By James Pethokoukis

When you’re an American president in a midterm election year and (a) your party has a razor-thin hold on Congress, (b) you have a 40 percent approval rating, (c) the economy is heading into a perhaps lengthy Federal Reserve tightening phase, then (d) you had better start thinking about what bipartisan bills you might be able to pass over the second half of your term.

And it seems pretty clear that President Joe Biden was thinking along those lines at his State of the Union speech on Tuesday. Perhaps that was obvious toward the end of the speech when he outlined his “unity agenda” consisting of four elements meant to appeal to folks across the political spectrum:

• New programs to tackle the opioid epidemic.
• A plan to address the declining mental health of children “whose lives and education have been turned upside down” by years of the pandemic, said Biden.
• Increased funding and medical services for veterans. 
• An advanced research project similar to the Defense Department’s top secret DARPA, only this one would seek to end cancer. 

And to the list I would add Biden’s mention of the competition bill — the House and Senate have each passed their own versions — that he rebranded the Bipartisan Innovation Act.

But folks, to compete for the jobs of the future, we also need to level the playing field with China and other competitors.That’s why it is so important to pass the Bipartisan Innovation Act sitting in Congress that will make record investments in emerging technologies and American manufacturing. We used to invest 2 percent of our G.D.P. in research and development. We don’t now. China is.

Caveat: While it’s rarely easy to predict what exactly Congress will do, this seems a particularly dicey time for the above reasons. I’m surprised Biden’s Build Back Better has basically imploded. That said, I wonder if the BIA has some juice. Or really any bill that can be portrayed as even tangentially related to China competition.

Journalist James Fallows argues that when Washington has passed some big, forward-looking legislation such as land grant colleges or the GI Bill, there was often some sense of emergency or national defense need smoothing the way. China might provide a similar impetus today, though I worry such efforts might mistakenly attempt to mimic the Chinese way of innovation, centrally planned industrial strategy.

On that topic, let me refer to a recent issue of my Substack newsletter, which includes this Q&A exchange between myself and Sebastian Mallaby, author of “The Power Law: Venture Capital and the Making of the New Future.”

Pethokoukis: Do you think that policymakers in the United States have drawn the wrong lesson from the rise of China? Some see China focusing on certain technologies and making advances and they think, “Well, the key is for us to do the same thing in our own way.”

Mallaby: The idea that China’s industrial policy built the digital economy is wrong. There was an industrial policy around tech in the late 1990s in China. It was focused on building a semiconductor industry. We know today that failed totally. They are still trying to build a semiconductor industry. Meanwhile, the government ignored consumer-facing technologies. So private venture capitalists, in fact, private venture capitalists from the United States, moved in and funded all the early, consumer-facing digital economies in China, from Baidu to Alibaba to Tencent. And the government was looking the other way. It’s a perfect illustration of how, in fact, industrial policy is not the right way to build a digital economy.

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