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Deep Dive: USICA

As Congress returns from its two-week recess, the House and Senate will begin negotiations to finalize a deal on far-reaching China competitiveness legislation known by a variety of names, including USICA, the “Endless Frontier Act,” the “America COMPETES Act” and the Bipartisan Innovation Act.

We expect action in the Senate as soon as this week to formalize the chamber’s conferees to officially negotiate on the final package. While there have been some discussions between aides for Senate Majority Leader Chuck Schumer and Minority Leader Mitch McConnell during the two-week break, those talks will really pick up when the Senate returns.

The two leaders need to reach an agreement on votes on motions to instruct the conferees before moving forward. These motions, which are non-binding, ostensibly provide instructions for the conference negotiations. But in reality, they’re used to make senators, particularly those in tough reelection campaigns, take hard votes. The votes to instruct conferees must take place before the Senate actually appoints these senators, although both leaders have already declared who they plan to appoint.

Our main takeaway from conversations with lawmakers and staff from both sides is that everyone wants a deal. There’s not an adversarial tone between Senate Democrats and Republicans closely involved with this bill, at least not right now. Even as leaders negotiate around the motions to instruct, both sides seem more focused on presenting a united front as they enter into talks with the House.

This is a rare moment. The package falls under the jurisdiction of multiple committees. There are more than 100 conferees combined from both chambers, with tens of billions of dollars at stake amid a frenzy of lobbying activity. The conference negotiations will be a complex process, to say the least.

Everyone is tracking this closely, from K Street to the White House to big corporations whose business models would be significantly impacted by the legislation. Also notable: it’s likely the best chance for a big bipartisan bill passing before the midterms that doesn’t involve Ukraine. There’s a possibility that insulin pricing, Electoral College reform and Big Tech antitrust bills get through, but the clock is ticking on all of these and it’s almost May. This proposal is much further down the line and has momentum.

Overall, a final bill will likely be far closer to the Senate product than the House product. Remember — the Senate passed USICA on a big bipartisan vote last year. The House passed their version, the America COMPETES Act, in February with Rep. Adam Kinzinger (Ill.) as the sole Republican supporter.

House aides point out that their bill is made up of key components from more than a dozen pieces of legislation that previously received overwhelming bipartisan support. But the Senate’s negotiating position right now is united — and as a result stronger — than the divided House.

The safe bets:

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The roughly $52 billion in funding for the CHIPS Act will almost certainly be in the final bill, aides familiar with the negotiations told us. Democrats and Republicans alike hail the push to incentivize domestic semiconductor chip manufacturing. This is, by far, the most popular provision in the package. Big corporations including IBM and Intel, as well as the Semiconductor Industry Association, are all lobbying hard for the CHIPS Act.

Crucially, both the House and Senate bills contain roughly the same dollar figure for semiconductor-manufacturing support.

The hang ups:

→	Trade policy. The biggest differences between the House and Senate bills are on trade issues. Watch this space closely; there’s a lot of work to be done to bridge the divides here.

An expansion of Trade Adjustment Assistance. A program providing benefits to U.S. workers harmed by globalization is included in the House bill. However, the Senate version doesn’t mention TAA reauthorization at all. This will be a struggle to get support among House and Senate Republicans.

Tariffs directly aimed at China. Section 301 exclusions previously granted by the U.S. Trade Representative are reinstated under the Senate’s USICA bill. There’s not a comparable provision in the House bill. The business community is lobbying heavily to get these exclusions extended, allowing more U.S. companies to get around the tariffs.

Outbound Investment Screening. A provision in the House bill would task USTR with reviewing large investments in China and other countries for national security implications. This was excluded from the Senate product due to a lack of support. Some critics believe it’s applying too broad a brush for a targeted problem. Expect the issue to be a big topic of discussion during the bicameral negotiations.

The Office of Manufacturing Security and Resilience. In both the House and Senate bills, there’s support for an office to monitor supply chains and provide financial support to strengthen these commercial networks. The House bill provides $46 billion in funding, while the Senate version doesn’t have any. There’s general agreement that the office is needed, but the hangup will be how much it costs.

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National Science Foundation funding. The treatment of the NSF was one of the major differences between the House and Senate bills. Differences include how much to funnel to the foundation and what its responsibilities would be. While our sources stressed these differences would be far easier to bridge than the disputes over trade provisions, crucial differences still remain.

