CFR Task Force Report: U.S. Economic Security—Winning the Race for Tomorrow's Technologies

In its important new report, U.S. Economic Security: Winning the Race for Tomorrow’s Technologies, the CFR Task Force on Economic Security finds that strategic competition over the world’s next generation of foundational technologies is underway, and U.S. advantages in artificial intelligence, quantum, and biotechnology are increasingly contested. The high-level, bipartisan Task Force warns that economic security risks, especially overconcentration of critical supply chains in China and underinvestment in strategically important areas at home, threaten American leadership in these three crucial sectors of the future. The Task Force report provides a comprehensive view of vulnerabilities that the United States must address and offers practical recommendations for mobilizing the resources needed to prevail. 

This Task Force is part of RealEcon: Reimagining American Economic Leadership, a CFR initiative of the Maurice R. Greenberg Center for Geoeconomic Studies.

FROMAN: Well, good afternoon, everybody. Welcome. It’s great to see so many people here. In addition to this standing room-only crowd here in Washington I’m told we have over 300 people registered online as well. Thank you for joining us for the launch of our latest task force report, “U.S. Economic Security: Winning the Race for Tomorrow’s Technologies.” You can pick up your copy outside.

In the decades following World War II, the U.S. led an effort to create an international economic order that was designed to promote growth and efficiency through trade liberalization and global integration. And today that rules-based system is very much under stress. The global system is being rewired, in part because of great-power competition. And economic security, the convergence of national security and economics, has become the new front line of strategic competition over foundational technologies, including artificial intelligence, quantum computing, and biotechnology.

Over the last ten years, the U.S. has increasingly intervened in the economy by deploying a range of tools, export controls, restrictions on inward and outward foreign investment, industrial policy, and even tariffs, to safeguard technologies and resources believed to be critical to our national security. And yet, the new economic security paradigm has not yet been fully defined. Any administration, current or future, is going to face the same set of questions: How and when to intervene in the market, what guardrails should guide the instances and extent of intervention, and how do we ensure that we’re able to compete effectively against China? And that’s why CFR convened this bipartisan Task Force on Economic Security under our RealEcon: Reimagining American Economic Leadership initiative, to help policymakers address these kinds of questions.

The report reflects nearly a year’s worth of hard work from our cochairs, the project director, task force members, observers, as well as our staff here at CFR. And the task forces are really one of our preeminent products of the Council. Now, I have to admit, I directed a task force in 1999 on the economic development in the Balkans. And I’m reasonably confident this one is going to have more impact than that one did. (Laughter.) Bringing together this bipartisan group of members from across multiple domains—former government, private sector, academia, think tanks—on such a timely issue is one of the things the Council does best.

And I want to thank the cochairs: Gina Raimondo, former secretary of commerce and a distinguished fellow here at the Council on Foreign Relations, Justin Muzinich, former deputy secretary of treasury, and Jim Taiclet, CEO and president of Lockheed Martin, both of whom sit on our board of directors. I’d like to thank John Hillman for being our—he’s our senior fellow for geoeconomics and he directed the task force and held the pen on the report. So any mistakes are his alone. (Laughter.) And Anya Schmemann, who helped shepherd this process and has been overseeing task forces successfully for some time.

I’d also like to thank the rest of the studies team that worked on this effort, particularly Chelie Setzer, Kat Viyella, and Ishaan Thakker. This report reflects a truly whole of CFR effort, bringing together our membership network, our convening power, our digital capabilities, and our in-house expertise. And, needless to say, lots of departments of the Council played one role in it or another. So it’s a privilege for me to turn this over in a minute to Greg Ip, from the Wall Street Journal, who’s going to have a dialogue with our cochairs and our project director. But first, let’s go to the videotape.

(A video presentation begins.)

RAIMONDO: The strength of a nation is no longer measured solely by its military, but by the resilience of its economy. In boardrooms, factories, and labs, the future of American leadership is being decided. Advantages in critical technologies, like AI, quantum, and biotech, that’s what will define the next generation and determine who will lead. This isn’t just an economic challenge. This is a national security imperative. Winning allows the U.S. to take first and full advantage of commercial, military, and other related benefits, such as shaping global rules and standards. But if we lag behind our competitors, the world’s most promising technologies will fall into the wrong hands.

China’s government is pouring hundreds of billions of dollars into foundational technologies, with the aim of surpassing U.S. firms and displacing American leadership. And China’s already demonstrated it’s willing to weaponize its supply chains, including its near-monopoly on critical minerals which are essential for semiconductors and other vital components. Take biotechnology. The U.S. depends on China for roughly 80 percent of the basic ingredients for antibiotics, fever reducers, and many other common medicines. And American companies are increasingly outsourcing biotech R&D and manufacturing to China. These deepening dependencies are leaving us more vulnerable.

Now, while we lead the world in AI investment, quantum and biotech struggle to attract sufficient capital, given high uncertainty and technical risk. So to meet these challenges head on the Council on Foreign Relations convened leaders from across the public sector, industry, and the military to create a roadmap for how we win tomorrow’s technologies and strengthen American economic security. Our task force crafted a set of practical recommendations to build more resilient supply chains, mobilize the private investment needed to compete, and upgrade American institutions for today’s era of economic warfare.

First, economic security begins at home. And we need to invest in American manufacturing capacity to produce strategically important goods—everything from data center components to advanced bio manufacturing. Second, to secure critical minerals we need to expand the national defense stockpile, accelerate mapping and permitting, and innovate beyond mining by pioneering recovering and substitution technologies. To spur private sector investment for quantum, we need to lead the development of the world’s first utility-scale quantum computer through Pentagon procurement. And finally, we should establish an economic security center at the Department of Commerce to strengthen government coordination, upgrade technical expertise, and deepen partnership with the private sector.

All of this won’t be free. It won’t be easy. And it won’t be fast. But we have a network of partners and allies to draw upon. And we have something that nobody else does, namely America’s innovators, entrepreneurs, investors, and workers. All are second to none.

(Video presentation ends.)

IP: Thanks very much for that introduction, Mike, and for the terrific, slickly produced video, which feels like I don’t have much left to say. (Laughs.) Maybe when’s the sequel. But I want to say that it is actually a privilege and an honor to be moderating this event because the evolution of the international economic system is something I’ve been writing about and thinking about carefully. If you go back in 2016, it feels like economic security is one of the things that barely mattered in discussions of international trade and economics. Today, it feels like it’s the only thing that matters. I mean, right now, just in the last few weeks, the headlines of my newspaper and others have been filled with discussion about what do we do about China’s control on rare earths, what do we do about our own control of exporting artificial intelligence and related technologies?

