B (2:54)

Yeah, Jordan, just to give you the alligator closest to the boat analogy since, since Leland decided to trigger me, you know, folks on the Hill are, you know, they're having to deal first, you know, firsthand and every day with the sort of the alligator closest to the boat issues. That's the, the rift that I always have. And so Leland put it nicely by, we're looking sort of over the horizon or at the horizon's edge on issues, things that, that aren't necessarily above the fold and sort of raising awareness and calling attention to those. And honestly, the other piece of it is just increasing literacy on some of these issues. And that's a huge piece of it as well.

A (3:28)

Yeah. And as a reader of this document going on a decade now, it's just really nice to see, like, how can I put this? The level of discourse in the American political ecosystem around topics like this is often very heated and not grounded in evidence. And having this report come out every year is just really refreshing and I think a kind of lateral, you know, it's just a different taste. I sort of had this feeling listening to the IPA Supreme Court discussion of like, oh, wow, here are people who are actually like engaging with the world and engaging with like, facts and trying to understand things. And you know, you're not going to write like a 60 page report about China's ambitions to flourish in space without like actually doing a lot of research and putting the work in. So, you know, we have two commissioners on. You guys get all the glory. But there is a large team of, of staffers who are really, who are really putting in the work and are, you know, from my interactions with them have been some of the folks who, you know, who take their jobs incredibly seriously. And yeah, as you, as you said, Mike, are afforded this like, really fun and interesting perch to be able to stare at issues for a long time. And instead of doing it in the intelligence community where, you know, I guess some people get to see it like, this is a product for the American People. So anyways, thanks guys for all your work.

C (5:17)

Well, you know, Jordan, Jordan, the staff are the backbone of this because, you know, the commissioners drive the agenda. We all have our different agendas. They're overlapping. Then, you know, it's fairly, fairly common for the staff to come up and say, no, no, I don't think you can base that on evidence. So we have a discussion. They do the research, a lot of research, all the time. And so we make sure that by the time we put something out, it's not something that is just passed through us. It's our, it's our perspective. It is something that is very evidence based. You look at the report, it's just a big research document that focuses policy but is, but is based on real stuff out there. So it's an important component of this. You know, the research part of this is critical, Jordan.

B (5:59)

And just to pile on here, the thing that I found most interesting when I joined the commission is I spent years with Leader Schumer getting some of the most exquisite intelligence in the world. And the first year I was reading over sort of the first draft that the staff put together and I must have highlighted at least five or 10 sections where I was like, where on earth did you get this? Just absolutely amazed at the amount of information that was in open source and them being able to, to find this and sort of pull it out.

A (6:29)

And you know, we're not complaining about the seven citations to China talk in this year. But anyways, that's, that's how you know.

B (6:36)

Is that too many or too few?

A (6:39)

You know, we'll chart it over time. We'll have chat GPT. I'm see how we're doing. So we do a lot of shows about Trump, Biden, how they're approaching China. Make the case you two for why Congress matters when it comes to US China issues.

C (6:59)

Start with a guy who's been on the Hill for longer.

B (7:01)

I mean, listen, Jordan, the first thing I would say is that if you think about the big moving pieces in US China policy over the last decade, a lot of them have come out of Congress, whether it's sanctions bills, whether it's chips in science, whether it's firrma. The effort to reform cfius biosecure didn't hasn't been passed yet, but is an idea that actually came out of the commission, which again is a legislative branch entity. Outbound investment screen. A lot of these ideas are actually ideas that either came out of the commission or came out of members of Congress. And so you know, the origin story on chips and science was that Leader Schumer and Senator Young got together and worked up a piece of legislation that became one of the most significant pieces of industrial policy we've seen in a generation. So if you take the actions that Congress has just done over the last 10 years, there have been some incredible shaping pieces of legislation that have driven the agenda. Obviously, the executive branch has a lot of broad authority in foreign policy, but a lot of the guardrails and other tools that have been used by the executive branch have been. Have been provided either at the direction of Congress or have sort of driven the. Driven the agenda. That's how I would. How I would say it and how I think about it. Leland, what do you think?

C (8:21)

You know, administrations are fleeting and Congress is forever. So if you want to have durable policy that lasts, you need to have Congress involved. And I think, you know, Mike's given examples of some of the things that Congress has been essential to. If you look at, you look at outbound investment, this is. This is not a success story, at least yet, because it's something that the administration and Biden administration handled and Trump administration handled, But Congress hasn't yet cemented the foundation for that in legislation. And so right now, you don't have a durable outbound investment mechanism. And I think that this is a call for Congress to constantly be on the tip of the spear, not just reacting to whatever one administration does, you know, back and forth as Republicans and Democrats all alternate the president.

B (9:04)

And the only other thing I forgot to mention is, you know, we pass an annual National Defense Authorization act in Congress every year, and undoubtedly that thing is chocked full of China policy, whether it's on the economic side or on the security side. So there's huge pieces of legislation that drive the agenda of both the Department of Defense and the broader executive branch in there. And then the other thing to keep in mind is, you know, we did a major update to the Taiwan Relations act about three or four years ago that was also carried by the. By the National Defense Authorization act. And that was driven out of Congress. It was not driven by any executive branch or administration. And it was actually done with a lot of push and pull from the administration saying, oh, my God, we can't possibly do this or we can't possibly do that. And it was ultimately Congress that said, yes, we can.

