Levine to Propose Federal High-Tech Support : Legislation: His bill to create a corporation to help U.S. firms is expected to face heavy opposition.
The debate over how much the federal government should do to support U.S. high-technology industries in their competitive struggle with the Japanese is likely to heat up again soon.
Concerned that the Bush Administration and the private sector aren’t doing enough to nurture domestic high-technology efforts, Rep. Mel Levine (D-Santa Monica) is expected to introduce a bill today to create a federally chartered corporation to support and finance American technology firms and projects.
The proposed legislation, which calls for establishment of a Technology Corp. of America, will face an uphill struggle. The Bush Administration, many congressional Republicans and even some electronics industry leaders oppose government intervention to promote specific industries.
The U.S. Chamber of Commerce, for one, is not enthusiastic about the Levine proposal. “Our caution is whether any one group has the wisdom to pick the winners; we think the market is a better judge,” said William D. Kelleher, manager of community resources in the chamber’s domestic policy department in Washington.
That sentiment is in line with the Bush Administration’s own policy. Due to apparent opposition within the Administration, a Commerce Department initiative to promote the development of high-definition television (HDTV) technology has been suspended.
Yet others believe that a more activist approach is needed. Late last year, the National Advisory Committee on Semiconductors and the Economic Policy Institute, a labor-supported research organization, warned that the United States faces dire consequences unless the government moves to help the U.S. electronics industry.
The Japanese, for example, now dominate the worldwide market for dynamic random access memory chips (DRAMs), a critical computer component that U.S. companies invented.
Levine has designed his bill to provide for an industry-led group to identify and address a broad range of issues affecting high-tech industries. By doing so, he hopes to keep his measure distinct from the overall debate over whether government should structure an industrial policy.
“The question today is no longer one of industrial policy and who picks the winners,” Levine said in a telephone interview Saturday. “The question is whether Americans or foreigners set the agenda for our economic priorities . . . Without initiatives like this, we’re likely to give up our leadership in industry.”
Levine describes his bill as an answer to Japan’s powerful Ministry of International Trade and Industry, which has played a pivotal role in that country’s meteoric rise in worldwide consumer electronics and other businesses. He compared the need to form the Technology Corp. of America to the need earlier this century to form Radio Corp. of America (RCA), created in 1919 with federal assistance, to help keep U.S. radio technology from the British who dominated the business. The U.S. Navy helped RCA by guaranteeing that it would award contracts to the new corporation.
Technology Corp., as proposed by Levine’s bill, would be a nonprofit, federally chartered corporation that would be run by appointees from industry but have the secretaries of Commerce and Defense in advisory roles. The firm would act as a catalyst for developing high-technology strategic start-ups and joint ventures that are not linked to defense work.
The proposed corporation is similar to one recommended last year by the National Advisory Committee on Semiconductors, a group of industry leaders and government officials set up under the Omnibus Trade Act of 1988. A study prepared by the organization recommended the establishment of a Consumer Electronics Capital Corp. to provide low-cost, long-term capital to fledgling consumer electronics companies and technologies.
As proposed, such a corporation would raise equity capital from industry, institutional investors and state and local governments. The federal government would not contribute funds directly, but would provide “pledges of support” to help consumer electronics firms get lower interest rates.
In contrast, Levine’s proposed corporation would be financed by direct federal funding for research, development and manufacturing. But the bill doesn’t address whether the corporation would provide venture capital funding for high-tech start-ups.
“We think that is a good piece of legislation,” said Edward A. Miller, president of the National Center of Manufacturing Sciences in Ann Arbor, Mich. “It is not a silver bullet, it doesn’t solve the problems of the country. It will help manufacturing and any other industry that is identified.” The center is a nonprofit consortium of manufacturing companies organized by industry under the National Cooperative Research Act of 1984.
