[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.

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