A (9:51)

Yes, we can. Man, what a throwback, Mike. So there is this weird thing, though, of, like, the executive branch sometimes, perhaps increasingly, not doing the things that the legislation says that they have to do. I mean, One of your recommendations is to do a better job of following what that Taiwan Relations act said. You know, of course we have the tick, the ongoing TikTok saga which, you know, both the Biden administration in their last few weeks as well as the Trump administration has, you know, I don't know, like, kind of punted on in a, in a way which did not, I wouldn't, I would say did not reflect the intent of all the votes that you had in the House and Senate for that. So how do you see that dynamic of like, you know, when you have legislation that gets signed and then an executive branch that doesn't necessarily end up kind of following through when it comes to China related stuff?

B (10:51)

I was on the Armed Services Committee in the sort of early days of the Iraq war and Afghanistan war. And the way I sort of think about it, looking back and reflecting on it now is it's kind of like holding up like a fishbowl. Right. Jordan? And if I go this way, it sloshes one way. If I go that way, it sloshes another way. And I only use that analogy because, you know, it's never perfectly in balance, you know, maybe for brief periods of time, but like not for sort of sustained period of time. So there's this sort of push pull relationship between the executive branch and legislative branch historically. And obviously it's different if it's divided government versus, you know, sort of one party in power. But it's, there's always sort of a sloshing around and Congress over the years has sort of provided broad authority to the executive. When the executive doesn't listen, they find ways to put guardrails up and constraints on, or funding prohibitions and things like that. And you know, that's sort of the tradition of our country. Right. So I think we're seeing some of that sloshing around right now. You know, I obviously worked for Democrats, so I sort of see things as a particular way. But you know, I don't think we're ever going to see the fishbowl sitting on the, on the counter here and, and then it being sort of perfectly settled on top. I think there's always some rumbling in the water.

C (12:06)

Yeah. And if you want to talk rumbling in the water, if you're an administration and you are, you know, you get into power, you've got a million things to do, a million priorities. You're not going to look at structural change most of the time to, to the way you do business. So one of our recommendations this year was on, you know, the creation of an economic statecraft agency of some sort entity, because we feel that. That there has not been enough coordination and integration, etc, among the various entities in government that handle sanctions and export controls and other things. Now, I'm not sure that anybody on the Republican side of the Democrat side would look at that and say, wow, that's. That, that's a terrible idea. But if you're in, if you're in the administration, whatever that administration might be, you know, the last thing you're probably doing is looking to structurally change a bunch of things around. So what we're doing is trying to say, look, we got to focus on the mission. And if the mission is best conducted by, by restructuring something, reintegrating things, then let's do it. And that's something that an administration which is focused on getting a million things done in the next 24 hours often can't do.

A (13:07)

Yeah. And so, you know, my questions were sort of my, my Leland jumped the gun here. My questions were a leading critique going into this first recommendation. Um, you know, it. This is a theme that I think we've also, I've also been writing about and have done shows on for four or five years now, talking about, you know, some sort of new reorganization around getting all these different. The disparate pieces of government that touch, you know, the China challenge in some way. You guys identified bis, ofac, the sort of export control chunk of the state department, the DTSA, which does export controls for the U.S. defense Department to all, you know, play nicer, live somewhere together. You know, it's just like one of the sort of stories of the Biden administration was this, like, fundamental difference among a handful of principles who all own different pieces of that, about just how hard they wanted to push on these various kind of like, investment controls, export controls, what have you. So I'm curious, you know, if you end up having cabinet members who disagree, like, what is, what is the hope that a unified economic, straight craft entity could do? I mean, are we just moving this all into the. The White House and kind of taking it out of the hands of these other principles?

C (14:47)

What's the.

A (14:47)

Give me more on the vision here.

B (14:49)

So this is something that Leland and I actually worked on together, Jordan. So you've got the, you've got the right people to give our feelings and get our agita out. Randy Shriver and I actually wrote Commissioner, Beloved Commissioner Randy Shriver and I actually wrote a piece on this earlier this year, and it was that we needed to sort of reinvigorate the export control sort of elements of the Department of Commerce. And I sort of, I think we said in the piece that almost something like the post of what we did after 911 in terms of reforming the sanctions, sort of elements of the, of the Treasury Department were needed. And then over the course of the year we had a series of hearings and meetings with a variety of folks. And I sort of got to this point and point of frustration where I almost put my hand on my forehead, Jordan, and it was like, oh my God, we didn't go big enough. And so the frustration that I have is that right now you have export controls. And this is also true in the sanction community where all these things sort of happen at sort of a mid level layer in departments and that sometimes they don't bubble up to senior officials. And the consequence of that is that they languish. Decisions languish, you know, just everything languishes and there's no natural forcing function. So the idea of rather than multiple agencies and departments sort of having these things sort of sitting at the Assistant Secretary level or below is you consolidate them so that you have some sort of forcing function not within multiple silos, but in one silo and that hopefully you have a senior leader, whether that's in the Department of Commerce or treasury or sort of a standalone entity that allows these issues to actually boil up to the top and where you don't need to every single time go to the National Security Council to get a resolution to something. We're silent on where this should go. This issue, the issue of export controls and sanctions is one that has a lot of controversy in Congress. The Banking Committee has control over export controls and sanctions in the Senate. The House Foreign Affairs Committee has jurisdiction over those issues in, in the House. And then there are of course, other committees that, that have significant equities in this space. You know, the Foreign Relations and Foreign affairs committees, the Armed Services Committees and a variety of other folks. And so we're silent on that piece. But we are sort of clear eyed in terms of we are in a period of economic statecraft and it's going to be a continuous cycle of measure countermeasure between us and the Chinese. And we need to sort of be thoughtful and strategic in a very consolidated and thoughtful way. And that was sort of the motivation behind this recommendation. Leland, what did I mess up?

