The $280 billion CHIPS and Science Act approved by Congress last month has many virtues. It passed with bipartisan majorities in both chambers. It aligns government funding with technological areas at the core of U.S. geopolitical competition with China. It includes efforts to geographically diversify the American innovation base.
Yet Washington needs to move quickly past self-congratulation. Global competitiveness is a “long game,” as one of President Biden’s national security advisors, Rush Doshi, has written. And the United States is, in some ways, playing catch up. As David Sanger observed in the New York Times, the technologies funded by CHIPS and Science “largely replicate the Chinese list”—from 2015. Further, “the money will just get flowing while Chinese and other competitors move on to their next set of goals.”
The worst thing that U.S. policymakers can do now is think their job is done. Much work on competitiveness policy remains to be done — several important provisions were left out of the bill, money will need to be appropriated, and implementation will be just as important as passage.
Left on the Cutting Room Floor
The CHIPS and Science Act is “far from perfect, but still very good,” as the American Enterprise Institute’s Klon Kitchen wrote. Some pieces of the original competitiveness bills that generated considerable opposition from American companies were excluded. Yet other provisions that enjoyed bipartisan support and are critical for strengthening competitiveness didn’t make it into the final bill.
Two of those excluded provisions concern high-skill immigration. One would have created a pathway for giving green cards to foreign students graduating from U.S. universities with advanced degrees in STEM fields. Another would have established a startup visa for entrepreneurs from around the world to grow their companies here. China’s severely restrictive approach to curtailing the spread of COVID-19 has led to an “exodus of foreign talent,” an impact that will linger for years. This would have been an ideal moment for Congress to strengthen U.S. competitiveness by taking action to attract global talent.
A third piece left out of CHIPS and Science was a bipartisan $45 billion authorization for the Department of Commerce to support future supply chain resilience. It is surprising, after two years of delays and disruptions and rising concern in Congress over American dependence on other countries, that this measure was left out. Pandemic-induced supply chain challenges have touched nearly every aspect of the economy and deserve continued policymaker attention.
Finally, reauthorization of the Small Business Innovation Research and Small Business Technology Transfer Research programs was left out. The programs expire at the end of September and have been important to U.S. competitiveness. Political wrangling has left them in limbo, further contributing to the sense that China has a leg up.
From Authorization to Appropriation and Implementation
Sens. Chuck Schumer (D-NY) and Todd Young (R-IN) deserve plaudits for getting CHIPS and Science across the finish line. They have worked together for several years and through multiple legislative iterations to get to this point. That may have been the easy part.
The bill authorizes $170 billion over five years for research and innovation across four federal agencies. Key word: authorize. The money will still need to be appropriated by Congress at some later point. Given looming fights over federal spending, especially if Republicans take the House in the midterms, such appropriation is far from guaranteed.
Implementation will also come with challenges. The Commerce Department, for example, is charged with creating 20 “geographically distributed” regional innovation hubs “in areas that are not leading technology centers.” More support is also allocated for regional innovation “engines” at the National Science Foundation. The Economic Development Administration within Commerce has done good work in recent years funneling billions of dollars to innovation and entrepreneurship programs around the country. Geographically diversifying American innovation is another order of magnitude.
Economists and policymakers have in recent years rethought the nature and limits of place-based policy. While researchers traditionally found little positive impact from place-based policies, the sheer regional economic divergence that the United States is experiencing has prompted re-evaluation. Building vibrant innovation and startup ecosystems in more parts of the country is necessary. In 2021, four metro areas accounted for over half of all venture capital deals — this concentration has been true for years. Program design and implementation will determine whether congressional intent is realized.
China Won’t Rest
The “Made in China 2025” plan was started in 2015. The country’s Belt and Road Initiative launched in 2013. These are “long game” efforts by China to out-compete, out-innovate, and globally out-maneuver the United States. Successfully countering China doesn’t mean we must imitate them. But it does mean we need to remain full speed ahead on competitiveness policy. It is imperative that we implement CHIPS and Science effectively—and continue looking for ways to strengthen U.S. competitiveness in all dimensions for years to come.
Dane Stangler is director of strategic initiatives at the Bipartisan Policy Center.