For — with strings

The case for the subsidy rests on a simple proposition: when a nation depends, for its defense and its commerce, on a class of goods produced almost entirely by foreign hands, the public has a strategic interest in correcting that dependency. The Report on Manufactures argued this in the 1790s; the present circumstance, with a small island in a contested strait holding most of the world's advanced fabrication, is the same argument under a new sky. The subsidy is well-placed. What needs more vigor is the condition: clawback on offshored capacity, workforce pipelines that reach actual American workers, and a transparent accounting of which firms have received how much, and what they have built with it. Energy in the executive, here as in defense, is not the danger; the danger is energy unaccompanied by check.

Skeptical

I am not opposed to the strategic argument; on this point my old adversary and I are closer than habit would suggest. What I oppose is the casual ease with which the public Treasury is opened to incumbent firms whose case for need is principally that they are already large. Subsidy, by its nature, picks winners; picking winners is an act of government less innocent than building a road, for the road serves whoever passes upon it and the subsidy serves whoever is positioned to receive it. If the matter is truly strategic — and I will concede it may be — then the appropriations should be smaller, the conditions tighter, the sunsets nearer at hand, and the share of the public's investment recoverable when the firm has prospered. To do less is to confuse necessity with welfare.

Structural question first

Before we ask whether the subsidy is wise, we should ask under what authority the federal government acts. The commerce power, broadly construed, reaches industrial policy; that has been the long settlement and I do not propose to disturb it. But the broader construction was always meant to be checked by the appropriation power, which the legislature is meant to exercise actively, not perform ceremonially every five years. If the Congress wishes to subsidize fabs, let the Congress write the conditions, hold the hearings, and bear the political cost of the choice. What I would resist is the casual delegation of the policy to an executive agency operating under a multi-year ceiling without serious legislative oversight. The check, properly exercised, is the answer to both my colleagues' worries.