Electronics remains a leader among American industries, but U.S. manufacturers face a future in which foreign competitors may be their technological equals. Without positive action by the Federal Government, the Nation's technical superiority will continue to erode, contributing to the decline of U.S. international competitiveness in this and other industries. Today, high-technology U.S. manufacturers of thumbnail-size integrated circuits as well as computers and communication systems remain second to none in both technology and most measures of commercial success. On the other hand, U.S. competitiveness in consumer electronics has declined precipitously. Technical and structural change in electronics will continue to be rapid, creating risks as well as opportunities for both American and foreign firms. By any criterion, electronics is vital to the future of the U.S. economy and for national security. Even so, the Federal Government has done little to help electronics manufacturers. The contrast with industrial policies in countries like Japan is striking. International competitiveness is closely linked to policies with domestic objectives, that is to industrial policy-which OTA uses as a neutral term to denote the collection of regulations, laws, and other policy instruments that affect business and industry. In this sense, the United States has had an industrial policy since its founding. The lesson of electronics, along with sectors like steel and automobiles that OTA has examined previously, is straightforward: future U.S. competitiveness will depend on a more coherent and consistent approach to matters of industrial policy. In developing a more coherent industrial policy, Congress could choose from among five alternatives. While they overlap, each represents a distinct thrust. The five alternatives are: 1. a strategy that would aim broadly at preserving domestic markets and domestic jobs; 2. protection and/or support for a limited number of industries that the Government judges critical for the U.S. economy or for national security; 3. support for the technological base and infrastructure that underlie American industries; 4. promotion of the global competitiveness of U.S. firms and industries; and 5. deferral in all possible instances to the private sector when decisions concerning industrial development are to be made. Plainly, a more coherent industrial policy offers no quick fixes for the dilemmas of the U.S. consumer electronics industry, nor any guarantees for the future competitiveness of our microelectronics or computer sectors. Just as plainly, industrial policy is a continuing activity of governments everywhere. In the United States, we can continue to leave industrial policy to the random play of events, or begin to improve the system. The first requisite for more effective policymaking is greater agreement on the role of high-technology sectors like electronics as a driving force for future economic growth. This, in turn, depends on a greater degree of consensus on where the U.S. economy is heading and where it should head. The second requisite is better understanding of how particular Federal laws, regulations, and administrative procedures affect the competitiveness of American industry. This will require a better capability within the Federal Government for analyzing the sources of competitive strength. If a more coherent industrial policy is far from a panacea, it nonetheless offers the best prospects for enhancing U.S. competitiveness-in electronics and in other industries, old and new. Making our industrial policies work better-evaluating, linking, and coordinating the many Government measures that make up U.S. industrial policy-could pay vast dividends throughout our economy. Copies of the OTA report, "International Competitiveness in Electronics," are available from the U.S. Government Printing Office. The GPO stock number is 052-003-00933-1; the price is $6.50. Copies of the report for congressional use are available by calling 4-8996. Summaries of reports are available at no charge from the Office of Technology Assessment. The Office of Technology Assessment (OTA) is an analytical arm of the U.S. Congress whose basic function is to help legislators anticipate and plan for the positive and negative impacts of technological changes. CONGRESSIONAL BUDGET OFFICE The Justification Statement of the Director of the Congressional Budget Office in support of the Appropriation Request for Fiscal Year 1985 is in preparation and will be inserted shortly. December 21, 1983 2 Mr. Chairman and Members of the Subcommittee, I am pleased to appear before you for the first time as Director of the Congressional Budget Office (CBO) and to present the fiscal year 1985 budget request for our agency. I assumed the directorship of the CBO last September, and the subsequent months have afforded me the opportunity to review the appropriation history of the Congressional Budget Office and to plan most carefully for the fiscal year 1985 request we submit today. As you know, CBO is an analytic organization that furnishes information and analyses on issues relating to the U.S. economy, the federal budget, and federal programs. Under the provisions of the Congressional Budget Act of 1974, our work is nonpartisan and offers no recommendations of policy. BUDGET REQUEST In fiscal year 1985, CBO is requesting $17,650,000. This is an increase of 4.9 percent over our anticipated operating level for fiscal year 1984 of $16,829,000. 1/ We are requesting no additional staff positions for fiscal year 1985. The number of staff positions under this request remains constant at the current authorized level of 222. 1. The fiscal year 1984 appropriation for CBO is $16,300,000. We have submitted a supplemental request of $529,000. This increment includes: $252,000 for the costs of the January 1, 1984 cost-of-living adjustment (COLA) and $277,000 for new expenses associated with CBO employees joining the Civil Service Retirement System. |