C (17:22)

Well, I'll give an even more pessimistic take. I think that the current structure sets up export controls and sanctions to fail. Because if you look at the way that this works, you look at Commerce Department. So the undersecretary is in charge of export controls, but the secretary himself is in charge of the promotion of US Businesses abroad. He is structurally disincentivized from doing tough policy. Not that the people who serve at the secretary level aren't patriots and they don't want good policy, but there's an inherent tension in the system from them pushing smart policy that interferes with their major mandate. Same thing happens at treasury, same thing happens to a degree at the State Department. So what this does in some ways is also free important national security policies from the structural disincentives built into the current system. And I think that's, it's totally, this aspect of policy is completely ignored and it shouldn't be because as long as you have a policy thrust at the very top that's for promotion of business, it's be very hard to have someone, you know, two steps below them in the, on the totem pole pushing for something that's, that's often completely counter to that.

A (18:35)

Yeah, well, let's stay on that, Leland, because like, regardless of where you put this, like, there will be counter forces of, you know, parts of the government that want to promote exports or retain, you know, global financial stability or keep oil prices low or, you know, all of these like completely reasonable arguments that we've heard over the decades for not doing more coercive actions against, you know, Iran or Iraq or Russia or China or, you know, pick your, pick your country where there is like a real cost to whatever, you know, sharper economic stuff the US Is, is considering. So is the argument then just like if you have someone who's a cabinet member whose job it is to advocate this, then just like the, that argument will be clearer or, I don't know, take, take it from here.

C (19:32)

So what I think that does is it structurally, it structurally sets up the policies to succeed. But I don't think any of this can succeed without a broader national economic security policy overlaying it. So I think the one thing that right now that, that, that administrations plural are missing is a national economic security strategy that integrates all these different pillars. Now, there's different reasons why people don't want to have that, but essentially, you know, you have all these issues that are part of economic foreign policy. You've got trade, you've got investment restrictions, you've got technology controls, you've got supply chain resilience measures to some degree, you've got, you know, re industrialization back home, whether it's defense industrial base or advanced manufacturing, all these Pillars are advocated for people that really want their policy to succeed. And unless you have a broader policy that weaves them in and integrates them and sees them as a broader mission going forward. In parallel, that everybody's fighting for their own piece of the pie, everybody's fighting for their own resources. And so what happens sometimes is that there's such a focus on trade and tariffs, et cetera, that you don't get any. You don't get enough focus on export controls, and you don't get any focus whatsoever on investment restrictions. If you had an overarching strategy in parallel with this new reordering of the economic machinery, then you're saying, wait a second, if we want to be smart, then we should be dividing up the US Government's prerogative and economic security matters into things that have a national security nexus and things that don't have a national security nexus. And if they have a national security nexus, they need to be working in tandem with each other. So we should have supply chain resilience at the core of any security, security policy. But at the same time, you have smart stuff on investment, smart stuff on technology. Trade and tariffs are absolutely part of that. Everyone works together. If you've got the right policy overhang and you don't have a structure underneath it that disincentivizes policies being pushed forward.

A (21:23)

Yeah, but here's the rub, right? Sorry, Mike, go ahead. Okay. But the rub is right, all this stuff costs money. And, you know, Mike made the point earlier. Like, politicians are focused on, sorry, the alligator next to the boat.

B (21:44)

Leland got it wrong and that. He's, He's. He's put it in. He's put it in your mind. Now, there's actually a former colleague of mine, the Armed Services Committee, a guy named Tom Goffas, who used to say it when we were on trips, he'd always talk about the alligator closest to the boat.

A (21:58)

The alligator closest to the boat, Right. And the sort of the things that, you know, the commission wants to optimize for are the, you know, more like two to five years out stuff. And I think one of the fascinating lessons of this year, right, is that we've had this dog that hasn't barked, and then it finally did with rare earth export controls. Right. And this is like the. The thing that you would think would get politicians in the executive branch and on the Hill to start thinking more seriously about just how, you know, just how sharp that sort of Damocles is held by the Chinese government now and how this sort of money and attention and energy and reorganization and you know, okay, like we're going to give a little bit up of influence in our committee because we know this is really important. Like you would think that all that stuff would start, you know, there, that the, the, the rare earth Saga of, of 2025 would have lubricated those sorts of gears in order to have more of the attention shifted to the types of, you know, more security resiliency stuff that Leland is advocating for. But I don't know, guys, I don't really see it.

C (23:25)

I. Jordan.

A (23:26)

Pessimistic.

C (23:27)

