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Chuck Schumer, China, and Build Back Better

How does the Senate majority leader's own $200 billion China bill fit
into the equation?

 

Senate Majority Leader Chuck Schumer (D-NY) speaks at a press conference
about passage of the bipartisan infrastructure bill and the budget
resolution, August 11, 2021. (Michael Brochstein/Sipa USA via AP Images)

 

****

**** After several days of cliff-hanging negotiations, House
Speaker Nancy Pelosi last week pulled off a compromise with corporate
Democrats led by Josh Gottheimer of New Jersey that allowed them to
claim a tactical victory while conceding nothing of substance. House
Democrats, including Gottheimer's Gang of Ten, then voted unanimously
for the House rule allowing consideration of the full $3.5 trillion
budget resolution, also known as Build Back Better. In exchange, the
leadership guarantees a vote on the smaller bipartisan infrastructure
bill by September 27.

On all the substantive spending issues, the deal kicks the can down the
road. How much of the maximum $3.5 trillion allowed in the rule will
actually get the support of more conservative Democrats in the House and
Senate? What will the Congressional Progressive Caucus do if the
proposed cuts are too deep? All that will be the subject of negotiations
over the next month.

But there is another important pending bill that partly overlaps with
the infrastructure measures. That is Chuck Schumer's omnibus China and
U.S. manufacturing bill, now titled the U.S. Innovation and Competition
Act (USICA).

Thanks to Schumer's intense deal making, taking advantage of
Republican hawkishness on China as an economic and national-security
threat, USICA passed the Senate by a formidable vote of 68-32 on June 8.
In many respects, this was a far more impressive bipartisan achievement
than the modest bipartisan infrastructure bill, which includes about $60
billion of new money per year over ten years, much of it traditional and
noncontroversial.

USICA includes the earlier CHIPS Act, which allocates $52 billion under
the National Defense Authorization Act, to create incentive programs for
increased semiconductor production in the United States. The bill also
includes more funds for broadband, and increased funding for R&D under a
new Directorate for Technology and Innovation within the National
Science Foundation, as well as support for rebuilding supply chains in
other critical industries and technologies.

Schumer's bill also contains several trade provisions aimed at
strengthening domestic production and containing Chinese mercantilism.
It would codify in statute the strengthened provisions of President
Biden's Buy American executive order of last February and would
strengthen requirements that federally aided infrastructure projects
must use only iron, steel, and construction materials made in USA.

**Read all of our infrastructure coverage here**

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Schumer's bill also includes shrewd and salutary elements of what used
to be called pork barrel. The bill underwrites new regional technology
centers. And $10 billion in funds for domestic semiconductor production
is to be allocated by the states.

Since USICA mandates trade policy changes but also spends a lot of
money, you might think that Schumer, given his leverage as majority
leader, would put as much of it as possible into the reconciliation
process. And in a memorandum Schumer sent to committee chairs, he did
offer the National Science Foundation directorate for potential
inclusion in reconciliation. But a wider-scale inclusion of all of the
spending measures in USICA is evidently not Schumer's plan.

According to my sources, Schumer is committed to getting a freestanding
vote on USICA in the House by the end of the year. He is reportedly wary
that if too much of USICA spending is included in Build Back Better,
that would kill it as a freestanding bill, which includes a lot more
than spending. Reconciliation items, generally spending, must be related
to budgetary actions.

Given that a very large train-reconciliation-will be leaving the
station in October, you might say this is crazy; or it could be crazy
like a fox.

After all, Schumer did manage to secure Senate passage of his bill by a
filibuster-proof margin of better than two-thirds. That far exceeds the
51 votes that Democrats (with no small amount of luck and horse trading)
hope to get in the Senate passage of the Build Back Better budget
resolution.

There are, however, some glitches. First, the House is not yet on board.
Schumer's Senate legislation was cobbled together by making deals with
key Democratic and Republican senators, who first made deals with each
other. Different titles of the bill came out of different committees.
Other amendments were added on the floor.

The plus is that Schumer got buy-in from lots of key senators. A minus
is that the bill is legislation unique to the Senate.

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On the House side, jurisdiction is fragmented. A key player is Rep.
Eddie Bernice Johnson of Texas, chair of the House Committee on Science,
Space and Technology. She does not have a close working relationship
with Schumer.

The timing of reconciliation, slated for completion in the next month,
forces Schumer to judge USICA's potential House outcome months in
advance. It's possible that the House could eventually pass the
Schumer bill. More likely is that some but not all elements of USICA
will be approved by the House, piecemeal.

That leaves it to Schumer to determine what spending-related pieces
could get a stand-alone House vote, and what could be fitted into
reconciliation. But presumably, every provision placed in reconciliation
could sap momentum for a broader USICA bill.

A second problem is that in the various grand bargains made by Schumer
to assemble a broad Senate coalition, some really bad stuff got into
USICA. The worst single provision was the work of Democratic Sen. Ron
Wyden of Oregon and Republican Sen. Mike Crapo of Idaho. It suspends the
tariffs imposed on China through the end of 2022, and requires the
government to reimburse importers for duties paid. This provision runs
counter to the rest of the bill and is a gift to Beijing.

One other area is conspicuous by its absence. A shameful aspect about
the U.S. indulgence of Chinese mercantilism is the open access that
Chinese state-owned industries have to U.S. capital markets, enriching
middlemen such as Goldman Sachs. Some Republicans, such as Marco Rubio,
have proposed limits. Rubio made such a proposal in this magazine
.

With all of the far-flung bipartisan provisions in the USICA, most of
them exemplary, there was no room for a Rubio amendment. In his work as
a loyal and astute floor leader for Joe Biden's progressive program,
even adding some progressive elements of his own, Chuck Schumer has come
a long way. He hasn't come that far from Wall Street.

To read more about infrastructure and the Build Back Better Act, check
out our series Building Back America
.

 

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