And the question that I always keep coming back to, well, it’s now a given that the so-called rules-based international order is dead, but nobody has a clear vision of what we replace it with. A lot of opinion, but not a lot of fact. And this is why this report, which I have right here, is so good. And I’m not just saying that because I’m moderating this panel. But what I love about this report, and the work you guys have done, is that this is not just highfalutin concepts. It is so granular. Is so full of, like, just, like, really crisp, interesting ideas. And that’s what I want to sort of dig down into today.

But to start it off, I’m just going to give you a quick sampling of some of the numbers that jumped out at me, because when I put them all together it really left me feeling, kind of, you know, like, overwhelmed. And these all have to do with China. So first of all—and I’m quoting from the report—China spends three times as much as the United States does at the government level on AI, quantum, and biotech. The United States depends on China for 70 percent of its rare earths and 99 percent of heavy rare earths. Eighty percent—33 percent for active pharmaceutical ingredients. Eighty percent of U.S. biotech companies have at least one Chinese supplier. We depend entirely on China for arsenic and holmium copper. Just to give you an idea, until I read the report I never even heard the words “holmium copper,” but I now understand that’s actually quite important. (Laughs.) And a single Chinese firm is involved in developing one-fourth of the drugs in the United States.

So I don’t know what your reaction is, but when I put all that together the first question I have, and I’m going to put it to you, Gina, to start, is it hopeless? Has China already won? I mean, should we just fold up the tent? It kind of feels that way when I read this. Tell me why it’s even worth addressing this, because their head start seems insurmountable.

RAIMONDO: Hmm, wow. OK. (Laughter.) Well, thanks for the question. Huge thank you to my co-chairs. I would say thank you to all the people who did the hard work, Jon especially. One reason that you should think it is not hopeless is that this is still a bipartisan issue, as evidenced by the fact that the three of us are up here—Justin, who served in the first Trump administration, obviously I was secretary for Biden, and Jim, who had service in the military, but is in the private sector. This is why we’re going to win. This is why, by the way, we are winning. We’re ahead of China and AI. We’re ahead in other areas. And we will continue to win because I think in a world of—pretty much very few things are bipartisan. This still is. And we found that in doing this report. I certainly found that with the CHIPS Act. The CHIPS Act was passed in a bipartisan manner. It’s still being implemented. Just the other month TSMC said they made the Blackwell chip, one of the most sophisticated chips in the world, in Arizona.

So the bottom line is, it’s a daunting report. And there’s no one quick silver bullet. But throughout America’s history, when we decide that we care about something and align ourselves entirely, public sector and private sector, in concert with our allies, behind achieving a goal, we’re able to get that done. And so that’s fundamentally why I am optimistic. And, you know, this provides a roadmap. Like, once again, there’s no one thing. But one other takeaway here is we can pull forward. China might be investing four times as much, but our private sector is incredible. Our capital markets are the deepest and most dynamic in the world. So we’re going to do it differently than China, and with our democratic allies around the world, but I like our odds.

IP: Justin, I want to talk to you about, like, how do we decide exactly how far we go down the road of, like, decoupling or de-risking from China? And what we’ve seen in the last year is that this administration has tried to establish a new relationship with China, one, you know, with higher tariffs and more controls. Is that periodically it gets pushed back because the markets are rather reactive, China exercises its leverage. And I think there’s a question overriding all this. You know, in the continuum from decoupling to de-risking to doing nothing, how much pain or cost is it worth the United States bearing to achieve the goals here? How do we know enough decoupling is enough?

MUZINICH: Sure. I mean, we really have approached this from a national security lens. And, you know, I think when you’re talking about national security, you’ve got to be willing to bear some costs. And the sooner you start doing it, the easier. I mean, we’ve picked three industries that are very future-oriented industries. And our view is, if we start today it will be much easier than waiting to a point where China uses its leverage on our supply chains to—you know, to try to get some sort of foreign policy—foreign policy outcomes.

So, you know, both sides of the aisle, I mean, if you if you ask what is the most fundamental use, for instance, of taxes, that both sides of the aisle would agree on, it’s to fund the Pentagon and fund the military. And if you see, you know, some of what we’re talking about through that lens, this is national security in the same way that buying a plane might be national security. We cannot let China have control over, for instance, basic medicines for the country. Then I think as a country you have to be willing to bear some costs. We say that in the report. But it’s much better to do it now than to wait.

IP: Is it—you know, given that the affordability crisis seems to be on everybody’s lips in recent weeks, is it really viable to say that for the sake of economic security, Mister or Madam American Public, you’re going to have to pay more for drugs, you’re going to have to pay more for, you know, electronics and so forth? It doesn’t seem like a popular message.

MUZINICH: It’s not a popular message. But I mean you—A, it has to be framed in the right way, so that it’s about national security. And, B, in terms of what we actually have the government spending in the report, the amounts aren’t that much. If you add it all up, it’s sort of low single digit billions—low double—sorry—low double digit billions, high single-digit billions. And, you know, if you compare that to the 300 billion (dollars) we’re taking in through tariffs, or, sort of, you know, what foreign companies have committed to spend in the U.S. with Trump’s deals, I think it’s pretty affordable.

IP: Jim, I want to turn to you now. You’re the practitioner here. You know, you built some of the most advanced and important weapon systems in our arsenal. Talk me—I think the F-35 program is a perfect example of the challenges in trying to sort of locate and remove dependencies on China. Walk us through what you discovered when Lockheed Martin turned to that task, and what does that tell the country as a whole? What lies ahead of it if it’s going to achieve the goals of this report, which is to really remove any dependency on China?

TAICLET: So, Greg, in a complex system like an F-35 aircraft, you have to make sure that every single component and every input into that airplane is reliable, it will perform as it’s engineered and advertised, and that it cannot be spoofed or hacked or somehow taken control of. And so every single item on that airplane has to be reliable in that way. And if you think about the complexity of an aircraft like this, or a submarine, or a satellite that is used for military purposes, it’s going to have, in the case of the F-35, we’ve probably got dozens of first-level suppliers. Each of them has dozens of suppliers themselves. Each of them has dozens. The supply chain goes down about six to seven layers from the aircraft itself.

We have to be able to monitor all of those layers. And we have a system to do that. But now and then it’s almost impossible to get what we call supply chain illumination. Where did every part come from, all the way down to the sixth or seventh layer? There was one example where there was a small magnet that was used in a subcomponent of a subcomponent of a system on the aircraft, that was found to be sourced from China. And we first went through a waiver process for the Department of Defense to continue to use it. We had to do experiments and tests to prove that there was no adverse design risk with that part. And, of course, we had to go find other sources for that part, of which there were very few.

