White House

Congress should authorize the creation of a National Network for Manufacturing Innovation (NNMI) and allocate at least $500 million to support the initial deployment of at least 15 and as many as 25 Institutes of Manufacturing Innovation.

Unlike leading manufacturing nations such as Germany or even the United Kingdom, the United States lacks an integrated, well-funded national network of large-scale, industry-led manufacturing innovation centers that can accelerate technology deployment, operate demonstration facilities and test beds, support education and training, and perform applied research on new manufacturing processes. Accordingly, the United States should develop a National Network for Manufacturing Innovation (NNMI) that would establish at least 15 Institutes of Manufacturing Innovation (IMIs) that would bring together industry, universities, community colleges, federal agencies, and states to accelerate innovation by investing in industrially relevant manufacturing technologies with broad applications. The network would help bridge the gap between basic research and product development, provide shared assets to help companies (including SMEs) access cutting-edge capabilities and equipment, and create a compelling environment in which to educate and train students and workers in advanced manufacturing skills. Manufacturers would lead the development of IMI proposals, defining the scope and focus of the Institutes, and provide at least 50 percent of the resources for each IMI, with that contribution growing over time. But Congress should act initially to authorize the creation of the National Network for Manufacturing Innovation and allocate at least $500 million—which would be matched 1:1 by industry and state/regional governments—to establish a $1 billion fund to support deployment at least 15 and as many as 25 manufacturing institutes.

Require the Office of Information and Regulatory Affairs (OIRA) to incorporate a “competitiveness screen” in its review of federal regulations.

In an era when global trade was minimal and the dominance of U.S. competitiveness was largely assured, the nation could afford to impose new regulatory requirements with little thought given to their impact on the competitiveness of traded sectors. But today, regulation can and does increase costs on industries in traded sectors that in turn make them less competitive globally. To the extent federal regulation makes distinctions between companies, it’s often on the basis of size, but it should rather be on whether a firm is in an industry facing global competition or not. To address this, regulatory agencies seeking to impose regulations that affect traded sectors in non-trivial ways should be required to have these regulations undergo a review by OMB’s OIRA for their first-order competitiveness impact. Moreover, given the limited amount of time and attention available for regulatory review, the highest priority should be placed on reviewing those regulations that directly impact traded sectors.

The White House should create an Office of Innovation Review in OMB (i.e., an Office of Information and Regulatory Affairs for Innovation).

All too often federal agencies propose regulations with little consideration given to their effect on innovation. To remedy this, Congress should create within the Office of Management and Budget (OMB) an Office of Innovation Review (OIR) that would have the specific mission of being the “innovation champion” within these processes. OIR would have authority to push agencies to either affirmatively promote innovation or achieve a particular regulatory objective in a manner least damaging to innovation. It would be authorized both to propose new agency action and to respond to existing agency action. OIR would add an important new voice to the regulatory conversation. First, there would now be an entity speaking clearly and forthrightly on the centrality of innovation. Second, and more importantly, OIR would have more than just a voice; it would be able to remand agency actions that harm innovation. It would also propose regulation that benefits innovation as part of its mission. But OIR would not be designed to thwart federal regulation; as a matter of fact, in some cases, the existence of OIR might lead to increased federal regulation (e.g., more Environmental Protection Agency regulations might pass muster under cost-benefit analysis if innovation-related effects were calculated).

The Obama Administration should create 400 new STEM-focused high schools.

To expand STEM graduates, high school is a key place to start and the best way to improve STEM high school education is to foster the creation of more STEM-focused high schools. The Obama administration should urge Congress to allocate $200 million a year for ten years to the Department of Education, to be supplemented by states and school districts and industry, with the goal of quintupling the number of STEM high schools to 500.

The Obama Administration should transform Fannie Mae into an industrial bank.

Former Intel CEO Andy Grove notably has called for a “scaling bank” to help scale innovations to production in the United States. To do this, the Obama administration should call for repurposing Fannie Mae into an industrial financing organization. The very existence of Fannie Mae reflects the fact that America has put more emphasis on consumption (housing) than on production (manufacturing). The new Fannie Mae (perhaps called the Federal National Industrial Mortgage Association) would buy and resell loans made to traded sector firms from banks and other lenders.

The Obama administration should detail Vice President Biden to lead a new free trade coalition.

The Obama administration should detail Vice President Biden to lead an effort to build a coalition with the Europeans, Canadians, Australians, Japanese, and whoever else will come aboard to lay out a renewed vision for globalization grounded in the perspective that markets should drive global trade and investment, that countries should not seek sustained trade surpluses, that currency prices should be set by the market (or at least not manipulated for competitive advantage); and that fair international competition and “good” innovation policies that leave all countries better off. The United States could start this with efforts to establish a TAP, a Trans-Atlantic Partnership: a new trade agreement with Europe and perhaps the Commonwealth nations.

The Administration needs a comprehensive national manufacturing strategy for the U.S. to create a competitive environment for manufacturing firms of all sizes to flourish.

Having a national manufacturing strategy means designing the nation’s business, regulatory, and innovation policy environments to make the United States the world’s most attractive location for R&D and business investment in manufacturing (including foreign direct investment). A national manufacturing strategy would include a coherent set of policies based on the four T’s: technology, tax, trade, and talent. It would play an important role in aligning federal programs designed to assist U.S. manufacturers. The strategy should also explicitly support public-private partnerships designed to help strengthen the connection between research and commercialization and to help firms “bridge the gap” between transforming technologies developed in universities and federal laboratories into commercializable products. Having a manufacturing strategy is simply a way for the United States to understand what it needs to do—whether it’s why the United States needs to cut the effective corporate tax rate, reduce regulatory red tape, expand research funding—to help its manufacturers become more productive and innovative.

The White House should create an Inter-agency Administration Task Force to identify cases where U.S. foreign aid acts as a mercantilist enabler.

Create an Administration inter-agency taskforce that includes the State Department, US AID, Commerce, USTR, Justice, Labor, and other agencies as appropriate that works to identify cases where U.S. foreign aid policy acts as a mercantilist enabler. Such a taskforce should recommend specific actions, including tying U.S. foreign aid to reduction of other countries’ mercantilist practices using formal and informal diplomacy, and pursuing trade enforcement actions. The task force should also issue an annual notice of inquiry to allow interested parties to report foreign mercantilist practices adversely affecting U.S. economic competitiveness.
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