The Senate just passed the next Apollo program
June 17, 2021 Source: The Hill | By: Keith Krach
It’s one small step for Congress, one huge leap for American competitiveness. By passing the U.S. Innovation and Competition Act (USICA) with strong bipartisan support, the Senate went a long way in countering what Secretary of State Antony Blinken called “the biggest geopolitical test of the 21st century” — China’s growing military, geopolitical, and economic aggression under the leadership of General Secretary Xi Jinping.
Xi’s biggest fear is for the United States to have another Sputnik moment and commit to the equivalent of a moonshot. USICA is designed to do exactly that by taking the technological advantage away from China Inc. and returning it to the United States. Ensuring tomorrow’s technology is trusted technology that empowers free societies facing perpetual authoritarian threats.
From my experience of creating categories by building four market-leading companies, I can tell you securing these advanced industries is not cheap. However, when the government targets smart investment in research and development with partners from the private sector, we get a tremendous bang for our buck. Just look at the Apollo program. Our $140 billion investment (today’s dollars) put a man on the moon. The program not only led to American leadership in aerospace but resulted in hundreds of spin-off products — from kidney dialysis machines to micro-electronics. It’s still paying dividends. In 2018, U.S. leadership in aerospace and commercial aviation contributed $2.3 trillion in GDP to the U.S. economy. That initial $140 billion investment continues to yield $4.1 trillion in annual recurring GDP.
Since the 1960s, however, U.S. government long-term investments in research have been declining. We once led the world. Now, we rank 9th globally in total R&D and 12th in publicly financed R&D. Corporate investments are crucial, but they are typically constrained to be shorter-term in nature due to the 90-day shot clock for quarterly earnings. For the sake of our national security and continued global leadership, it’s critical that high-tech R&D is a public-private partnership.
The U.S. Innovation and Competition Act has quite a few valuable provisions. The main one is its Endless Frontier Act component which authorizes about $150 billion over five years for scientific and technological research in 10 tech-intensive industries that America simply cannot cede to China Inc., including semiconductors, 5G, AI, clean energy, cybersecurity, quantum, robotics, biotechnology, and others.
The CHIPS Act portion of the USICA is derived from our team’s historic $12-billion onshoring of Taiwan Semiconductor Manufacturing Company (TSMC), appropriates nearly $53 billion to bring back American semiconductor manufacturing after we lost it. The bill’s crucial emphasis on Taiwan puts real muscle behind the Lee Economic Prosperity Partnership and the Science and Technology Agreement we signed as a result of my trip to Taiwan last fall as the highest-ranking State Department official in 41 years.
That Taiwan trip was one of the reasons why this small-town Ohio boy ended up No. 3 on Dictator Xi’s sanctions list. I received this distinction not for what I said as under secretary of State, but for serving my country and getting results. However, the main reason was building the Clean Network Alliance of Democracies, which defeated Xi’s master plan to control 5G through Huawei. The Wall Street Journal called the Clean Network “an undisputed success” and perhaps the “most enduring foreign-policy legacy” of the last four years. With Huawei now neutralized, USICA’s $1.5 billion infusion for 5G innovation will accelerate American companies’ efforts to get back in the 5G game.
The Clean Network was a product of my mission to take economic statecraft to the next level by developing and operationalizing a Global Economic Security Strategy (GESS) — which later became another bipartisan bill, The Global Economic Security Strategy Act of 2019 — aimed at driving economic growth, maximizing national security, and combating economic aggression. It consisted of three pillars: 1) turbocharge economic competitiveness and innovation; 2) safeguard American’s assets, such as intellectual property, supply chains, financial and education systems; and 3) form a network of trusted partnerships comprised of like-minded countries, companies, and civil society that operates by a set of democratic trust principles for all areas of economic collaboration, which turned into the Clean Network.
The Endless Frontier Act, initially conceived in October 2019, was one of the byproducts of the first pillar of the Global Economic Security Strategy. Our team at the State Department worked with Senate Majority Leader Charles Schumer, a Democrat from New York, and Sen. Todd Young, a Republican from Indiana, to reboot America’s technological leadership at a time when we face an urgent threat from the Chinese Communist Party. The bipartisan legislation which was introduced a few months later was designed to spawn tomorrow’s trusted technology by boosting investment in high-tech research vital to our national security.
Most significantly, USICA is a catalyst for such private-sector, and even allied, R&D investments. The strategic plan presented by Paul Touw, my senior advisor and fellow founder of Ariba, and me to senators and congressmen demonstrated how to grow this critical high-tech research investment to $500 billion with matches from the private sector and our closest technological allies. We later validated this and garnered significant interest from companies and countries that became members of the Clean Network.
The beauty of this approach is that it not only compounds the government’s R&D funding in 10 national security sectors but also maximizes the commercialization of those investments by leveraging private-sector resources and know-how. From an economic diplomacy standpoint, it also enhances collaboration and increases economic competitiveness with our Techno-Democracies-10 (TD-10) partners to counter China Inc. The TD-10 was designed as a powerful coalition of 10 to 12 like-minded countries assembled to compete with China Inc. by focusing on the development, protection, dissemination, and use of emerging technologies.
USICA’s focus on economic statecraft with its investment in alliances and partnerships, coupled with the increase of the Development Finance Corporation’s (DFC) funding from $60 billion to $100 billion, significantly bolsters the continued expansion of Clean Network beyond the original six lines of effort. USICA also gives a shot in the arm to the clean infrastructure initiative we rolled out as the Blue Dot Network, aptly renamed the Clean Green Network. It was gratifying to see the G-7 recently get behind this initiative because it serves as an equitable and unifying alternative to China’s “One-Belt One-Way Toll Road to Beijing,” as one Asian foreign minister called it.
By passing the U.S. Innovation and Competition Act, the Senate did its part to send a powerful message to our citizens, private sector, allies and the Chinese Communist Party itself that America is united in its commitment to preserve our precious freedom from authoritarianism. It’s now the House’s turn to take the baton and then, let’s get on with the moonshot.
Keith Krach was unanimously confirmed as U.S. under secretary of State and is former chairman and CEO of DocuSign and Ariba. He also served as Chairman of the Purdue Board of Trustees.