[Congressional Record Volume 140, Number 26 (Thursday, March 10, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]
[Congressional Record: March 10, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]
NATIONAL COMPETITIVENESS ACT
The Senate continued with the consideration of the bill.
Several Senators addressed the Chair.
The PRESIDING OFFICER. The Senator from Missouri.
Mr. DANFORTH. Mr. President, I ask unanimous consent that in the
Cohen amendment numbered 1489, the words ``This Act'' in section 1 be
changed to ``This Title'' and, in sections 2 through 12, the words ``of
this Act'' be changed to ``of the Counterintelligence Improvements Act
of 1994.''
The PRESIDING OFFICER (Mr. Daschle). Without objection, it is so
ordered.
Mr. ROCKEFELLER addressed the Chair.
The PRESIDING OFFICER. The Senator from West Virginia.
Mr. ROCKEFELLER. Mr. President, prior to this transaction, I listened
to the colloquy between the Senator from North Dakota and the Senator
from South Carolina. It is true that the bill came out of commerce on a
unanimous vote. On the other hand, we do understand where we are, and
we have to accept that.
I would like to make a plea for, in a sense, kind of cool heads on
this because I really do not think that the country wanted to see us
fighting in this way over this bill, which was designed to create
precisely the kinds of jobs that we need in this country. What occurs
to me, as I listened to these arguments, and have over the past couple
of days, is that both sides of the aisle have participated in
developing these policies. These are, in fact, very bipartisan
policies.
This is understandable in the course of events. I really do believe
we can pass this bill, and I really do know that we must pass this
bill, because this is very good for my people in West Virginia and for
the people from urban and rural States. In many ways, it is the promise
of America. The next generation of what we have to be doing in America.
So I hope that we will understand that we are basically in partnership
on both sides of the aisle on the concepts embodied in S. 4. At NIH,
NASA, Department of Energy, DARPA, and the Department of Defense
Conversion, we are dealing with concepts that embodied in this bill.
I hope that debate will continue, and if there will need to be
cloture votes, that will happen. But cool heads and thoughtful heads
will reflect that this is really a bipartisan matter we are discussing.
I yield the floor.
Mr. HOLLINGS. Mr. President, does anybody wish further discussion on
the amendment of the Senator from Colorado?
Mr. DANFORTH. Mr. President, first, I do believe that some
explanation is in order for what happened in the Commerce Committee,
because repeatedly it has been said that this was a unanimous vote in
the Commerce Committee that it was approved in the Commerce Committee.
The fact of the matter is that it was agreed to by voice vote. There
was not a recorded vote in the committee. It is true that any Senator
on the Commerce Committee could have asked for a recorded vote. None
was asked for. I want to explain why that was the case. It was the case
not because everybody on our side of the aisle thought that this was
just a terrific bill; they did not. We had people on our side who did
not like this bill at all. But it was voice voted, very frankly,
because it was the chairman's bill. It was the bill that the chairman
has worked on over a long period of time, and I appreciate that. I know
he has labored very, very hard to bring this bill to the floor of the
Senate. He believes in it. A number of key ingredients in it are his.
The so-called Hollings Centers are centers that are named after the
very distinguished chairman of our committee. And I would really say
that it was a matter of comity, plus the fact that it was $2.8 billion
in an authorization bill, and people, frankly, let it slide.
Maybe we should not have. In retrospect, we should not have. I should
have asked for a vote and opposed it in committee. I did not do it
because I have other business to transact in that committee, and it was
the chairman's bill. I viewed this bill as something of a minor problem
in the quantity of it. I thought that it was a serious matter with
respect to the underlying philosophy. I do believe that it is
industrial policy. I do believe that it is an overinvolvement by
Government in the private sector. But it was not a matter that was
really high on my level of priorities. It was way down my level of
priorities until last winter. What happened last winter--I think last
December--was that our Government changed its existing policy with
respect to the subsidies code that was being negotiated in Geneva in
the GATT negotiations.
I am sure I can be faulted, and I have been repeatedly on the floor
of the Senate over the last 4 days, for letting this matter slide. But
I want to explain what it was that elevated this from a minor issue
that I was willing to let go by the committee to one that has become a
major issue.