Jordan, I'm going to push back on you here because look, if the reason that nobody was talking about supply chains until a few months ago, now everybody's talking about supply chains is because they didn't see them as a tier one national security priority. They understood them. Supply chains are boring. A year ago, if you would have brought us on a China talk and said, let's talk supply chains, it would have been a very, very different conversation. And you probably have a lot fewer people tune in because they're reading the title. It says supply chains. Oh, gosh, this is gonna be a, this is gonna be boring. What. The way to elevate these really critical issues and I would say supply chain resilience is, is, is, you know, up there at the very, very top, is to have it as part of a multipillar next national economic security strategy where you're saying that these are the five things we need to do in order to have smart policy on China and smart policy on all our potential adversaries and competitors. Supply chains are not just this thing that corporates control and then, you know, hopefully they're smarter on them rather than dumber on them over time. You know, it's an absolutely critical facet of the U. S. China relationship. Our sixth hearing this year was on, was, was on. Was focused on supply chains and Beijing's economic supply base, Beijing's choke points on the US Economy via very critical supply ch. Now, by the time we had done that, we'd been planning this for, you know, six, eight months beforehand. But by the time we did this, everyone was finally talking about critical minerals and rare earth magnets. The other components of that are probably even more important over time. You know, we focused on pharmaceuticals. China controls not just they have a small direct shipment of medicines, generic medicines, principally to the United States, but they control the APIs, the active pharmaceutical ingredients behind those medications, and, and often the key starting materials behind those APIs. So when you see all these numbers about us importing drugs from India. Most of the key starting materials from those pharmaceuticals came from China originally. How much, you may ask? We don't even know. The commission did enormous amount of research, months and months of research. We had access to everything and we came up with ranges because the US Government hasn't thought it appropriate yet to really dig down and get the information to mandate the fda. Get the information. Printed circuit boards, legacy semiconductors, or foundational semiconductors, we should call them. All these issues of potential choke points that Beijing has over the US Economy. Now, if you go back to pharmaceuticals, it sounds really boring to talk about APIs and KSM, but if you put it in terms of the fact that China may actually have a choke point on the ability for the United States to get insulin, heparin, antibiotics, and all kinds of other critical medications for our people and our troops, then all of a sudden you're saying, holy cow, this is an enormous potential vulnerability we have. This needs to be part of our national security thinking that was not present a year ago. It's starting to permeate, you know, it's starting to penetrate the discussion in D.C. right now on how smart we should be. But had we had something where we're saying, look, supply chain resilience isn't just a talking point. It is a critical. It is a critical pillar of a national security policy that will allow Beijing not to have leverage over us. And if Beijing doesn't have leverage over us, it can't say, if you don't do what we want, then we're not going to let you have this, or we're going to let you have that. And that gives. That cuts down our policy choices. So essentially, it's about integrating these and convincing people that there really are a handful of tier one priorities. And you could argue what all those five or six or however many priorities are, but that those need to be recognized and integrated and be worked forward as a policy mechanism in tandem in order to have smarter policy on China.

B (27:03)

Jordan, I just want to pile on a few things here. When we were doing chips and science, one of the areas where we tried to push into. And remember, this is like 2019, so long before it was cool. 20, 2018, 2019, we were already pushing.

A (27:17)

Come on, give. Give that era some respect. Mike.

B (27:20)

Hey. Yeah, trust me, I know. If you want to talk about Vonniver Bush in a few minutes, you just let me know.

C (27:26)

The.

B (27:27)

The what? Every time we pushed into this space during the Endless Frontier conversation early days, there was an incredible amount of pushback from industry and industry Basically patted us on the head and said, oh, no, supply chains, that's our, that's our domain. Don't you dare put anything in there to compel us to, to provide information here. So like, that's the first data point just to sort of pile on to some of Leland's thinking here. And then the other thing that was formative for me, and this is a part of the recommendation that we, that neither Leland or I talked about in the first sort of rounds here, but one of the things we did after 911 was we made sure that the sanctions community was integrated into the intelligence community so that the, so the intelligence was actually coming in and fueling some of the things and served as a catalyst for some of the things that the Treasury Department did. The Bureau of Industry and Security, while they do certainly have access to the intelligence community, are not integrated into it. And the consequence of not being integrated into it is basically the intelligence community will give you information when you ask for it, but isn't sort of like pouring in their, their resources to make sure that your requirements are being met. And so I'm sure there are some casual areas where that happens, but it is not sort of an industrial scale effort. So one of the other parts of the recommendation is that there needs to be a deeper integration of this sort of entity into the intelligence community. So it actually benefits from a lot of the things that we do know about supply chains. The second thing or third thing, Jordan, just to sort of say this is going back to Leland's point. This is an area where the US Government has not been strategic historically. You know, we might know on some defense systems where sort of the sensitive materials are and where the sort of supply chains are, but it's not something that we've thought about in sort of a coherent and sort of broad based way. And so I think that was another thing that was a driver for both the hearing and sort of Leland and Livia's hearing, as well as the recommendation in the commission report. Sorry, Jordan, I didn't want to sort of get, make sure we get out that piece.

C (29:25)

Yeah.

A (29:25)

So Leland, you said like in 2024 supply chains weren't sexy, but like they certainly were in 2020 and 2021. And you know, Mike can I'm sure give us a whole big riff about how the, the, the crunch around chips during COVID was helpful in getting the chips act across the finish line. So, I mean, look like, Mike, this stuff takes money, right? Or does it, I mean, do you need a, a, you know, a double Digit billions bill in order to address, you know, PCBs and APIs and, and rare Earths. I mean, we've seen some stuff out of, out of, out of Executive Brands are being creative. We got some loan guarantees, we're buying 10% of this in that company. But, but you know, I don't know. Congress has been shut down. They haven't like, where's this bill? What does it need to look like?

B (30:21)

Listen, none of these things run on fairy dust, Jordan. They all run on money. And you know, making sure that we are, you know, appropriating the appropriate sums of money not just to the defense side of the ledger, but also the non defense side of the ledger, which BIS is part of, is an important piece. And so, you know, as Congress evaluates whether or not they like this economic statecraft recommendation, they'll have to make a decision as to whether or not to, you know, sort of provide more resources to implement it and obviously a variety of other decisions that they'll have to make.

