April 18, 2014    Volume 21, No. 6

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Senate Committee Shrinks Budget for Proposed National Manufacturing Innovation Network In Half And The Number of Hubs By Two-Thirds

By Richard A. McCormack

The once ambitious National Network for Manufacturing Innovation (NNMI), which was described as being a $2.4 billion program by President Obama in his most recent congressional budget request, has become far more modest in scope.

The Senate Commerce, Science and Transportation Committee approved an amended version of the legislation (S-1468) authorizing the program at $300 million over 10 years. It is half the amount of $600 million that was in the original bill, the Revitalize American Manufacturing and Innovation Act of 2013, sponsored by Sens. Sherrod Brown (D-Ohio) and Roy Blunt (R-Mo.).

The amended bill makes it impossible for the Obama administration to create the 45 manufacturing innovation hubs that it says are needed. The bill caps the number of centers funded during any one year at 15.

At $30 million per year, the National Network for Manufacturing Innovation will have less than one-quarter the amount being spent annually ($128 million) on the Manufacturing Extension Partnership (MEP) program.

But there is a caveat for additional funding: The Secretary of Commerce would be allowed to use "not more than 10 percent of the funds of any economic development, manufacturing or small business assistance program, except for the MEP, to carry out the program," according to the amended bill provided to MTN by the Senate Commerce Committee.

There is another big hurdle the program must overcome in order for it to pass the Senate: Republicans on the Senate Commerce Committee insisted that there be $300 million in offsets to cover the cost of the program "before it has consideration on the full floor," said ranking minority member John Thune (R-S.D.).

At the bill's markup, Commerce Committee Chairman Sen. Jay Rockefeller (D-W.V.) replied: "I would say to the ranking member that I thoroughly agree with what you have said. It is one thing to pass a bill out of committee, it's another thing to get it considered on the floor much less over in the House. So we do have to come up with $300 million and that's not a ton of money, but it is a bunch of money and without bipartisan agreement on an appropriate offset, we're probably not going to do very well on the floor here. So I have made a commitment, which I intend to keep, to all members on the Republican side, that this bill will be reported but we will identify the necessary full payment of the offset so that is totally satisfied."

Thune said it will be a challenge to find offsets to fund the program "due to various committee jurisdictions."

Bill co-sponsor Roy Blunt said he has found some offsets under the Commerce Committee's jurisdiction, but not all that are required. "We will continue to work to find that [money] and I think those pay-fors will likely to be outside of the jurisdiction of the committee. But we found some savings and some elimination of programs that will happen if this bill passes that will not happen otherwise."

The Advanced Manufacturing Technology Consortia (AMTech) program, which was funded by Congress at $15 million in 2014, would be consolidated into the new manufacturing network. The Senate Commerce Committee legislation says the Technology Innovation Program (TIP) would be eliminated, but it has already been disbanded after Congress stopped funding the program in 2012.

The amended bill contains a sunset clause to eliminate funding for the manufacturing network after 10 years. But the legislation keeps a federal funding option open by stating that the network may continue to operate "subject to the availability of appropriations, if the [Commerce] Secretary determines that the purposes" of the program -- improving "measurably" the competitiveness of American manufacturing and increasing domestic production -- are being met.

Funding for each of the new centers will decrease every year after the initial award and will stop altogether after the seventh year unless the center can prove it is doing a good job.

"While I believe the bill is better, I continue to have significant reservations about the legislation," said Thune. "While in principle I support the goal of increasing advanced manufacturing in the United States, I do remain skeptical as to whether additional federal involvement and federal funding is really the missing ingredient needed to spur that innovation. It seems to me the most promising manufacturing technologies and processes -- the ones that warrant federal assistance -- are the same ones that are most likely to attract private-sector investment and state-level tax incentives."

A better solution that would benefit a greater number of manufacturers, Thune added, would be regulatory reform, tax reform and enactment of trade promotion authority. "As I noted at the hearing of the bill, Christina Romer, who was the former Chairman of President [Obama's] Council of Economic Advisors, says the president's manufacturing initiative will probably have a small effect on job creation."

Thune said he will "hold judgment" on the bill when it gets to the Senate floor "until suitable offsets have been identified. Several of my colleagues on this side share this view. For this reason, if this bill were to be a roll-call vote, I would have to vote no. But having noted my reservations and having discussed this bill, we are prepared to move this bill to a voice vote in recognition of the good faith negotiations that have already occurred."

Rockefeller replied: "You can count on that."

Rockefeller then noted that the bill might be perceived as having been considered "pretty quickly" by the committee during the markup, but told those in attendance: "You listened to what goes on in this meeting. There are hundreds and hundreds of hours of staff work on both sides of the aisle to bring us to this point." He then called for a voice vote. The ayes had it. There were no nays. "Carries," said Rockefeller.

The companion bill in the House, HR-2996 has 65 co-sponsors. The House Science Committee's science and technology subcommittee held a hearing on the bill in December. Staff on the Science Committee say they are working with bill sponsor Tom Reed (R-N.Y.) and House leadership on the legislation to authorize the NNMI program at NIST, though no action is currently scheduled.

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