What happened was that when our Government changed its position in
Geneva on the subsidies code, it decided to green light--that is, to
permit--certain subsidies to be in existence around the world, which
would no longer be countervailable. In other words, subsidies for
research and development up to a very high level of percentage would
now be permissible without the discipline of countervailing duties.
Subsidies for research, which is now defined as any combination of
basic research and applied research, would not be countervailable up to
75 percent of the cost of that subsidy. And subsidies for development
up to 50 percent would now be permissible without being
countervailable.
When that happened, it caught my attention, because I now thought
something very serious is in the works. What is very serious is a
breakdown of our international trading system and a breakdown of
disciplines that existed with respect to subsidies. I believed that
this was something that the administration was pursuing, and I do
believe that. The change in the subsidies code was not something that
was thrust upon our administration. It was something that this
administration pressed for in the trade talks. This administration
asked for this change and got this change. So suddenly, instead of
seeing this as something that was not desirable, but was reasonably
innocuous, and was, after all, the chairman's bill, it dovetailed, in
my mind, with what was done with respect to the subsidies code. And
therein is my problem.
It is the view of this Senator that we have a very, very serious
problem facing us, and the problem relates to subsidies for research
and development. I believe that if we get into a global contest with
the rest of the world on how much we are going to be subsidizing
research and development, that product after product after product is
going to look very much like Airbus; and we are going to be in a
position in our country of either keeping up with the rest of the world
and subsidizing or, in the words of a Commerce Department memorandum
that came to my attention well after this bill was out of our
committee, being a leader in the world of subsidies, or we are going to
lose major industries.
My interest in this bill is very closely tied with the trade
question. I have been speaking repeatedly with people at USTR,
including Ambassador Kantor and Ambassador Yerxa about this issue. I do
not think it is going to be easily solved. But it is my hope that with
respect to the enabling legislation, and with respect to perhaps side
agreements that could be reached with the Europeans and the Japanese
and the Canadians, perhaps we can somewhat mitigate what I consider to
be a very, very serious situation.
So now we have this administration in Geneva pressing for major
changes with respect to what governments can do for subsidies for
research and development, and also we have this very, very major spurt
forward in amounts of money to be spent for our own Government
subsidies for research and development in the private sector.
Senator Brown in the amendment that he has offered is absolutely
correct. Senator Brown has pointed out the dollar amounts, and it is a
huge increase in dollar amounts.
Senator Hollings says in 1992 we passed this. The 1992 bill was $208
million. That is what the Senate passed. This is $2.8 billion. This is
10 times as much as what we passed in 1992. This year for these
programs we have appropriated $526 million. This grows from $526
million to $1.37 billion in a single year.
I may be slow of wit. I am not here to brag about my own genius. I
should have seen this in the committee. I should have raised the issue.
I apologize if I blind-sided my chairman by not pointing it out
earlier.
But I will say, I think we have a serious policy matter before this
country, and I think that it deserves to be debated. I do not think
that it is correct to refer to it as Senator Hollings has as
monkeyshines and all this business. It is not monkeyshines. It is
industrial policy. It is the spending of the taxpayers' dollar or the
borrowed dollar in our Treasury. It is a major leap forward in the
entanglement of the Federal Government in the private sector and it is,
I believe, related to a trade policy which has now been adopted by our
Government, which is basically the sky-is-the-limit policy with respect
to research and development spending.
So, Mr. President, I think this is a serious issue, and I do not
think this is an issue which should be just dispatched in 1 day or 2
days on the floor of the Senate. I truly believe that we are going to
be living to regret what we are doing for a long time to come, not
because of S. 4 alone, not because of $2.8 billion, even though it is a
ballooned dollar amount over 2 years, but an authorization bill. Let us
face it, for $2.8 billion in itself is not exactly a world-shaking
event in this country. It is the whole idea that we are debating. It is
the whole idea. It is S. 4 plus what was done in Geneva. It is S. 4
plus the changes in the subsidies code asked for by this
administration.