And so that’s just one minor example, tiny example of the complexity of the defense supply chain. And our defense supply chain has to be resilient. It also has to be reliable. We can’t have things cut off from our country, like titanium, for example, which is the metal that goes into a sophisticated airplane like this. So economic security and national security, as the secretary has said, they are absolutely intertwined. You cannot separate one from the other.

IP: Given that experience—first of all, A, can you give me some sense of how many years are we talking about from when you first decided that this was something you had to address to when you got to a solution, or were even at a solution? And when you extrapolate from your experience how big a job is ahead of us as a country and all of corporate America?

TAICLET: I mean, it took a fairly short time to get the waiver because we could test the component. And it was so minor it didn’t have an ability to degrade the system or the aircraft. So we came to that conclusion fairly quickly. But other components could. And so that’s why we have to have a really, sort of, powerful, pervasive system for this supply chain illumination. But that also applies to, in biotechnology, the originating substances that go into the drugs, for example. It applies in quantum computing to the very specific lasers and mirrors that are only made in one country. Many of those pieces just made in China, for example. That not only we’re going to need these capabilities for national defense, because not only do the aircraft have to be, you know, the best in the world so that we can maintain deterrence from armed conflict, the systems around the aircraft and the command and control network has to be the best in the world. And AI and quantum are going to be critical to us having the most robust systems in the world, so we and our allies can continue to deter armed conflict among great powers.

IP: Could you give an estimate on how many years away you think we are from achieving that goal?

TAICLET: It’ll be a never-ending challenge. And so, you know, as was stated, you can’t not—you can’t not pursue this. You can’t give up. You just have to say, we’re going to get more and more deliberate about having our own supply that’s reliable and resilient.

RAIMONDO: And work with our allies. I mean, so often I think, at least when I’ve spoken about economic security, a conclusion is, oh, so you want to make, mine, and manufacture everything in America? No, no. Not reasonable. In biotechnology, for instance, the numbers that you offered at the beginning as it relates to China and using their contract research organization, are scary. But Korea has some of the best CDROs and CROs. Europe, same thing. So we were talking earlier about Japan has some incredible technology. So it’s important to do what we can here that we need to do here, but also get very serious and strategic about working with our allies around the world.

TAICLET: And, secretary, I think if we are deliberate about this as a country, industry, government, congress, et cetera, there are real opportunities right now to bring those allies into very specific recommendations that even we have in our report, right? So, for example, President Trump has been very successful in garnering commitments from our allied countries to invest in the United States. Well, there are a number of investment opportunities in our report alone, and I’m sure there are many more, where if we could match those obligations of investment in the U.S., from our allies to projects that would help bolster national and economic security together, then I think that’s a real win for everyone.

IP: Justin, does that—I think they’ve raised a very important point here, that it is much more efficient to, like, keep our allies close and essentially share the burden of these technologies. Many of which involve enormous economies of scale, not just in the research and development, but in the production. But is it—you know, we’re in an era now, as I said at the opening, where the idea of free trade is, kind of, like, very unpopular, right? So in your view, is what you’re talking about here is a bespoke set of arrangements that focus solely on specific security products, where we’ll have a set of trusted allies on the F-35 or something like that? Or is this actually a stepping stone to rethinking trade altogether, that economic security can actually be the building block for an entire set of new trade arrangements built around economic security, unlike the old world where we didn’t make that distinction?

MUZINICH: Sure. We’re really focused on the first, which is, you know, arrangements that will ensure that we have a national security, you know, arrangement that we think is sustainable for the U.S. Yeah. So we’re not, I think, taking steps sort of beyond that. And when you’re really focused on national security, I think what comes out at all of us is that, as a democracy, we do not want to put ourselves in a position where policy can be dictated to us because authoritarian countries can cut off vital supplies to the country. And if that’s sort of a starting point, it forces you to cooperate really just with other democracies that share a basic set of values.

IP: So, Gina, I’ll ask you this question, because obviously you were in the past administration. You know, you were involved in that administration’s efforts to build new frameworks. You know, for example, the relationship with our Pacific allies. What’s your assessment of where we are today? I mean, there’s been a lot of tension with our allies as President Trump has tried to completely remake trade. Are we moving backwards or forwards on the path of establishing those new relationships?

RAIMONDO: I think it’s what Jim said. It is a daily, relentless effort. And that is how we have to approach it. Whether it is Japan and Korea investing in the United States in these specific areas related to AI, quantum, and biotech, whether it’s us relying on, you know, Samsung’s CDRO in Korea, these are important things to do. What I do think is this. With respect to critical minerals, there are several countries, you know this, in Southeast Asia, which are critical mineral rich—Indonesia, the Philippines, others as well, and the Global South. They would like nothing more than to have offtake agreements from the United States. Selling 96 percent of their nickel to China makes them enormously vulnerable.

So I do think whoever—in whatever administration, I think the U.S. needs to step up its game in this effort, in a bipartisan way, to be much more proactive reaching out to those allies in countries who themselves want to wean from the risk of China, wean from the dependency on China as their, you know, monopoly customer. And I think we have to be more proactive and strategic and have a fulsome approach to go to those countries and structure agreements with our private sector, with the government also, which gets us the minerals we need and helps them reduce their risk, as it relates to China. So I think there’s more to do.

IP: I want to stick with you for a second, because the following question I know goes right to something you spend a lot of time thinking about, and this report talks about. Do we actually even know enough about our supply chain here in the United States to take the very basic steps you’re talking about here? I mean, when I listen to you, Jim, I mean, when you go seven layers down, like, how many suppliers do we now have at that seventh layer? I mean, we’re talking tens of thousands of companies. Do we actually know who all those suppliers are? If the president came to you, or you, Justin, one day and said, I’ve decided that product X and company Y are a threat to the United States. I want all those out of our supply chain. Could you even locate those things? And if not, how do you fix that? How do you create the information infrastructure? You know, I—just a bit of background—like, I covered the financial crisis, right? And when it came to figuring out where the mortgages all were, we just didn’t know. It was a nightmare. And this feels like it’s the physical analog to that.

RAIMONDO: Yeah. That’s interesting. So I came into office in the thick of COVID. And, you know, I remember this vividly. There weren’t that many people in the Commerce Department, which is a gigantic, cavernous building, if anyone’s ever been there. And I don’t know, maybe it was, like, a month or two into the job. It was the peak of supply chain challenges. And I did get that call from the president saying, what the hell is going on with such and such? Because he was getting calls from—as was I—constant phone calls from CEOs of auto companies who couldn’t put their cars together for want of a single chip to work the windshield wipers, put 10,000 people out of work in Kalamazoo. You get the call from the White House on that. Medical device companies can’t make pacemakers, for want of some component six layers deep in the supply chain, made in one small operation in Malaysia.