A (30:51)

The export control issue that Leland brought up, one of the few areas where Congress has been pretty vocal on and expressing its, you know, displeasure or concern with the Trump administration is, is this idea of semiconductor exports to China. You know, you've seen some letters from both Republican and Democrat politicians. The GAIN act is, is gaining steam. And you know, on the one hand it's like, oh yeah, it would be nice to have more intelligence in bis, but if they've like forsworn any new export controls for a year, then what are they going to do with that? The, the sort of triggers that would really get Congress even more focused? Leland, I think you're right in that if China had done the API stuff, the, the reaction like to the broader public would have been a lot more dramatic than, you know, a handful of factories not being able to make cars for a few weeks. But yeah, I guess what's your sense of the broader appetite for this stuff and maybe a little anthropology of the different camps within Congress currently on both sides of the aisle about how they're thinking about these issues?

C (32:15)

I think what Congress, those in Congress that support export controls and those in the administration that support export controls have to make a better case for why they're important. I think if you look at the broader picture, the argument is constantly being made, and it's certainly being made by industry, that we need to stop doing provocative stuff to China because we're poking the bear, we want to have better relations. Why are we doing these things that are going to bring us closer to war. But I think that what this does is forget the way the sort of the 30,000 foot view of the economy and the US China relationship. If you look at China's economy, China is a two speed economy. The broader macro economy is structurally slowing down significantly. You have slowing down domestic demand, you have weak consumption, you have a property bubble that's deflating all kinds of problems. But the second speed of China's economy is the national security side. And Xi Jinping has made very clear what this is. These are the made in China 2025 sectors. This is advanced technology. These are things that are, that are, that have a national security nexus and are helping to, to build up the military. Now if we look at this in terms of policy, our policy should be focused not on the broader structural parts of the economy. We don't care if China's middle class is getting richer. As a matter of fact, that might be a good thing if they import more U.S. goods. But what we should be focusing on is the areas of the economy that Xi Jinping is looking at that have a national security nexus, Advanced manufacturing, et cetera. How do you get to that? Smart trade policy, smart outbound investment policy, smart export controls. So you're looking at these areas which are extremely critical to China building up its technological and military machine. Now if you look at what a potential nightmare scenario is, it's waking up one day and seeing that China has broken quantum cartography, that they have achieved AGI, or maybe they don't want AGI, but some enormous breakthrough in AI. They've, they've cured cancer through, you know, they're, they're responsible for curing cancer and they beat the US to it. But there will be a shock that goes through the system that will be something like we've never seen because it'll be, it'll be a realization Cancer, I.

A (34:34)

Don'T know, hats off to them.

C (34:35)

Well, well look, we want someone to cure cancer, but you know, we want to get there first if possible. We don't want China to control the pipeline for that. So I think the point is, is that if you have enormous success stories on AI and quantum and biotech, then you know, it shows that you're not doing the right things in the national security side. And the reaction to that is likely going to be a broader decoupling. It'll be a look and saying look. The broader part, the economy itself is basically ignored by Xi Jinping. He doesn't care if households aren't doing well. He doesn't care if, you know, if you know, how the stock market's doing. He doesn't care how tech billionaires are doing. What he cares about is his part of the economy that's focused on advanced manufacturing and national security issues. And so we should be focusing on that from a policy standpoint. If we don't, the reaction after some sort of huge China breakthrough or set of breakthroughs on the technology side is going to be much more reactionary and it will likely be part of a broader decoupling because the recognition will be, wait a second, we sort of allowed the economy to do well enough in order to have all the funding fuel over to the technology side, to the manufacturing side. And so we need to be very careful about doing that. I think there will be a much broader policy reaction and, and it'll be a much more dangerous set of US China tensions in the future if we ignore these national security priorities right now and instead wait until something big happens and then it's going to be a much, much more tense and potentially confrontational relationship.

A (36:01)

I got to stay on the cancer stuff because it is like, sort of illustrative of this. Okay, what is national security and what is. Okay, Right. And you know, one of the. This is like a meme in Washington for decades now is like, if you want your thing to get attention, it's a national security problem. Right? And I mean, look, I'm sure there are some, like bioweapon super soldier, like knockoff things that you would also unlock by curing cancer, but, like, you got to draw the line somewhere, right? And I mean, Leland, are we only drawing it around like China buying middle class consumer goods? Is there no universe in which the two countries can work, can like, not harm each other and their attempt to, like, discover cures for human illnesses?

C (37:02)

No, no. I'm not saying that there are no opportunities to work together. And I'm not saying that China curing cancer would be a bad thing if the alternative not curing cancer. But I think that we want to have the US industry, particularly the US Industry that is providing a huge amount of the R and D right now to be able to win that battle if we can. Because the alternative is to have China control the supply chains coming the other direction. It'll give them enormous leverage in the relationship. I don't want to oversell the cancer thing because, look, everybody wants cancer cured. Of course, what I'm saying here is that we need to be looking at the relationship not on 100 different policies that we could throw spaghetti against the wall and hope some of them Stick on China. We have to be looking at what are the things that we're doing that provide capital or technological inputs to the party or to the military, and we need to shut those down. The problem here is not only do we not have strong policies that shut that pipeline down of capital and technology, we are refusing in most cases to even track that. So if you look at the problem with supply chains, it's not that we have bad policies, it's that we have refused up to this point to even get the data necessary to highlight what the vulnerabilities are. And the reason we have not gotten those. Those data is that we've been very sensitive to the idea that we're on industry's turf, we're going to hurt our companies, et cetera. I'm totally. I totally acknowledge that. But I think that we need to again, highlight what are the national security things that we need to be focusing on. And when there's a national security priority, the government needs to become active. It needs to demand eth. FDA get these data from the companies and be able to aggregate them so we understand the. The extent of our vulnerabilities here. I think that's the issue. First, get the data necessary to understand the extent of the problem, if there is a problem. And two, then you can form good policies. So we're even. We're even quite far away from developing good policies because we have. We have refused to get good data on investment. We've refused to get good data on supply chains and. And technology could. And technology as well.