I would just like to read to the Senate a column that was written
that appeared in the Washington Post in, I think it was January 1,
1993, and I missed this. I frankly did not read this column, and if I
had, maybe I would have been more alert to the problem of S. 4, but I
am just going to read it. It does not take all that long. It is by
Michael Schrage, and it appeared in the Washington Post. It is entitled
``Medical & Biological Technology.''
As both a new year and a new administration approach, one
question dominates the 1993 innovation agenda: Should
Washington become the nation's next capital of innovation,
and will it?
Once upon a time, Pittsburgh, Detroit and Wilmington, Del.,
were the nation's innovation capitals: Their smokestacks
symbolized American industry. In the decade past,
California's Silicon Valley, Boston's Route 128 and Wall
Street shared the postindustrial innovation honors: People
began to recognize that intellectual capital mattered every
bit as much as financial capital.
Of course, some folks would argue that Washington, with its
$70 billion-plus annual research and development budget and
an armada of alphabet agencies--NOAA, NASA, NIST, DARPA,
etc.--already is a capital of innovation.
Not true. Yes, there have always been champions of
innovation in the federal bureaucracy, but this is the first
postwar administration to have made it a central tenet of its
economic proposals.
With a new president promising ``change,'' ``investment''
and ``reinventing government,'' the map of American
innovation will inevitably be redrawn. Will Washington be at
its center? Off to one side? Or will the new administration
attempt to become the nation's innovation cartographer?
An administration that champions industrial
competitiveness, technological prowess and a new government-
industry ``partnership'' can't help but transform the culture
and business of American innovation. Should we invest in new
machinery now, or should we wait to see if that investment
tax credit materializes? Should we launch that new research
initiative, or should we first see if that new industry
consortium materializes?
If Ron Brown's Commerce Department helps organize and fund
a materials-research consortium of leading chemical
companies, who sets the research priorities? The government
technocrats, the Fortune 500 ``corpocrats'' or the
entrepreneurs? What determines its ongoing success? the
marketplace? Or an appropriations subcommittee worried about
the reaction back home? When defense contractors in
California and Massachusetts struggle to adapt to military
spending cuts, who helps oversee their retraining efforts?
The state? Or Robert B. Reich's labor Department and Les
Aspin's Pentagon?
These questions should not be construed as some morbid fear
of central government or concern over pseudo-socialistic
``industrial policies.'' The problem is actually much simpler
and more dangerous. When the nation's capital promises bold
and activist leadership, people understandably start to look
as much to Washington as they do to themselves. A corrupting
``psychology of the center'' emerges.
Even the boldest entrepreneurs start viewing
opportunities through the prism of policy. The capital of
innovation becomes the capital of innovation politics.
That's how leadership can devolve into pork-barrel co-
dependence. Consequently, it becomes just as important to
manage expectations as to manage programs.
Should Washington want to be seen as an arbiter of
postindustrial innovation? Or should Washington's role be to
enable dozens of innovation capitals to emerge? Does
leadership in innovation mean federal decentralization or
recentralization? Should government standards be used to
stimulate technical innovation? Under what circumstances is
federal intervention never appropriate?
This is what policy is all about. This is why rhetoric can
matter as much as implementation. You can't ``reinvent
government'' without first redefining it.
Clearly, there is a world of difference between innovation
policies designed to stimulate regional economic development
and those that recentralize power and influence. Clearly,
innovation policies designed to stimulate small-business
growth are fundamentally different from those intended to
encourage mature industries to adopt new technologies.
But, just as clearly, any administration that asserts that
these worthy goals can be pursued simultaneously understands
neither innovation nor priorities. The obvious risk is that
the promises of partnership quickly turn into a New
Paternalism: a belief that the federal government is
primarily responsible for setting technical standards,
funding new technologies, promoting technology transfer and
encouraging innovation.
Instead of necessity being the mother of invention, it
becomes the excuse that justifies government intervention.
The less obvious risk is that, if Washington becomes an
innovation capital, we lose the benefits of creative tension
and rivalry between industry and government. Open hostility
is clearly counterproductive, but so is coziness and
complacency. Look at the dramatic rise of fuel-efficient cars
and the emergence of the semiconductor industry as examples
in which the absence of public-private partnerships was
essential to marketplace success.