So I was overrun with these phone calls at that time from CEOs and for my boss. You know, like, hey, Gov—which is what he called me—Gov, what the hell’s going on with this? Why is my phone ringing off the hook? OK, sir, I’ll get back to you. Then I call someone who works for me, what the hell’s going on? (Laughter.) And they call someone who works for them. What the hell is going on? And what turns out, if you do what I did and walk around to the bowels of the building, there’s, like, three guys in a spreadsheet trying to figure out. And picking up the phone and calling companies. So we have a lot of work to do. Now, because of COVID, we, in the government, probably like every business, really picked up our pace. And in fact, one of the things I did, which I’m very proud of, in the Commerce Department we built a new AI-powered analytics engine to map supply chains so we could be proactive about vulnerabilities.

A lot of the stuff is predictable. If you know that a single critical component is made by one small, family-owned business in Malaysia, you have a problem. Fix it. It could be a typhoon. It doesn’t have to be COVID. So I would say we are far ahead of where we were, as the government. But there’s always more to do, because it’s the nature of the complexity. And this is an area where AI can be our friend, to scrape all the data, to be proactive, to see how all the links are together.

TAICLET: And, Greg, there’s good news and not good news on the supply chain illumination issue. So in our industry, by regulation and by practice, every purchase order from Company A to Company B, or you’re buying a product from a company, an identifiable product from an identifiable company, we’ve got really good supply chain awareness down to that level. Then there’s another layer below that, which is a distribution network, right? So these rare earth magnets, they went from Chinese provider, maybe, 80,000 in a batch, all over the world, to distributors. And then those distributors sold to sub-distributors. And then our supplier, six layers down, is going to buy from a sub-distributor. That’s really, really, really hard to do, even with AI.

But there are ways to figure out where those real pivot points are, where it’s a single source, a non-resilient source, a family business, so to speak, potentially, or in a country where they could shut us off at any time. And the model we use at our company for the risk of a tail event happening, and what’s the cost? What’s the value of preventing or minimizing the chance of that tail risk occurring, is called anti-fragility. And that’s based on a book by Nassim Taleb, who wrote The Black Swan. He also wrote a book about this very topic, which is there is a cost to making systems more resilient, but it pales in comparison if the cost of that event happening, which is what we’ve been experiencing now and then, especially with the rare earth minerals.

RAIMONDO: But that’s the—with the story you just told—is the reason we need government intervention. Because any individual company is incentivized, particularly public company in the United States today, is incentivized to perhaps minimize the risk of the black swan event in the future, to maximize shareholder value and profits today. Which is exactly why we’re in this mess in the first place. In the mid-’80s, the U.S. was the dominant producer of chemicals in the chip industry. Now we make essentially none. You know, if you dig into this report—which I know you’re all going to do because it’s riveting. Justin is going to do autographs later. (Laughter.) It isn’t just the chips that has to be made in America. It’s the substrates and the chemicals and the materials. And that all was in the U.S. It’s all now in China, Asia, somewhere, because it was cheaper to do. Chasing profit, the private markets, that’s what they did. And so that’s why I have no doubt we will beat China, because if we use all the muscle and tools of the federal government to weigh in appropriately and judiciously in a concerted way, we can achieve what is required.

IP: Justin, I want to drill down on one thing, on a specific theme in the report. Because you guys, after—at the end of the process, chose to focus on three specific technologies—artificial intelligence, quantum, biotech. Why those three? You could have chosen lots of others. What was special about these? And, excuse the cynic in me, but, I mean, I’ve read lists from twenty years ago about all the breakthrough technologies we had to dominate. And it’s full of things like additive manufacturing, and fuel cells, and virtual reality, and so on. And, like, five or ten years later, you know, we discovered they weren’t that important. Walk me through why you guys concluded that these three were special and needed the, you know, visible hand of the government.

MUZINICH: Sure. I mean, there are others we could have chosen. But we chose these three—I mean, first of all, we had a process sort of within the group. We had a terrific group of task force members, many of whom are here today. And this is a question we debated. And we actually created a poll to sort of get people’s views. And we coalesced around these three because it’s our sense of where the puck is going. I mean, they’re important today, but if you look out ten years if we’re not winning in these industries, or if we’re highly dependent supply chain-wise on China in these industries, we’re going to face real national security risks.

And, you know, AI and quantum are a little different than biotech, since the biotech industry is so well developed today. And that one we focused on both because, you know, it will be even more important in ten years, but also because in that industry we’ve sort of really gone backwards. I mean, if you look, you know, twenty years ago we started outsourcing testing in biotech to China. Then we started outsourcing manufacturing. And now we started to outsource innovation. And if you just look at sort of basic—you know, basic patent data around that, in 2000 China had basically 0 percent of patents in biotech. And recently they surpassed the U.S. So we have to be just very careful in terms of what’s happened with the biotech supply chain, especially given all the innovation in biotech.

HILLMAN: And, Greg, just to—just to add quickly to Justin’s points there, this is a set of technologies with pretty significant dual use capabilities. And I think that was one of the—another one of the primary criteria that the task force members were thinking about. You’re right. There are others—robotics, fusion. It could have been a longer list. But these three are also important because they’re increasingly used together, right? So it’s sort of less useful to kind of study them in isolation, as they’re being used for things like discovering new materials. So that’s sort of why they worked well as a group.

IP: Is it also the case that it was necessary that it be feasible to actually draw perimeters around what we thought was important, and in that you—is it the case that when you looked at these you said, this we can do. We can actually identify the chokepoints. Whereas if you had broadened the perimeter would have become, like, just too sprawling a task?

HILLMAN: Yeah. I mean, look, I give the cochairs credit for focusing us on three areas. Again, it could have been a slightly longer list. We could have gone on for slightly longer as a task force. We wouldn’t—you know, we wouldn’t be launching this today, maybe. But I think we did—we did have to make some tradeoffs too about what our primary focus was. So, for example, when we looked at AI, we spent a lot of time looking at specific components for an AI data center. We acknowledge that broader U.S. infrastructure is critical for the ability of U.S. data centers to operate, but we decided to focus primarily on the components within the data center. So we had a couple framing tradeoffs like that, so that we could go deep and get some of the granular information that’s in there.

IP: Now, rare earths and critical minerals, you don’t carve those out as a separate industry. But clearly they are inputs to many of these industries. And you spend a lot of time talking about those. Based on that, I want you to give me a report card on how we’re doing on that front. I mean, one of the more interesting aspects is that if you set aside all the tariffs and other stuff for this administration, there’s been a very active agenda in terms of going out and making strategic investments. You know, there was the company in Alaska to help, you know, build a road. There was the Canadian company, I think, Trilogy, MP Materials. I can’t name them all, but there’s been a lot going on there. Just tell me, is this going in the right direction? Does it look like we’ve figured this part out? What’s good or what’s lacking in this approach? Anybody want to tackle that?