A (39:04)

Mike, you want to take it wherever you want.

B (39:10)

Since you talked about the endless frontier, let me just go either a layer above or a layer below where Leland is. And it's the sort of innovation cycle. Right. It's great. If we can talk about supply chains. You know how we can talk about supply chains if we're innovating. And so a number of the recommendations, Quantum biotech, a few other things that we had in the report, talk about the importance of making sure that you sort of preserve the ecosystem of innovation. And so, you know, you wanted to talk about the Endless Frontier Act. The original story was it was obviously intended to be a $100 billion investment in the innovation cycle. And the idea was that we've been benefiting for 80 years from the investments that we made during World War II and sort of had the American innovation flywheel going. And it was time to sort of reinvigorate that based on really what Leland is talking about, which is that China has done an incredible job of building its manufacturing machine. The American innovation machine is still incredibly resilient, and I still believe that today. But again, going back to my fairy dust comment, all this stuff runs on money. And so if you want to talk about supply chains going 10, 20, 30 years in the future, we need to make sure that we're sort of feeding in that innovation machine into the process and doing the foundational science and the early scaling stuff that allows us to make sure that we do know what is in those supply chains and know what's required to build the technologies of the future.

A (40:39)

All right. We went 45 minutes without talking about Trump. The, you know, the dynamic there, Mike, is you have Mike Kratzio giving nice speeches about Vannevar Bush and then you have, you know, science funding getting cut. Us sort of like, you know, holding. Do we want to do this? Maybe let's not do this. Let's. I want to talk maybe Leland and Mike a little bit about the sort of treasury sanctions to commerce export controls parallel. One of the things that you, one of the, like, little recommendations that really caught my eye is this idea of having, you know, whistleblowers for export control violations, which is illustrative of just like a playbook that already exists and is already really successful when it comes to financial sanctions and financial crimes that just has not been manifested. So, yeah. Curious for your reflections on that. Maybe like a diagnosis, is it just much harder because it's not everything, you know, runs on dollars and through banks you got to deal with all these small companies as well. What, what, what's going on here?

C (41:53)

I'll dive in quick and then Mike can take over. Look, I think that the issue. So we have a very extensive recommendation on export controls and ways to sort of bolster the policies of the Bureau of Industry and Security at Commerce. I think the issue here is that you have an entity that's doing extremely important work that is so massively under resourced that it's laughable. And I think what we're doing right now, via changes in policy and proliferating more exports to the Middle east and elsewhere means the job of BIS is bigger and harder and more expensive. So, yes, of course, we would love to see more money going to bis. There is, there is some more money going, but it's not nearly enough. You know, there's a, you know, there's like one person in each country responsible for doing inspections. The whole entire, the whole entire resource issue is quite ridiculous. But what we were trying to do is get around this problem. However, we can so how can we use technology to help? How can we put things in like the whistleblower hotline? How can we shift the model? I mean, we suggest shifting the model from a sale model to a rent model so the US companies and the US government continue to control the levers of what technology, what chip technology are being used abroad. So what we're trying to do is not just say we need more money, we need more money, of course we need more money, of course we need more manpower doing some of these compliance checks, et cetera. But how can we use technology and some other mechanisms to make bis job easier and more effective? And so I think that's what we focused on for the export control recommendation in particular.

A (43:37)

Mike, let's do a little history lesson around the financial sanctions stuff. What were the big unlocks that allowed it to really have some bite?

B (43:46)

I mean, sadly, the biggest unlock was 9 11. Right. And allowed sort of people to look at these things in a different way and see how sort of non state actors were, were leveraging the financial system. And, and, and that's sort of what invigorated the process. The second thing that happened was obviously the intelligence community reorganization that happened. And I don't remember what year it was, but that was also sort of a critical piece of it that allowed sort of more, more sort of resources and thoughtfulness into that ecosystem. So that's the, those are the big parallels. You know, obviously we're not talking about a non state actor anymore. We're talking about a state, state actor. And so we're thinking about these things differently. But a lot of the lessons learned in my opinion from the post 911 sanctions reforms can be applied here. And then honestly, the, the other piece of this, and I think we briefly touch on this in the recommendation, is FIRRMA did a lot of really important work. We almost need a FIRRMA 2.0 and hit a refresh key on that because like I said, this is a cycle of measure countermeasure. And we need to make sure that the entities that are involved in these sort of economic statecraft elements of our government are able to be one, resilient and two, flexible to respond to the various actions that the Chinese are taking.

A (45:04)

All three of us have been doing this stuff a long time and I appreciate the sort of sunniness of Mike and the urgency of Leland, but it really feels like this is kind of like a conversation that you have with defense folks where they're like, oh, war in Ukraine, maybe this is the thing that would have unlocked defense acquisition reform. And you know, here we are almost four years later and yeah, we got some stuff a little bit, you know, legislation's moving, what have you. You would really think that the rare earth stuff, which again, is not something people weren't aware of, but like finally happened and you know, we're still here and things are moving a little bit and we'll see, but it's not the sort of 911 type. Okay, like, no more bullshit. Like, we're going to spend a lot of money and we're going to get new authorities and we're going to fund new corners of the government to like actually get out this mission. So I'm kind of. And you know, we have a.