The no-gos:

→	Climate change provisions. The House-passed America COMPETES Act featured billions of dollars to assist developing countries in countering the effects of climate change. This has little realistic chance of making it into the final package due to GOP opposition.

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Immigration provisions. The House bill also included immigration reforms that would provide more visas for entrepreneurs and a path to permanent residence for immigrants who attain a Ph.D. in a STEM field while in the United States. Republican aides involved in negotiations say these are a definite no-go in the current political environment.

Storylines to watch:

Inflation messaging. Republicans see inflation as the driving issue for the midterms. Democrats see this bill as a way to talk about solving supply chain problems and lowering inflation. Will Republicans be willing to give them that win?

Motions to instruct. The new vote-a-rama? As we mentioned earlier, Senate Republicans are looking to force Democrats into politically embarrassing votes on so-called “motions to instruct,” which are essentially messaging votes aimed at “instructing” Senate conferees in a conference committee. Sen. Bernie Sanders (I-Vt.) also wants some votes, including removing the chip manufacturing provisions. Keep an eye out here for vulnerable Democrats who have begun to break with President Joe Biden on border policy.

White House involvement. For the most part, the White House has been relatively hands-off during the USICA talks. The Commerce Department has taken the lead. Could USICA become the White House’s new legislative focus with a Build Back Better rebirth looking unlikely?

USICA

Players to watch on USICA

There are 107 members of the USICA conference committee. Quite simply, it’s an unwieldy mass of legislators. Only a select handful, however, will actually matter. Beyond leadership — who will, of course, play vital roles — here are the main players to watch in the conference committee.

→	Sen. Todd Young (R-Ind.): Young has been the key Senate GOP player on USICA. Young has been intimately involved in the National Science Foundation provisions and is eager to see tech hubs distributed across the country and away from traditional power centers.

→	Sen. John Cornyn (R-Texas): Cornyn is the GOP sponsor of the CHIPS for America Act, a major component of USICA. Cornyn, along with Young, has been a leading Republican on the bill in the Senate. Plus, Cornyn is very close with GOP leadership.

→	Sen. Mark Warner (D-Va.): Warner is the Democratic sponsor of the CHIPS Act. Along with Senate Majority Leader Chuck Schumer, he will play a key role in negotiating these provisions.

→	Sen. Maria Cantwell (D-Wash.): Cantwell is chair of the Senate Commerce Committee, which has jurisdiction over many of the key provisions of USICA.

→	Sen Foreign Relations Committee Robert Menendez (D-N.J.), Finance Committee Chair Ron Wyden (D-Ore.) and HELP Committee Chair Patty Murray (D-Wash.): They’ve been deemed key negotiators for Senate Democrats.

→	Sen. Rob Portman (R-Ohio): Portman has been very involved in China-related issues within the bill, but he has also been involved in CHIPS funding. Intel recently announced the construction of two chip factories in Ohio. Portman may also be key in working out a TAA deal.

→	Rep. Eddie Bernice Johnson (D-Texas): “EBJ” is chair of the Science, Space and Technology Committee. She’s also the architect of the bipartisan Science Committee portions of the original House-competitiveness bill from 2021. She will be the lead House negotiator.

→	Reps. Frank Pallone (D-N.J.), Richard Neal (D-Mass.) and Gregory Meeks (D-N.Y.): The Democratic chairs of the House Energy and Commerce, Ways and Means and Foreign Affairs committees respectively will play significant roles due to their committees’ jurisdiction over large chunks of the bill.

→	Rep. Michael McCaul (R-Texas): McCaul is the lead GOP sponsor for the House CHIPS for America Act. McCaul, along with Cornyn, have been influential voices on semiconductor bills for the past two years.

→	Here’s an ad that may anger former President Donald Trump. Club for Growth is up statewide with a spot that reminds voters that J.D. Vance was once a “Never Trumper.” Of course, Trump has now endorsed Vance.

RIP

Orrin Hatch dead at 88. There’s a new book coming out about his life

Former Sen. Orrin Hatch’s (R-Utah) death over the weekend is another marker in the passing of the “Old Senate.”

Hatch – the longest serving Republican senator in history – was bashed by progressives due to his support for former President Donald Trump, as well as his record on abortion, immigration, federal spending and taxes, and LBGTQ rights, among other “culture war” issues, especially early in his career. The New York Times noted that he called Democrats “the party of homosexuals,” back in 1990. The Salt Lake Tribune called Hatch a “right-wing brawler,” and that’s definitely accurate.

