entirely on non-China-related priorities, including the expansion of the Department of Energy’s Office of Science, expansion of the National Science Foundation, the creation of regional technology and innovation hubs, and expansion of the Manufacturing Extension Partnership program and Manufacturing USA institutes.

While this bill is unsalvageable and reconciling it with the Senate bill is unlikely to fix it, there is a way forward.

First of all, there are amendments to the bill that were denied by the Rules Committee to be considered on the House floor. Secondly, the foreign relations division of the Senate’s Innovation and Competition Act had several positive provisions, and its House counterpart a couple. The two committees were trying to work out compromise to serve as a base for a bigger package when the House Democratic Leadership blew the whistle on the process in order to pursue the more politically directed America COMPETES Act package.

The House China Task Force and the Republican Study Committee have also produced comprehensive proposals that could be used as a basis for starting over again. And at this point, that is, unfortunately, the only sensible thing to do.

This piece originally appeared in The Daily Signal