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Surprise: China COMPETES bill is boon for military spending

Legislation set for debate this week goes way beyond semiconductors and uses paranoia over not 'keeping up' to get more money for defense.

Analysis | Reporting | Military Industrial Complex

This week, the House of Representatives considers legislation that would authorize hundreds of billions of dollars in new federal spending on supply chains, research, foreign affairs initiatives, and more.

Though this bill, the America COMPETES Act, has been framed as an alternative to similar legislation passed by the Senate last year to address domestic semiconductor manufacturing, the massive America COMPETES bill could actually pave the way for increased military spending in the years ahead.

National security and competition with China are a major part of the messaging around the bill, with both President Biden and key Congressional Democrats framing America COMPETES as a way to "combat" or “outcompete” China. Now to be clear, China’s “state-led efforts to develop an indigenous, vertically integrated semiconductor industry, unprecedented in scope and scale” may be of legitimate concern to Members of Congress and the Biden administration. But it is worth noting that in 2019 China ranked only fourth in the world in semiconductor fabrication capacity, according to the Congressional Research Service (CRS). Three U.S. allies — South Korea, Taiwan, and Japan — combined to compose 5.5 times the “fab” capacity of China.

Nevertheless, Division A of the America COMPETES Act — and its parent legislation, the CHIPS for America Act, which was included in the fiscal year (FY) 2021 defense policy bill — is framed around “national security” and the threats posed by China. Rep. Michael McCaul (R-Texas), top Republican on the House Foreign Affairs Committee, warned upon introduction of the CHIPS for America Act in June 2020 that the “Chinese Communist Party aims to dominate the entire semiconductor supply chain.”

Lawmakers have been sufficiently spooked to authorize $54 billion in semiconductor (or ‘chip’) spending under the America COMPETES Act, for domestic semiconductor incentive programs already approved by law under CHIPS for America. That may be small compared to the likely FY 2022 military budget of $740 billion, but it’s no small potatoes.

The military also directly benefits from the chips largesse in America COMPETES. The Department of Defense, a likely beneficiary of significant budget increases this fiscal year, receives $2 billion under America COMPETES to “establish a public-private partnership” to “incentivize the formation of one or more consortia” to “ensure the development and production” of “secure microelectronics.” (I’ll pause while you wrap your head around the layers of bureaucracy Congress is setting up here; it took me awhile.)

For some, that additional $2 billion for the military (on top of the $25 billion budget boost they’re likely to receive when Congress finally figures out appropriations for FY 2022) is actually not enough. Rep. Pat Fallon (R-Texas) has a proposed amendment to the legislation that would have the Secretary of Defense identify “additional military funding [needed] to effectively respond” to China’s military. Rep. Fallon’s amendment would also include a “certification” — a professional and Congressional word for “complaint” — that America COMPETES provides no funding for the Department of Defense “to carry out military operations to counter the People’s Republic of China.”

Despite complaints from Rep. Fallon and other House Republicans that the bill doesn’t include enough funding for the military, these defense hawks may get their wish in due time. Multiple sections of the bill, and at least one proposed amendment, could pave the way for more military spending down the road. Allow me to take you on a brief tour of this military-adjacent language:

Section 10224 contains no funding but requires the National Institute of Standards and Technology (NIST) to establish a “program for AI [artificial intelligence]-enabled defense research.”

Section 30210 asks the Secretaries of Defense and State to “present a plan for strengthening the community of civilian defense professionals in Taiwan” (this is the section Rep. Fallon would amend, asking the military to tell Congress how much money the military wants to respond to China’s military).

Section 30222 authorizes $225 million over five years for State Department international military education and training (IMET) programs.

Section 30224 asks the Secretaries of State and Defense to expand programs that “provide capabilities to allies and partners in the Indo-Pacific region” (this includes support for providing “air and missile defense systems,” “anti-ship cruise missiles,” “land attack cruise missiles,” and “long-range precision fires” missiles to Indo-Pacific allies).

Section 30247 authorizes $67.5 million over five years for the “International Military Education and Training Program” in Latin America and the Caribbean.

Section 30261 calls for “deepen[ing] bilateral defense consultations” with India.

Section 30263 asks the Secretaries of Defense and State to “develop a multi-year strategy” for supporting “U.S. interests” in the Indian Ocean.

Section 30299E calls on the Secretaries of Defense, State, and Homeland Security to report on how the U.S. can “provide assistance” and build “capacity” of civilian and national security institutions in the Pacific Islands.

Furthermore, a proposed amendment from Rep. Josh Gottheimer (D-N.J.) would authorize $655 million in five-year funding for foreign military financing assistance in the Indo-Pacific region and $40 million for a “pilot program” that would have countries enter into foreign military financing compacts with the U.S.

I don’t include any of the above provisions to suggest they are wholly good or wholly bad. Many of the countries referenced above have important economic, diplomatic, and/or security relationships with the United States, and several (like Taiwan) have to deal with aggression and interference in their affairs from China.

But beware when the reports and requests outlined above are submitted by military officials to members of Congress in the months and years ahead. The common thread through all could be requests for more funding, more programs, more personnel, more weapons, and more goods for the U.S. military. And in that way, the America COMPETES bill is more than just a monster bill that will cost taxpayers hundreds of billions of dollars now. It may increase the military budget far into the future.

Analysis | Reporting | Military Industrial Complex
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