HILLMAN: I mean, I think what’s—this is an exciting period because there’s a willingness to experiment right now with the full set of tools, right? I think we’ve been seeing a lot recently with equity, which is—which is a newer development. But equity is just one tool, right? And so we also focus in the report on other tools the government has—the procurement power of DOD, the ability to, in some case, make advanced market commitments. So I think this is coming at a point where there’s definitely a willingness to think creatively and to think about how do we use these finite public amounts of money to catalyze larger pools of private capital.

MUZINICH: And, I mean, I give the administration actually a lot of credit on this, because I think they’re being very creative. Deals with Australia, price floors for U.S. development of critical materials. And, you know, Secretary Bessent said something which I thought was absolutely right. He said he was sort of surprised China had played its hand on rare earths, because it’s not a hand you can play too often without spurring a reaction domestically. And I think they’ve woken us up a little bit. And you’re going to see more and more of it.

TAICLET: And, Greg, I think one of the important conclusions of this report is that government intervention is not always appropriate. It’s appropriate in cases of market failures, like Gina was describing, where, hey, it’s so much cheaper for a public company to go do or buy something in China than doing it in the U.S. So that’s a market failure. We’re not protecting our ability to continue to produce because we’re doing that short term as a company, quarterly decision to get a little bit cheaper component from somewhere else. That’s a market failure. The government should help address that. The other is this notion of external supply chain inputs that can be constrained or stopped by a political actor in another country. If you have those two circumstances we feel, and the in the report describes it, as government intervention of some kind is probably appropriate there. But not necessarily appropriate for every, you know, issue we have in economic security.

IP: Well, let me stay on that topic for a moment, because that too is also an active subject of discussion. You know, this administration has, you know, taken—like, has intervened in markets in a way others have not. You know, Gina, you were key in executing—in conceiving and executing the CHIPS Act, right? And it had a very specific way of approaching the question of how do we bring chip manufacturing back to the United States. So Intel received approximately $10 billion in commitments. This administration said, meh, you know, I think we’ll do something different. We’ll just sort of threaten tariffs and make Intel give us 10 percent of their equity. Is that the right approach? You know, to go to Jim’s question—when is it right and when is it not right for the government to be that directly involved?

RAIMONDO: Yeah. I think a few things. Often people will say to me, I think, as you did earlier, oh, there’s a new era of industrial strategy. Governments getting involved. I mean, kind of. Like, the U.S. has been subsidizing the airlines, agriculture. It’s not unusual that we’ve had some thumb on the scale by government in industry. And it is certainly not unusual that the U.S. government would make investments in our national security. Now, in the depths of the Cold War with Russia, we may have made investments in certain things. And today it’s technology. So it is true now there is bipartisan support for a, quote/unquote, “industrial strategy.” Or what I consider just fundamental investments in American strength so we can compete. And today the threat is China. It revolves around technology. And so that’s where we have to go.

You know, obviously we favored a different approach. You know, I think different approaches work. We favored a different approach. I thought it was important that companies would—we tranched the money. They received a small amount. They had to meet some milestones. Received another amount. I mean, how you go about doing this, there are many ways to get the job done. I think the important points are you have to have a policy, you have to have a strategy. And, you know, I think it’s better if you have—if you’re making these investments pursuant to a strategy, versus one off in individual companies, you know, one off deals. And as Jim said, as we have all said, the strength is the private sector, right? So for every taxpayer dollar that we used in the CHIPS program, we had $10 of private sector capital. That’s a good thing. We put in a little bit of money, private sector came in 10X.

If you’re going to compete with China, which, as I think Justin said, is investing 400X from the government in biotech, you bet—it’s the private sector in America that has to make up that—it will be better. It will be more efficient. State-owned enterprises, or heavily owned enterprises, are not the most efficient, are not the most innovative. That is not the American way. What we want is capital markets, I would say trade and, you know, a measure of freedom in letting the market work. But we have to—we have to make some investments to stimulate that outside investment, because the market doesn’t price in national security. And that is our job as a government to make sure America is secure and strong and competes.

IP: Jim, I have to ask you, because obviously Lockheed’s name came up in the context of these discussions earlier this year around the time of the Intel purchase. But, you know, is the U.S. government taking a position in large key industries, your own included, is there is that a useful way for the United States to achieve the goals that we’re talking about here?

TAICLET: So I think the approach we should be taking is opening access to the capital markets for defense projects, right? And so in China they have state control over all three sectors that would be important in this equation. One is the People’s Liberation Army, obviously state controlled. Secondly, they have companies like AVIC, it’s called. That’s their sort of Lockheed Martin/Boeing kind of company. That’s also state controlled. And then the Bank of China is state controlled. And so in China there are ways that the secure—the defense investment requirements can be securitized through the army, meaning their entire military, to their industry, to their aerospace and defense industry, through the Bank of China, into our capital markets.

That’s something that is not yet possible in the United States. We are using the P&L and not the balance sheet of the country. The P&L is the defense budget. That’s how we—that’s how we fund national defense, in the classic characteristic of that. But there’s many ways, including taking stakes all the way to just having long-term contracts that I can go securitize through Wall Street. So we want, again, the full gamut of optionality, I think, as a country, so that we can use two of our greatest strengths, which are the technology sector and innovation and the capital markets. That’s the way to approach this problem, where we may have either market failures or regulatory failures, I’ll call them, where the classic ways of doing things between government and industry don’t make sense anymore. And that’s really ultimately what this whole report is about. It’s changing, in a positive, controlled, manageable way, the relationship between the U.S., government and U.S. and allied industry when it comes to the integration of economic and national security.

IP: Thanks very much. I mean, I have so many more questions I’d like to ask, but I also want the audience to have a chance here. So if you have a question please raise your hand. We have a couple of mic runners. And we’ll try and get to as many of you as we can. OK, let’s start with you in the back of the purple tie.

Q: Hello. My name is Khalid Azim. I’m with The Atlantic Council.

So you spoke about supply chain in terms of raw material and product. My question is about knowledge capital and talent, skills needed within the marketplace to actually build the products and skills going forward. So could you speak to how your strategy, or how your report addresses skills shortages, you know, upscaling and trading? Thank you.

