The COMPETES Act Is a Bad Idea. Here’s What Congress Should Do Instead
The 2,912-page America COMPETES Act (H.R. 4521; the backronym is for ‘‘America Creating Opportunities for Manufacturing, Pre-Eminence in Technology, and Economic Strength’’) is the latest in a series of spending bills intended to spark the economic recovery from the COVID-19 crisis and revive America’s manufacturing sector. The problem with this is that unemployment is down to 3.9 percent. GDP grew 5.7 percent last year, and has already made up the ground it lost at the height of the pandemic. Manufacturing output is already higher than it was when COVID hit, and is near the all-time record high set in 2018.
So that rationale is a no-go. But the COMPETES Act has another purpose: To counter China. The Chinese people are our friends, but the government in Beijing is not. President Xi Jinping’s consistent illiberalism is harming the Chinese people and China’s neighbors and trading partners.
The COMPETES Act seeks to counter Beijing’s illiberalism by imitating it. This is the same “but they do it, too” argument the Trump administration used to justify its trade war. The COMPETES Act’s copycat policies include tens of billions of dollars of corporate subsidies, stricter control of capital flows, and centrally planned innovation. Imitation is the sincerest form of flattery, which is why the American economy would be best served if Congress scrapped the COMPETES Act altogether.
Seen in this light, perhaps it is a good thing that much of the COMPETES Act’s text is a mish-mash of competition-unrelated wish-list items and campaign-season pork. These include coral research, climate change initiatives, and union organizing efforts. Of course, these are also bad policies.
But there are plenty of things Congress should do instead:
- Give the Federal Reserve the independence it needs to get inflation under control. It can do this by keeping out political activist appointees.
- There are currently more than 1 million federal regulatory restrictions that cost the economy nearly $2 trillion per year. These badly need to be addressed via structural reforms.
- The national debt just hit $30 trillion, nearly a third more than America’s entire GDP. Congress should spend less.
- Tariffs are clogging supply chains and raising prices on hundreds of billions of dollars of goods, above and beyond what inflation is doing. Congress and President Biden could lift most of these burdens immediately if they wanted to.
- Nearly a quarter of jobs now require some kind of occupational license, up from about 1/20th of jobs 60 years ago. These licenses are often economic protectionism, and block opportunities for millions of workers and thousands of businesses.
These are all areas where Congress can help American businesses become more competitive and have real accomplishments to show off.
It is not enough to simply oppose bad bills such as the America COMPETES Act. Reformers should also have a positive agenda. In addition to the ideas listed above, my colleague Wayne Crews has his own list over at Forbes, and there is also the latest edition of CEI’s Agenda for Congress.