U.S.-Industrial Partnership Split on How to Pay for Effort

Leaders in high-tech manufacturing are full of praise for Commerce Secretary Robert A. Mosbacher’s endorsement of a new industry-government partnership to improve American competitiveness.

But they acknowledge, tongue in cheek, “minor” differences over one point: Money.

The industrial officials say that, like Mosbacher, they oppose a heavy-handed program of federal bureaucrats dictating industrial policy. The government’s past tries at picking winners have typically been expensive flops such as the effort to create a synthetic fuels industry in the 1970s.

Instead, the manufacturers want an “industry-led” policy where the private sector judges the market and chooses products and research programs worthy of special backing.

Cooperation Endorsed

“It’s not a bunch of guys in Washington sitting in a closet saying this is the way it’s going to be,” said Robert Costello, a former undersecretary of defense, now at the Hudson Institute, a private research group.

Mosbacher, in a major departure from the free-market views of the Reagan Administration, endorsed that concept--which involves cooperation rather than competition among companies--in a speech earlier this month to the Economic Club of Detroit.

The commerce secretary and the manufacturers diverge, however, on who should pay. Mosbacher wants an industry-led and mostly industry-financed effort, while the manufacturing executives say government must match private funding.

“I feel it is imperative that we communicate to the Administration that at some not too distant point more government funding is needed,” said Rep. Mel Levine (D-Calif.), who led an industrial policy conference last week attended by such high-tech superstars as Robert Noyce, co-inventor of the microprocessor.

But Mosbacher, speaking of the most likely candidate for a public-private partnership, high-definition television, warned at a congressional hearing that electronics companies asking for $1.35 billion in federal aid shouldn’t expect Uncle Sam to act like “Uncle Sugar.”

Instead, he said industry can look to government to encourage research through such methods as loosening antitrust restrictions and providing tax incentives.

Opposition Within Cabinet

Levine and other participants in last week’s conference are down-playing the money fight and lauding Mosbacher’s step away from the doctrines of the previous Administration.

Mosbacher’s statements are “a very significant step in the right direction,” Levine said. “I don’t want to underestimate the differences we have with the Administration at this point, but I think they can be bridged.”

However, it probably won’t be enough to convince Mosbacher, even though he enjoys great influence with President Bush, an old friend. The commerce secretary reportedly faces opposition within the Cabinet from chief economic adviser Michael J. Boskin and budget director Richard G. Darman.