Commentary on Political Economy

Wednesday 9 June 2021


Senate Overwhelmingly Passes Bill to Bolster Competitiveness With China

The wide margin of support reflected a sense of urgency among lawmakers in both parties about shoring up the technological and industrial capacity of the United States to counter Beijing.

The legislation was a collaboration between Senator Chuck Schumer, the majority leader, and Senator Todd Young, Republican of Indiana.
The legislation was a collaboration between Senator Chuck Schumer, the majority leader, and Senator Todd Young, Republican of Indiana. Credit... Stefani Reynolds for The New York Times
Catie Edmondson

WASHINGTON — The Senate overwhelmingly passed 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.

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Republicans and Democrats — overcoming their traditional partisan differences over economic policy — banded together to endorse what would be the most significant government intervention in industrial policy in decades. It includes federal investments in a slew of emerging technologies as well as the semiconductor industry.

The 68-32 vote reflected the sense of urgency about the need to counter Beijing and other authoritarian governments that have poured substantial resources into bolstering their industrial and technological strength.


The lopsided margin of support for the 2,400-page bill was the result of a series of political shifts by lawmakers jolted to action by the pandemic. Virus-related shutdowns led to shortages of crucial goods that highlighted the country’s dependence on China, its biggest geopolitical adversary. Nineteen Republicans, including Senator Mitch McConnell, Republican of Kentucky and the minority leader, voted in favor of the legislation.

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The Senate on Tuesday voted 68-32 to approve legislation that would spend a quarter-trillion dollars over the next five years on scientific research and development aimed at boosting the United States’ ability to compete with Chinese technology. Credit Credit... Stefani Reynolds for The New York Times

Policymakers have moved to increase domestic production capacity. Passage of the legislation came hours after the Biden administration announced new steps to strengthen American supply chains.

The nations that harness technologies like artificial intelligence 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?” Mr. Schumer said. “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 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 ambition of the bill to accommodate those objections.

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

The bill would sink hundreds of billions more into scientific research and development pipelines in the United States, create grants and foster agreements between private companies and research universities 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,” he added.

President Biden hailed the passage of the legislation on Tuesday shortly after the Senate approved it, adding that he hoped to sign it into law “as soon as possible.”

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“We are in a competition to win the 21st century, and the starting gun has gone off,” he said in a statement. “As other countries continue to invest in their own research and development, we cannot risk falling behind.”

While the legislation’s centerpiece is focused on bolstering research and development in emerging technologies, it also includes major trade and foreign policy measures. Those would again allow for the temporary suspension of tariffs on specific imports and would call on the Biden administration to impose sanctions on those responsible for forced labor practices and human rights abuses in and around the Xinjiang region of China.

With Mr. Schumer intent on using his 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.


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, with the rest of the original funds funneled toward basic research and the labs.

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.

In a stark reflection of just how much some conservatives have evolved on the issue, eight Republicans joined with Democrats on Tuesday to support keeping in the legislation a prevailing wage requirement, known as Davis-Bacon, aimed at semiconductor companies.


“This type of targeted investment in a critical industry was unthinkable just a couple years ago, but the need for smart industrial policy is now widely accepted,” said Senator Marco Rubio, Republican of Florida. “I hope my colleagues will recognize a strong American work force is similarly important to the future of our nation.”

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.

“For everything from national security to economic policy, there’s a clear and urgent need to reorient the way our country views and responds to the challenge from China,” he said.

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