Transforming Washington into a capital of innovation hasn't
happened since Franklin D. Roosevelt and Vannevar Bush in
World War II. Their success was astonishing and undeniable.
But they had a world war and the most concisely articulated
set of philosophies, policies and programs since the
Federalist Papers. The new administration has little more
than sharp people and great expectations. That's probably not
enough.
Mr. President, that column really states the question. It is the
position of this Senator that that is not a minor issue for America. It
is a major issue. This S. 4 is a little window onto a major issue, but
it is nonetheless a major issue.
I would like to repeat to the Senate the two paragraphs--and I am
just going to read two paragraphs from the memo that was faxed either
from or to the USTR at Geneva, maybe from the Commerce Department, but
it clearly is a memo that was prepared by somebody in the Commerce
Department, so says the administration. This was faxed on November 27,
1993, with respect to the trade talks. Here it is. And it is about the
so-called green category; that is, the newly permissible forms of
governmental subsidies for R&D.
If the green category of the Dunkel draft Subsidies Code is
expanded to include development subsidies, the [U.S.
Government] will ostensibly choose between matching or
exceeding foreign subsidies or accepting the reduced
competitiveness of U.S. manufacturers. If the first choice is
made, budget resources will have to be made available or the
choice is illusory, and the reduction of subsidies discipline
would create a net loss to the U.S. economy, as others could
subsidize and we would not.
The overall effect on the economy can be positive only as
long as we remain willing and able to exceed foreign
subsidies, and to be selective in the particular areas
subsidized. * * * Thus, a decision to reduce subsidies
disciplines requires a commitment to be subsidy leaders, both
in choosing beneficiary sectors and amounts given, if we are
to ensure positive economic effects for the United States.
Because the Code will be in effect for many years, the
commitment must also be long-term.
Now I want to repeat that, Mr. President, because this is a
memorandum that was circulating contemporaneously with the time the
administration changed our position on the subsidies code. It says that
if we are to now green light subsidies for research and development,
that ``requires a commitment to be subsidy leaders, both in choosing
beneficiary sectors and amounts given.''
``Subsidy leaders.'' That is what is required. That policy is what
has brought all of this debate about. That policy with respect to the
Government's involvement in research and development has been what has
brought all of this about.
I do not agree with this policy. But the one thing I do not want us
to do is to blunder into a new policy by the bum's rush.
That is why I have been participating in this debate. It has not been
some political contrivance. It has not been some bad-faith manuever on
the part of the Senator from Missouri. It has not been an intentional
effort to somehow blindside my chairman. It has simply been that a
small matter has been blown into a big matter by a change in trade
policy. And I admit I should have seen it earlier.
Mr. President, I suggest the absence of a quorum.
Mr. HOLLINGS addressed the Chair.
The PRESIDING OFFICER. Does the Senator withhold the quorum call?
Mr. DANFORTH. No, I do not.
The PRESIDING OFFICER. The clerk will call the roll
Mr. HOLLINGS. Mr. President, I ask unanimous consent that further
call of the quorum be dispensed with.
Mr. DANFORTH. I object.
The PRESIDING OFFICER. Objection is heard.
The assistant legislative clerk proceeded to call the roll.
Mr. MITCHELL. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER (Mr. Mathews). Without objection, it is so
ordered.
Unanimous-Consent Agreement
Mr. MITCHELL. Mr. President, I ask unanimous consent that there be 17
more minutes for debate on the pending Brown amendment allocated as
follows: 5 minutes to Senator Rockefeller, 2 minutes to Senator Brown,
and 10 minutes to Senator Hollings; that upon the completion or
yielding back of that time, the Senate proceed to vote on or in
relation to the pending Brown amendment.
The PRESIDING OFFICER. Is there objection? Without objection, it is
so ordered.
Who yields time?
Mr. MITCHELL. Mr. President, I ask unanimous consent that the time to
be used in the obtaining of the following agreement not be charged
against the time on the pending Brown amendment.
The PRESIDING OFFICER. Without objection, it is so ordered.
____________________