House Passes Bill Providing Billions to Compete With China, Boost Research

House Passes Bill Providing Billions to Compete With China, Boost Research

iStockphoto/The Fiscal Times

The House on Friday passed a broad bill aimed at boosting competitiveness with China and increasing federal support for scientific and technological research. The vote sets up a potential showdown with the Senate, which approved its own more modest version of the legislation last year.

The House bill, called the America COMPETES Act of 2022, authorizes hundreds of billions of dollars for research and development, including $52 billion for incentive programs to ramp up U.S. production of computer chips, helping to combat a global shortage that has plagued the tech and automotive industries and fueled inflation. It also provides $45 billion over six years to address supply-chain problems and support domestic manufacturing.

House Speaker Nancy Pelosi (D-CA) said the bill “will ensure that America's pre-eminence in manufacturing, innovation and economic strength, and can outcompete any nation.”

The 222-210 House vote fell almost entirely along party lines. One Republican, Rep Adam Kinzinger of Illinois, joined Democrats in supporting the measure, while one Democrat, Rep. Stephanie Murphy of Florida, voted no, citing concerns about the trade provisions in the bill. “This bill is going to arrive in the Senate DOA, and because it is so chock full of progressive, protectionist policies that will never make it through the Senate,” Murphy said, according to Politico.

Republicans, meanwhile, criticized the bill’s trade climate provisions and said it did not do enough to counter China. “It wastes billions of dollars on unrelated matters and includes no measures to make China pay for the chaos they created,” House Minority Leader Kevin McCarthy told reporters.

What’s next: The House bill must now be reconciled with the Senate version, the $250 billion United States Innovation and Competition Act (USICA) of 2021, which passed in a 68-32 bipartisan vote in June. That may be a challenge, given the differences between the two bills and stark partisan divides over some provisions. The compromise version will need to be approved by both chambers again, meaning it will require the votes of at least 10 Senate Republicans.

The process could take quite some time though President Joe Biden on Friday called for the House and Senate to move quickly. “Business and labor alike have praised this legislation as vital for continuing the economic momentum we’ve seen over the last year, and national security leaders from both parties have said that the investments in this bill are needed if we want to maintain our competitive edge globally,” he said in a statement. “I look forward to the House and Senate quickly coming together to find a path forward and putting a bill on my desk as soon as possible for my signature. America can’t afford to wait.”

Commerce Secretary Gina Raimondo likewise urged lawmakers to speed the process, telling reporters it “should take weeks, not months.”

The cost question: Published reports put the cost of the 2,900-page House bill at up to $350 billion, but the Congressional Budget Office has yet to issue an official cost estimate, and budget watchers criticized lawmakers for pushing ahead without one.

“Maintaining America’s economic standing by improving our ability to compete with China on research and manufacturing is a worthy investment, but it should not come at the expense of future generations saddled with more debt,” Maya MacGuineas, president of the Committee for a Responsible Federal Budget said in a statement Thursday. She added that lawmakers “should reconsider whether it is worth borrowing from China to compete with them and instead fully offset any proposed increases in spending or reductions in taxes.”

Why it matters: “The bill’s passage stands to become a major win for the White House and Democratic leaders, with the party eager to tackle voters’ rising concerns such as inflation and supply chain bottlenecks,” Politico’s Gavin Bade and Sarah Ferris write. “But even its supporters acknowledge that much of the House bill — stuffed with Democratic trade priorities to increase supply chain oversight, expand tariffs and tighten U.S. trade laws — is unlikely to become law.”

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