Economic Impacts of the US Innovation and Competition Act

On June 8, 2021, the U.S. Senate passed the United States Innovation and Competition Act (USICA), an ambitious piece of legislation that would dramatically increase federal investments in scientific and technological research and development (R&D). The bill has enjoyed the support of both Democratic and Republican senators, and was overwhelmingly approved by a vote of 68-32.

Although USICA has received much less media attention than the Infrastructure Investment and Jobs Act (the so-called “Bipartisan Infrastructure Law”), a press release from the office of Majority Whip Dick Durbin (D-IL) maintained that it would constitute “the largest investment in U.S. science and technology leadership since the Apollo era.”

In this memo, we make use of the Data for Progress Jobs Model to conduct a macroeconomic analysis of USICA. We find that the appropriations provisions of this legislation would, if enacted, contribute between $44 billion and $51 billion per year to U.S. GDP from 2022 through 2027, and would create or preserve a total of between 2.6 million and 3.0 million jobs over the same period.

The forecasts in this memo could be underestimates of the true economic impact of USICA, since they are necessarily based on a model of the industrial structure of the U.S. economy as it currently exists. In the case of a bill that promises to catalyze productivity-enhancing innovations across sectors, there is potential — if difficult to measure — for even greater gains than our estimates suggest.