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Rubio Wants More Guardrails for Research Funds in China Bill

PoliticsMay 17, 2021 18:12
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2/2 © Bloomberg. An employee wearing a cleanroom suit walks through bay 1 inside the GlobalFoundries semiconductor manufacturing facility in Malta, New York, U.S., on Tuesday, March 16, 2021. Production plants for semiconductors have become a focal point as the economic recovery from the pandemic is held back in areas by a shortage of some of the critical electronic components necessary. Photographer: Adam Glanzman/Bloomberg 2/2

(Bloomberg) -- Senator Marco Rubio has proposed an amendment to a broad package of legislation to counter China that aims to shield research and development boosted by a massive infusion of cash from threats of espionage or theft.

The change being sought by the Florida Republican to a package of bills based on a proposal from Senate Majority Leader Chuck Schumer and Indiana Republican Senator Todd Young offers a preview of the sort of skirmishing that is likely to erupt as Schumer pushes for floor passage of the legislation by the end of the month.

Rubio’s amendment would expand oversight of research funds to include the U.S. intelligence community, requiring the Director of National Intelligence and other agencies such as the Federal Bureau of Investigation to certify that anyone receiving money authorized by the legislation is not susceptible to foreign threats. It also would prohibit people who have received financial or other support from the Chinese government from receiving funds authorized by the legislation, among other provisions.

Rubio wants to add his proposals to the Endless Frontier Act, the legislation from Schumer and Young that is forming the backbone of a broader package that will receive floor consideration this week. An initial procedural vote is scheduled Monday afternoon.

The main part of the bill would authorize more than $100 billion over five years to boost research and development of innovative technology and manufacturing at colleges, universities and other institutions and create a new entity within the National Science Foundation to focus on technology.

It’s also expected to include a $50 billion emergency appropriation aimed at boosting domestic semiconductor manufacturing, as well as funding for a communications security initiative designed to counter China’s dominance of 5G networks, according to a person familiar with the matter.

The package is being pushed toward passage on an aggressive timetable by Schumer. The fervor among Democrats and Republicans to counter about China’s challenge to U.S. economic primacy has made the legislation, known as the Endless Frontiers Act, one of the few bills to draw broad support at time when partisan divisions are running deep. Its fate also may serve as an indicator for other proposals, such as infrastructure, that have nominal bipartisan support.

“Federal underinvestment in sciences has seen our country slip, exposing critical weak spots in our economy,” Schumer said last week, setting up the first vote on the legislation. “If we don’t fix them, we will no longer be the number one economic leader in the world.”

Related to that goal is a separate proposal expected to be included that would provide $50 billion for a program aimed at increasing semiconductor manufacturing in the U.S. that was passed as part of the 2021 defense bill but never funded. The proposal has gained urgency as a global shortage of semiconductors causes economic pain in the U.S., shutting down auto plants because of a lack of chips for cars and trucks.

Semiconductor Supplies

Republican Senator John Cornyn of Texas has been working on the proposal with Democratic Senator Mark Kelly of Arizona along with others and said he expects it will supported by the White House as well as Senate Republicans. President Joe Biden in his broader infrastructure proposal has called for as much as $50 billion to expand U.S. chipmaking.

“If China decided to cut off our supply of semiconductors it would be like the Strait of Hormuz is to oil,” Cornyn said. “It would be a disaster economically.”

Despite generally broad support, the Endless Frontier Act was the subject of a sometimes contentious markup session in the Senate Commerce Committee on Wednesday.

Scores of amendments were proposed and some were adopted, sometimes over the protest of co-sponsor Young. In particular, he called an amendment proposed by Democratic Senator Ben Ray Lujan of New Mexico, a “poison pill” because it would divert some of the funding to the Department of Energy for its network of national laboratories. Among those is the Los Alamos National Laboratory (NYSE:LH) in New Mexico.

Funding Shift

“I am disappointed that an amendment was adopted to divert significant funding away from the NSF Tech Directorate in favor of a program outside of the Committee’s jurisdiction,” Young said in a statement after the bill was approved by the committee.

The legislation has been carved up into separate tranches, with about half of the money going to the core functions of the National Science Foundation and another almost $30 billion going to help stand up a new tech directorate within the agency.

Lujan’s amendment sends about $17 billion to the national labs. His co-sponsors included GOP Senators Marsha Blackburn of Tennessee, Shelley Moore Capito of West Virginia and John Thune of South Dakota, all of whom represent states where the national labs have a presence. Lujan’s amendment passed 23 to 5 and the overall bill passed the Commerce Committee by 24-4.

Rubio had also called on the Senate floor for the legislation to be directed to the Defense Advanced Research Projects Agency -- or DARPA -- instead of the National Science Foundation, calling the NSF “the same agency that time and again has had the research we fund stolen by professors and graduate students who are on the payroll for China.”

Other Republicans, including those on the House Republican Study Committee, Congress’ largest ideological caucus, said the legislation did not have sufficient protections built into it and called for boosting defense spending rather than spend money on research and development.

Such political horse-trading -- along with a bipartisan desire to confront China -- may be key to passage in the Senate.

The Endless Frontier Act, which is supported by numerous industry and trade groups, will be combined with a bill passed by the Senate Foreign Relations Committee this year and with proposals from other Senate committees, including Banking and Health Education and Labor. Senators will also be able to offer amendments on the floor. The process for passing the overall package is estimated to take two weeks.

©2021 Bloomberg L.P.

Rubio Wants More Guardrails for Research Funds in China Bill
 

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