C (46:20)

We.

A (46:20)

Have an executive branch which is really of multiple minds on what they're going to do about a lot of these issues. So I'm personally like, like, I like all the recommendations. This is as pessim as, as I've been in a while, frankly, that the.

B (46:39)

Yeah, I spent, I spent time in the majority, in the minority in Congress. And the way I thought about my job in, in both places was my responsibility was to keep pushing rocks up hills. So first of all, I've never been called sunny, so that was refreshing. But second of all, you know, just because it looks dower doesn't mean you got to stop pushing the rock up the hill. So I still look at it the same way and I still think it's important that people feed ideas into the system that are outside of the noise level and that are. And to Leland's earlier point about the horizon line or over the horizon.

C (47:11)

Right.

B (47:11)

So this is something where, sure, we can be pessimistic about where we are in the moment and we can talk about critical minerals and rare earths all day long. We can also have sort of a more sort of strategic conversation like, okay, this is happening to us now. The executive branch sort of has the steering wheel on this right now. What are ideas that we should be considering that are over the horizon that would make us more resilient in the future? And the other thing, and you're going to think I'm like a broken record here, is that, you know, rare earth is, is really bad. What is the, what is the innovation cycle that we are funding or creating or breathing energy into to make sure that we are able to work around this because it's not going away. And so, you know, we can talk about, you know, mining facilities and processing facilities. We can do that. We can also say, like, what are other ways to get around this problem? And how are we. How are we being thoughtful about that? And where are we making those investments?

C (48:08)

I think we're doing that, though, so I'm going to be the cheery guy for a change. I think that we are doing big things. Well, it's not. It's not a normal occurrence, so let's. Let's enjoy it while it happens. Look, I think that there are big things happening on critical minerals and rare earths. You know, a year ago, nobody was focused on this and nobody was doing anything. You know, we're talking. You know, you can talk all you want. China has a. China has. There's a million rare earths, there's a million critical minerals. Sourcing's not the problem. Processing's the problem. I think we all sort of come around to the idea of that, but they have. There's been enormous attention to this issue over the last several months now, maybe partly because the rare earth issue became so elevated that it affected the President's trade and tariff program. So it caught the attention of the White House. It doesn't matter why it's become elevated. It's become elevated. And the Pentagon has moved in to take equity stakes in companies to create price floors, which is a model going forward. I think if you look at how we're going to fix supply chains going forward, the problem has always been that China can price things cheaper, not just because their labor is cheaper and regular structural reasons, but because they subsidize the hell out of anything that's a national security priority. And so they've always been able to have the lowest price, which means we've always outsourced everything and therefore are reliant on imports from China, directly or indirectly. I think what we're doing is changing the entire paradigm right now, which is we're saying there are certain things, again, by setting national security priorities and saying this is one of them. We are saying that we are not going to work on economics alone. We're going to be setting price floors. We're going to be taking stakes in companies. That is not my support for taking equity stakes in all kinds of companies for all kinds of reasons. But in certain issues, like what we're doing at Mountain Pass, I think it makes enormous sense. And there's coordination with the Australians on some other processing plants. So I think that, yes, it's always true that the United States government and the United States people react really only to crises. But we had many crises here. It's not a real crisis, but it's. But it's sort of A flash, flash in expectation of a future crisis. And I think that has kicked, you know, the US Government into action, not just in doing things, but also in thinking outside the box in terms of new economic models, of getting things like processing of critical minerals going.

B (50:20)

So, you know, and the other thing I would just pile on here, Jordan, is the one thing that the Chinese are incredibly effective at, and this relates to Taiwan or the sort of critical mineral space, is this sort of boiling of the frog or sort of salami slicing of the status quo and, and sort of doing it underneath everyone's nose. I had this piece that I did for real clear a few months ago on sort of America's biotech future is now made in China. What we've actually seen in the biotech space, and Leland talked about some of this, is this sort of slow acquisition of not only sort of the manufacturing capabilities and the research capabilities, but really the entire infrastructure layer of the biotech economy. And, you know, biotech, when I say this word to policymakers, historically, they immediately think pharma. And obviously you and Leland talked about cancer drugs. But like, biotech is a lot more than that. There's incredible materials opportunities. You know, there's companies in North Carolina making bio cement, which is, you know, surreal to me when you think about it. There's companies in South Carolina that are making purses out of mushrooms and sawdust, which, again, just blows my mind. And so there's an infrastructure layer there that China has essentially acquired over a series of decades slowly. And the same things happened in rare earths. And so you sort of talked about the urgency of the moment and things like that. The thing that happens in the, the balloon is sort of a rare example of this where something's outside of the noise level. Right. They just slowly chip away at it and boil the frog on us. And again, happening in Taiwan, and it's happening in some of these key areas of strategic technology importance as well.

A (51:59)

Yeah, so the.

C (52:01)

Please, I was going to say I don't want to jump the gun here, but, you know, I, I think that our, our biggest challenge is not convincing Congress and other policymakers to be serious with supply chains or even biotech. It's, it's, it's. It's a more futuristic issue like quantum. I mean, I think that quantum is, is, is really a case study in whether we can, you know, help get the DC community more serious about future technologies that are going to dictate the way that we live our lives and whether we can control our own, you know, our own, you know cryptography in the future, but it's not something that has immediate payout. So I think that this, it's an example in this spectrum of things. Some things are hitting us right now. They're immediate, they're urgent. Congress can see that some things are more futuristic. And so we've got a full spectrum. And I think on the distant end of that is quantum. We obviously had a recommendation that tries to encourage Congress to get ahead of this, to put sort of a quantum strategy in place. But again, this is the challenge because we have a lot of urgent issues right now. Can we help Congress come around to an idea that's more medium term and long term?