RAIMONDO: Well, we’re probably all smiling, and Froman is grinning in the front. This was a subject of much discussion of our task force members. And, as is necessary when you’re producing a report by committee, you have to make some choices. (Laughs.) So we only touched on the talent needs briefly, not because we don’t think it’s important but we had to prioritize. And the whole goal here, by the way, and I hope when you read it you can tell us if we achieved our goal, we wanted this to be, like, a tool that would be used by Cabinet secretaries, assistant secretaries, undersecretaries. Almost like a map of specifically what could they do. So we tried to get into the weeds and make it specific. Necessarily we couldn’t cover everything, and workforce is something that we could have gone into greater depth.

You know, you hear the president talking about more apprenticeships. You saw CEO of JPMorgan making a monster investment including in apprenticeships and reskilling. I can tell you, from my experience as governor and secretary working with the chips industry, it’s a big piece of the puzzle. You know, the average age of a machinist is mid- to late ’50s. We have a dearth of electricians to put up all these data centers, AI. We need to massively upskill people for AI. So I think it’s essential. It’s part of the ecosystem. And perhaps you should have another report on just that. (Laughter.)

IP: Yes, over here.

Q: Hi. Nelson Cunningham, formerly with the State Department, before that McCarty Associates.

My question is for Secretary Raimondo. You talked about your experience overseeing the spending of hundreds of billions of dollars in the chips industry and others. What lessons do you take from that? What would you have done differently? And how would you redo it today in the context of this report?

RAIMONDO: Thank you. Nice to see you, by the way. That’s a great question.

I will say it’s hard to get right. Whether you call it industrial strategy, equity grants, whatever, making these sorts of bold bets in the political context, there’s, you know, one way to get it right, a thousand ways to get it wrong. So lessons I learned. It must be bipartisan at every step. You know, at any time that we would—I think we did a pretty good job of this—but at any time that we tried to, you know, maybe gain political advantage from our success or this became trumpeted by just Democrats, it’s really not a good way to do it. Because for this to be successful it has to still be successful a decade from now, which means you need bipartisan support the whole way through. And you will make mistakes, you know, through the passage of time. And so you need both parties, leaders of both parties and industry, to say this was a good thing.

Second thing is, you have to hire the right talent. I was blessed. I was able to build a team from scratch. I hired a couple hundred people. And I went to Wall Street, I went to Silicon Valley, and recruited the best investors and technologists I could find. Now, I was criticized for that by some folks on Capitol Hill. Why are you going to Wall Street? Why don’t you have more policy analysts? My answer was, because I have an investment job. I want the best investors. But I think, you know, you shouldn’t just have policy people. No offense, policy people. (Laughter.) But we were investing $50 billion. And across the table, you know, from pretty tough negotiators.

The other thing, huge lesson learned, it wasn’t about our return on investment. We were not trying to make money. We were using our money to secure and to buy, if you will, a national security result. And I would say, don’t fall into the trap of saying we’re going to do this to make money for the government. There’s plenty of ways to make money for the government. That’s not what this is about. That’s not what our recommendations are about. National security is not for sale. It’s not going to be compromised. And these are investments to make a return, because you don’t want to lose your money. You want to achieve and buy a national security outcome. And so we set forth goals in the beginning, 20 percent of leading-edge chips made in America by such and such a date, memory at scale, yada, yada. And I always tried to, sometimes successfully, sometimes not, drive the team and the narrative to say, you’re not here to make X percent return. You’re here to hit those five goals, and have broad bipartisan buy in, and in the private sector, to those national security goals.

IP: Let’s go to a question from the folks watching online.

OPERATOR: We’ll take the next question from Jennifer Fonstad.

Q: Hi. Thank you. I don’t know if you can hear me. Jennifer Fonstad here. I’m a venture investor for the last twenty-eight years here in the Bay Area.

And I wanted to ask a question about communications and space. Since we’re talking about national security, I’m curious why that wasn’t really addressed even as an enabler in some of the key issues that you’re trying to achieve around rare earth minerals and a number of other categories. So curious your thoughts there. Thank you.

IP: Do you want to tackle that? That’s right. Go ahead.

TAICLET: Communications—yeah. Communications and space missions are part and parcel of everything that this report talks about. They were going—are going to require the same capabilities as the rest of the technical economy. So it is definitely a priority for us. And just to narrow down on one specific area, quantum communications is much more cyber secure. It’s much more encryptable. And, by the way, it can decrypt other coding systems. So therefore, it is a critical part of our communications infrastructure. China has already rolled out quantum communications at a national scale level in their country, not just on the defense and government side but also on the actual, you know, population’s communication systems. It’s coming into play. It’s a much more, you know, efficient—energy efficient communications mode. It’s, again, more reliable. You can put a lot more data on a hertz of spectrum, and all of this. So quantum is critical to communications advancement for us. And a lot of that communications is going to be to, from, and among space satellites and space devices.

HILLMAN: And I’ll just add that the task force before this one was focused on space. So we’ve got more for you on the CFR website. (Laughter.)

IP: Also, my sense, Jonathan, is that you picked technologies which are in some sense foundational, general purpose technologies. And all these other applications sit upon them, right? So getting AI right is important to getting space and communications and countless other things right. Am I—is that a fair statement?

HILLMAN: Yeah, that’s exactly right. And we’ve got examples in the report too of both dual use of each technology and then some of the overlapping uses as well.

TAICLET: And to go all the way to the ground, weather events are getting more dramatic and more damaging and dangerous. And so we’re using AI with our partner, Nvidia, to figure out an AI way to essentially predict or very quickly identify wildfires before, or as soon as, they start. Or we can—Gina and I worked on this, actually, for a time in the Biden administration too, and we’re still pursuing it, by the way, just so you know. (Laughter.) That we could eliminate mega fires in the United States in, you know, the next five to ten years if we were able to introduce this technology in a way that was scalable. And so for it to be scalable, we have to have all the inputs on the AI side that we’ve been describing in the report.

IP: Let’s see. You, at the very back.

Q: Hi. Brendan Bordelon, tech reporter with Politico.

This is a question for former Secretary Raimondo. This report is obviously ultimately about boosting the U.S. government’s ability to support high tech—you know, sort of dominate these high-tech industries. CHIPS Act was kind of the first bite at that. And, Madam Secretary, one of the things you guys did was a 7.4 billion (dollar) R&D framework, was going to be—it’s called Natcast, running the National Semiconductor Technology Center, sort of to funnel government investments into semiconductor projects. That whole thing has been blown up by the Trump administration.

The Commerce Department, Secretary Lutnick, actually called it a semiconductor slush fund, excuse me, that was meant to line the pockets for Biden loyalists. They’re sort of starting from scratch now. I mean, as far as we can tell, it looks like the Commerce Department wants to directly funnel funds to a wide range of projects, maybe beyond semiconductors into AI. Quantum might be particularly salient there. I’m curious if you have a reaction to Commerce Secretary Lutnick’s comments on that project. And also if you have any concerns about the change in approach, sort of starting from scratch with this 7.4 billion (dollars).

