$350B Bill Aimed at Competing With China Could Reshape Middle America

The U.S. House of Representatives passed the $350 billion America Competes Act on Friday, a bill designed to boost domestic tech production and fortify internal supply chains in an effort to curb the country's reliance on foreign powers like China.

Tucked alongside the $52 billion for semiconductor fabrication and the $45 billion for critical good production, is a $7 billion carveout for investments in 10 regional tech hubs outside of the nation's five leading technology centers.

Mark Muro, a senior fellow with the Brookings Institution who's researched the geography of the digital economy, told Newsweek that the funding in the Competes Act could prove to be the kind of investments that kickstart economic development in the center of the country, exposing the region to the growth experienced on the West Coast as a result of the boom in digital tech.

"It's explicitly targeted on heartland up and coming places that maybe aren't terribly distressed but are kind of going sideways and really have potential that could be unlocked by technology investment," Muro continued. "I think it is important that we begin to spread the innovation industries out."

U.S. Capitol Police Officer William Evans Lies
The bipartisan agenda to compete with China could see the nation reshape it's heartland economy. Here, Senate Minority Leader Mitch McConnell, Senate Majority Leader Chuck Schumer, President Joe Biden and Speaker of the House Nancy Pelosi attend a memorial service for the late U.S. Capitol Police officer William "Billy" Evans as he lies in honor in the Rotunda at the U.S. Capitol on April 13, 2021, in Washington, D.C. Photo by Drew Angerer/Getty Images

Tech is considered one of the nation's fastest growing industries, with the Brookings Institution describing it as a component of the "innovation economy" that is key to "more inclusive economic growth."

However, Muro notes in a 2020 Brookings report that "90 percent of the nation's innovation sector employment growth in the last 15 years was generated in just five major coastal cities: Seattle, Boston, San Francisco, San Diego, and San Jose." Subsequently the five poorest states in the country all fall outside of the East and West coasts, those being Mississippi, West Virginia, Louisiana, Arkansas and New Mexico.

Muro said the investments in regional tech hubs could prove to be a step in addressing these economic discrepancies between the nation's coasts and center. This bill could prove to be particularly effective in addressing this issue if the $52 billion for semiconductor fabrication results in facilities being constructed in the nation's heartland. This movement could already be in motion, with Intel announcing plans to build a plant near Columbus, Ohio.

"Part of the idea of using innovation legislation is to kind of knit the country back together a bit," Muro told Newsweek. "Over the medium term, [these investments] could potentially be a very significant supporter of jobs as well as innovation and competitiveness."

The last steps toward making these investments a reality requires a final round of reviews then votes by the House and Senate before the bill can make its way to President Biden's desk. While the House vote passed along party lines with a 222-210 Democratic majority, the Senate version, which first passed in June 2021, received bipartisan support in a 68-32 vote.

Muro told Newsweek that he expects the bill to ultimately pass, given its intention to counter China and reshape the economy of Middle America. "I think there are a number of Republican senators that are going to be willing to vote for this," he said.