B (53:11)

Jordan, I don't know if you've geeked out on quantum, but there was. Leland and I led a, a brief trip to the west coast on this with, with the commission. And it was, it was an incredible journey. We sort of did corporations, we did, we did academics, and there were a whole bunch of things that really jumped out at both of us. One is that the US Is pursuing sort of multiple pathways to a quantum computer, which was incredible to sort of better understand. And the second thing, and I think both Leland and I were struck by this, and he touched on it, but not as much as he usually does. So let me attempt to trigger him here, which is like chemistry. Chemistry is going to have an incredible role in a quantum ecosystem, just because there's a material science piece to this that I don't think we fully appreciated. And so it goes back to like the endless frontier, Jordan. And I know you're probably sick of it at this point, but there is a flywheel piece of quantum that it's vital that sort of policymakers continue to focus on. And so that's one of the reasons why the quantum recommendation is in the top 10. The other thing, and I think Leland had a similar reaction to me, is software, right? We talk about software all day long. The thing that we sort of don't talk about when we talk about software is quantum software doesn't exist. So it's actually an ecosystem where we have to be thoughtful about this and sort of be strategic. And so it's an area where, again, in the top 10 recommendations, we talk about quantum software, and people are probably going to scratch their heads and like, what the hell are you talking about? We have all these software companies all over the country. Well, guess what? None of them do software on quantum computers. So it's an area where, you know, both the private sector and the public sector need to be thoughtful about These investments.

A (54:57)

So the, the second recommendation, the second one says, see the commission's classified recommendation Annex for a recommendation and discussion related to US China Advanced Technology Competition. Competition. Mike, blink twice if that's a, you know, Manhattan Project for Unobtainium. Is this how we're going to solve all our rare earth issues?

B (55:18)

I, I, I've worked in the classified space long enough to know that my answer is people should go look at the classified annex. I will say that just since you said Manhattan Project, I just want to remind everybody that last year the commission's number one recommendation, which Cliff Sims and Jacob Helberg were kind enough to work with me on, wasn't a Manhattan like project for AGI. So the commission was dramatically ahead of the curve on that sort of AGI conversation. Just sort of showing the over the horizon work that we often do.

A (55:52)

Yeah, you guys got it. You didn't need government though. You just had, you know, a few trillion dollars of global capitalism all pour in for you. I want to close on space because I like space. This is a Mike thing, right? Mike, what's up with the space chapter and recommendation?

B (56:12)

I mean, like, first of all, Jordan, I love space issues. One of the coolest things about my gig with leader Schumer was the ability to sort of see the, all three sort of communities working in this space, the civilian, NASA space, military space, and intelligence space. And it was an incredible sort of opportunity to, just to see how, how much, one, how much money in public treasure has been poured into this over the last 80 years. But two, just to see all the things that the, the United States government is capable of doing. One of the things that we did a hearing on, and I can't remember what the title was, but I know I loved it was like the rocket's red glare or something like that. And the, and the staff wouldn't let me, wouldn't let me have a question mark at the end of another hearing title. So I didn't get a question mark at the end, which is devastating. But the thing that we're seeing is, is we have this incredible historic infrastructure in this space that we invested in as part of the sort of the shuttle program and obviously the race to the moon and a lot of it is getting really old. And so imagine two cars going down the road. You know, we're cruising at, you know, 60, 70 miles an hour, but there's a car that's coming behind us at 100 miles an hour in this space. And that's what we're seeing China do, really, is we're seeing them making incredible investments in launch, in infrastructure, and in technology that's deployable to space. And so we had a long hearing about this. General Saltzman kindly came to the hearing and really said more things than I've ever heard a military leader talk about in the space ecosystem. So we heard about military space, and then we had some folks from industry and the think tank community talk about civilian space as well. It was a great hearing, as far as I'm concerned. Obviously was Cliff Sims and I. So I'm obligated to say it was a great idea and a great hearing. So that's the first piece of it. The second piece, Jordan, is I sort of had a deeper awakening about two weeks ago when I was at this conference called igem. This is a synthetic biology conference, which you're probably thinking like Kaiken. What does synthetic biology and space have to do with each other? The answer is we have to figure out a way to sustain life in space, whether it's in outer space, on the moon or on Mars. And the synthetic biology community is going to have a vital role in here. And so it gets back to sort of the biotech recommendation, which is we need to be incredibly thoughtful about this ecosystem and who's making investments, because this is going to be a future technology that we rely on deeply, whether it's sustaining life on the or sustaining plant life or anything else, you know, in a future space station, on a spaceship, or in the places we talked about moon and Mars. Leland, did I get everything on the space recommendation?

C (58:57)

I think so. And he didn't even mention China once. It's impressive. I did.

B (59:01)

Didn't you hear my racing car analogy?

C (59:02)

Okay, okay. An illusion.

B (59:05)

All right, we're going 60. We're going 60. 70. You want me to do it again?

C (59:08)

No, it was good. You got it.

B (59:10)

Point conveyed.

A (59:11)

Oh, man. The who knew China commissioners could double as like, you know, back to back stand up act. Mike Leland, this was a pleasure. Thank you so much for being a part of Chinatalk.

B (59:26)

Thanks, Jordan. Thanks, Jordan.