RAIMONDO: Yeah, thank you. So, look, we spent a huge amount of time. And what this is referring to, the CHIPS Act, what gets all of the attention is the money we gave to companies, which was $39 billion of the $52 billion appropriation. There was 6 or 7 billion (dollars) for research and—Congress passed it for research and development, and more cutting edge. They asked us to set up a venture fund. They asked us to, you know, real cutting edge, next generation stuff. So that’s what we did. I’m very proud of what we built. I obviously disagree with the approach that’s being taken now, but hopefully they’ll be successful.

What we did is we set up a network, similar to what we’ve been talking about here, to work with startup companies, private sector investors, some of the best universities in this country, to try to—once again, I believe, in leaning into America’s strengths. Our great research universities, we wanted to draw forward more venture capital. Precious little venture capital in the U.S. today goes into hardware. It’s all gone into SaaS and software because it’s cheaper and easier to make money. So I’m proud of the approach we did. I think it’s unfortunate to unwind it, because we don’t have time, right? This is a red-hot problem. But, that being said, I hope it’s successful, because the U.S. needs it to be successful.

IP: Yes. Woman, there with the raised—yeah.

Q: Yeah. Hi. My name is Carmem Domingues. I’m a former senior AI advisor at the White House.

My question is to Secretary Raimondo, but also open to, you know, thoughts from the rest of the panel as well. Back in July, just before the release of the AI action plan, we reverted months of export controls around H20 chips. Here we’re talking about, you know, staying ahead of China and the increased—the higher—much higher investment that China has already on all these fronts, right? Can you talk about that? You know, some of the argument that was given at the time was that by enabling China to buy H20s, that would somehow slow down their own production or more advanced chips. And we were even talking about selling other more, even more advanced chips than H20 to China. Can you talk about whether—do you see this as a sort of a logical fallacy, or what are your thoughts on this?

RAIMONDO: Yeah, thank you. So I’m a firm believer that the whole trying to beat China by holding them back is not a winning strategy. I think you win by playing offense and investing in our considerable strengths, which is what we say here. That being said, export controls are, like, a very powerful tool in the toolkit that the U.S. government has. And I think they should be used with our allies in a precision way to deny China the most cutting-edge technology that we have, that they don’t, that they will put in their military. You know, they have a civil fusion—civil-military fusion policy. There’s no private sector in China, essentially. Whatever the private sector develops, the military can have it. So I believe, then, I believe now, we have better, more sophisticated chips. And we shouldn’t allow them to have it.

At the end of the day, export controls are about national security. America’s national security should never be for sale. America’s national security shouldn’t be compromised. And so there’s a lot of different ways to use it. But I think what you have to say is, but nor should it be too broad, right? Denying U.S. companies revenue is a bad thing. That’s why it has to be used in a precision way. And it’s hard. I’ll be the first to say I’m not—I’m certain we didn’t get it right every time. It’s just really hard, and an ever-changing technology. I think the important thing is those tools are economic security—excuse me—are national security tools to secure America. And they have to be used in pursuit of that goal, period.

IP: Justin, can I get your thoughts on this? Because I think, you know, the secretary is touching on a really key tension point right now. You feel some of the industry and some of its supporters in the administration, they argue that is in the interest of the United States for the world, including China, to be as essentially dependent on the U.S. tech stack as possible. And when you impose restrictions on sale of our best stuff to China and others, you work against that. How would you approach that balance?

MUZINICH: Yeah. I mean, there’s no—there’s no perfect answer. I mean, there are arguments on—good arguments on both sides. And it’s a judgment call. And, you know, it’s tough to second-guess that people who are seeing intelligence every day and trying to make that call. I think everyone’s aware of the dependence argument. So I think a lot of it comes down to the specifics. I will say, you know, one of the recommendations in the report is to set up this sort of Economic Security Center at the Department of Commerce. And, you know, one of the reasons for doing that—for this to be successful, as Gina has said, you need bipartisan support. But you also need it to be—you need a continuous effort over time. You need to sort of work at this over the course of a decade. And we think having this sort of Economic Security Center will allow more continuity, sort of from administration to administration.

IP: Would the center be, like, de novo, or would essentially fold into it many existing abilities and, you know, authorities? Would you take, like, the BIS and fold that into it?

RAIMONDO: It’s a great question. I think it could be done in many different ways. But the point of it—and I don’t think it’s very expensive. I don’t think we’re suggesting a new department or a huge new bureaucracy. But at least in my experience, I think I can speak for Justin and any of you who’ve been in these interagency processes, they don’t collaborate as well as they should. You with me on this, if you’ve been in these processes? (Laughter.) And in this area in particular, with export controls, with CFIUS, a lot of these tools were invented in the, you know, ’50s and ’60s, for different Cold War era. They have to be modernized. And we have to just kind of stitch them together in a more coherent way.

So, for instance, CFIUS, which Justin ran and knows a lot more about, is—you know, like it’s in the purview of Treasury. That could be used in concert with export controls to achieve the same goal, right? Like we could make it easier for our allies, Japan, Korea, to have a quick way, easier way to invest in the United States, in quantum for example. And at the same time, use our export controls to slow down China. That doesn’t happen so much now because it’s very siloed. So the concept would—and also technological know-how need to be integrated more into the government. So our concept was not a huge bureaucracy, more of a coordination function.

IP: Would it be a little bit like the national security—the NSA, where you essentially, like, department seconded top people to this agency, and so you had that kind of existing knowledge base working together? And then they would basically report up to their respective principals after a collaborative process? Is that what you had in mind?

RAIMONDO: I think so. I think that’s a good analogy. You know, that’s an excellent analogy from which to build. But also, it is important that there be a lead agency. Decisions actually have to be made.

TAICLET: Right. If you go back to first principles, you know, this is situation that requires continuity, as Justin has said, over decades or maybe longer. It’s nationally important. So maybe Cabinet level nationally important. And you want to have the political staff turnover with the election results from the country, but you also want to have a professional staff that stays along the way. There’s two examples of how that’s done already in other areas of security. National security is the Defense Department, or the Department of War now. It has all those attributes—long cycle projects, it has a professional staff, and political leadership changes with the elections.

The Department of Homeland Security, not as, you know, tenured as the national defense enterprise, same concepts. And for economic security, I don’t want to get into what department it should be, but there should be a Cabinet-level department that cares as much about economic security as the DOD cares about national security in the classic sense and DHS does for homeland security in its sense. If you have that first principle concept, you know, pick the place, you know, name it what you want, make it subordinate or separate, like NSA. But if we could get those first principles accomplished, this topic should be raised to that level.