Yet Hatch also evolved during his 42 years in the Senate, in part because of his personal friendships with liberal Democrats, including the late Sen. Ted Kennedy (D-Mass.). Hatch helped write the CHIP Act, providing healthcare for millions of children. He pushed for passage of the Americans for Disabilities Act, as well as funding for AIDS research. Despite his hard line on immigration – and there’s no question where he was on that issue – Hatch helped write the DREAM Act along with Sen. Dick Durbin (D-Ill.), which is designed to provide a pathway to the citizenship for the children of undocumented immigrants, if it’s ever enacted. Here’s a good story on the many – we do mean many – contradictions of Hatch.

Hatch was a credentialed conservative, but he was also willing to see people for who they were and accept them. That’s a priceless gift, and one largely missing from politics these days.

We’re reminded that in June 2016, when Muhammad Ali died, Hatch wanted to do an interview about his relationship with the boxing legend and American icon. Hatch gave Bres, then at Politico, this quote for a story on the pair:

Ali even endorsed Hatch during the senator’s 1988 reelection campaign. Hatch later spoke at Ali’s funeral.

And let’s not forget that Hatch recommended the late Ruth Bader Ginsburg to then President Bill Clinton for the Supreme Court in 1993. The two were friends until Ginsburg’s death in 2020.

So if you think that you can just stereotype Hatch, you’re wrong. Just like the “Old Senate.” It was a flawed institution, sometimes very deeply so. But it was also filled with senators who had much greater “life experience” and depth than the current crop of senators and Senate hopefuls. And they were much more willing to make deals and strike compromises.

Also: William Doyle sat down with Hatch for a book about his life called “Titan of the Senate.”

You can pick the book up here and this is what the intro says:

MOMENTS

9:55 a.m.: President Joe Biden will leave Delaware for D.C. He will arrive at 10:50 a.m.

11:30 a.m.: Biden will get his daily intelligence briefing.

2 p.m.: The Tampa Bay Lightning will visit the White House.

3 p.m.: Jen Psaki will brief.

Week ahead: Wednesday: Biden will speak at former Secretary of State Madeleine Albright’s funeral at the National Cathedral. Biden will also host the Council of Chief State School Officers’ 2022 National and State Teachers of the Year at the White House.

Saturday: Biden will speak at the White House Correspondents’ Association dinner.

CLIP FILE

NYT

→	“Their cover blown, Blinken and Austin pushed on to Kyiv despite the security risks,” by John Ismay with this dateline: “In Poland, near the Ukrainian border”

→	“After a Rocky First Year, a Cautious Garland Finds His Footing,” by Katie Benner

→	“Twitter in Advanced Talks to Sell Itself to Elon Musk,” by Lauren Hirsch and Mike Isaac

→	“A Crusade to Challenge the 2020 Election, Blessed by Church Leaders,” by Charles Homans in Colorado Springs, Colo.

WaPo

→	“Congress returns to battles over spending as inflation looms,” by Tony Romm

WSJ

→	“U.S. to Return Embassy to Ukraine, Boost Military Aid, Blinken and Austin Tell Zelensky in Visit to Kyiv,” by William Mauldin, Isabel Coles and Evan Gershkovich

→	“U.S. Withholds Sanctions on a Very Close Putin Associate: His Reputed Girlfriend,” by Vivian Salama, Joe Parkinson and Drew Hinshaw

Bloomberg

→	“Macron Gets Second Chance to Show France His Vision Can Work,” by Ania Nussbaum and Samy Adghirni

→	“China’s Spreading Outbreak Stokes Fear of Beijing Lockdown,” by Charlie Zhu, Dong Lyu, Jessica Sui, Ishika Mookerjee, Jing Li, Yuan Gao, Tongjian Dong, and Jie Hou

AP

→	“Russian advance in Ukraine slow; US says Moscow ‘is failing,’” by David Keyton in Kyiv

Politico

→	“Progressive and export-dependent: Oregon is a test for Democrats on trade,” by Steven Overly in Portland, Ore.

USA Today

→	“Trump investigations set to accelerate in coming weeks: Where the inquiries stand,” by David Jackson and Kevin Johnson