IP: So we have a former Commerce secretary and a former undersecretary of the treasury here. May I suggest the two of you have a game of rock, paper, scissors and the winner gets to decide which department has the security center? (Laughter.)

TAICLET: Make some news right now.

IP: Yeah.

RAIMONDO: Well, the report says Commerce, so I’m going with that. (Laughter.)

IP: OK. Yes, right there, please. Just wait for the microphone here.

Q: Thank you very much. Joe Gasparro, Royal Bank of Canada. Congrats, again. Great, great task force.

Speaking about broader agencies, how will the DFC or the Export-Import Bank kind of play into all of this, working with Commerce, Treasury, State? Thank you.

HILLMAN: Yeah, we—thanks, Joe. We’ve got a section toward the end of the report that talks—sort of takes a step back and says we need to upgrade our broader economic security toolkit because we’ve sort of noticed some deficiencies as we’re looking at these three areas of technology. And in order to be prepared for whatever the next set of technologies is, or whatever the next set of challenges is, we need to invest in making some improvements. And so on that list we do have—we are recommending reauthorization of DFC, with some enhancements including fixing its equity authority, for example. We’re recommending reauthorizing Ex-Im. And then we’ve got some other recommendations in there too that would help with mobilizing private capital more broadly, because I think that’s a theme that you’ve heard in a lot of this, right, is that we’re not going to spend public money at the scale that China is, but we’ve got these capital markets. And that’s a major advantage.

IP: Can I—we have time for a few more questions, but there’s one question I do want to ask, because it’s surprising to me that so little attention, I don’t think there’s any attention in this report, to tariffs. And yet, that seems to be a very important issue right now. And in fact, there was a Supreme Court case heard last week precisely around the president’s authority to use tariffs in pursuit of national security. So my question to the panel, and this—anyone can answer this one, do tariffs have a role in achieving the economic security goals that you’ve talked about here? And if so, what is that role?

MUZINICH: Sure, yeah, I’ll start. I mean, I think they do. I mean, they’re one tool, as Gina said. There’s a whole toolkit. And it would be—the U.S. should always, sort of, consider all tools. Especially if a country is engaged in a heavy subsidization. I think there’s a strong use case for tariffs to create a fair market. And if national security is implicated, that cases is even stronger. But there are also other ways to achieve those goals, as the administration is showing with price floors and otherwise. So it’s just—it’s just one tool. And they have a place.

RAIMONDO: I agree totally with that. I mean, there’s certainly a place, especially, you know, the competition with China, which is famous for subsidizing and dumping. You know, there’s a role for tariffs. But I think, precisely because tariffs get so much attention, we felt incumbent to say, you know, there’s many other tools at your disposal. And, like, it would be incredibly powerful if the secretary of defense, secretary of treasury, secretary of commerce could sit together, that there’s a plan to have secure mining, processing, and manufacturing of the most critical minerals.

And in some instances, we would use—here’s how we’re going to use tariffs, here’s how we’re going to use tax incentives, here’s how we’re going to use investments, here’s how we’re going to use DOD procurement. By the way, there’s stockpiling. You could make an equity investment in an early-stage company, but you could also provide a purchase order. Which is sometimes, you know, the difference between survival and not for early-stage companies. So the point of our report here is, open the aperture and combine all these efforts pursuant to specific goals.

IP: Yes. Thank you. Federico Steinberg from CSIS and Georgetown.

I want to ask about the role of Europe. You mentioned Japan, Korea, some countries in the Global South. Europe has some technologies that are advanced. Others, not so much. So in the report it figures out as having some role, or your thoughts on that.

MUZINICH: Sure, yeah. I think Europe has an important role to play. You know, its economy is—obviously, it’s not as fast-growing as the U.S. There’s not as much innovation in Europe. But they’ve got a great manufacturing culture. And, most importantly, they share basic values with the U.S., when you zoom out. Obviously, there are disagreements over the size of government. But when you zoom way out, and we share a belief in democracy and freedom. And these are the types of countries we need to partner with as we’re looking to create resilience in our own supply chain. So I think they have an important role to play.

RAIMONDO: Well said.

IP: Yes, right there.

Q: Hi, thank you. Munish Walther-Puri, TPO Group.

I really appreciate this report. It does a great job of identifying the supply chain chokepoints and levers for, like, allied supply chains and market crafting. There is one thing. You call it a race. And I think actually what you’ve been talking about, it’s more like a decathlon. (Laughter.) There’s many events that are happening. So it’s too late to reprint them, or is it? (Laughter.) But my question is, there is one area that I find is particularly exposed and is hard. It’s a global network. It’s multifaceted. It has opaque dependencies. And that’s open-source code used in machine learning models. And it’s pretty crucial, as we found. It has the dependencies, the—(inaudible)—problem that you were talking about. It’s not subject to—I want to know if you found ways to have industrial policy or some strategy around that to increase resilience, manage risk, make it anti-fragile, bring in capital markets, because it’s a critical and intangible layer. Thank you.

TAICLET: I can address the way that we’re managing artificial intelligence in our company. And it’s in accordance with the Department of Defense framework. Which is, we have our own data sets. We don’t use external data at all, off the internet or open source anywhere else. We have our own data sets for the problems and issues we’re trying to solve for. We have our own instances, of Claude, et cetera, of the actual AI engines that are either ported through Microsoft or inside our own AI data center. By the way, which is our own Nvidia chips, only used in our company by our company. There’s no access in and out of that infrastructure. And so we have a self-contained environment to do national security workloads using artificial intelligence. So we’re trying to make sure we can get to the cutting edge of all those inputs, but then bring those inputs into an environment where we don’t have any risk of either open-source code coming in, bad data, or cyberattack, because it’s all self-contained.

IP: I think we have time for one more right here.

Q: Thank you. David Messenger from McKinsey & Company.

A lot of the discussion today has been about national strategy and industrial capacity. But how will this translate into results for Main Street, prices, jobs, and the availability of these technologies?

IP: Want to tackle that, Justin?

MUZINICH: Sure. Well, yeah, it comes back to also a point that that Jim made. When you’re talking about national security, there’s going to be a cost. When we talk about national security and think about investments we have to make through the Department of War, there are—there are costs. And, you know, as a society, we have to be willing to bear some of that, or the alternative is the cost we’re going to pay in the future is going to be much greater, and we’re going to expose ourselves to national security risk. So, you know, we don’t—we don’t live in an ideal world. There are tradeoffs. But the cost of not doing something is significantly higher. And then that becomes a matter of political leadership and explaining that to people.

IP: I’d like to say thank you to all the panelists. I’d like to thank the task force for their excellent work on this report. I’d like to thank the audience for your interest and your questions. (Applause.)

(END)

This is an uncorrected transcript.