Conservatives in the U.S. House revolted yesterday against a taxpayer-funded program on rare earth minerals, defeating a bill that was expected to quickly pass without much debate.
Because the measure came up under suspension of House rules, two-thirds of lawmakers needed to approve it. The bill failed when 142 Republicans and one Democrat voted against it. It received 260 votes; it needed 269.
The defeat dismayed the Democrat sponsor of the Securing Energy Critical Elements and American Jobs Act, which Heritage Foundation economist Nick Loris described in The Daily Signal as a government “handout” and unnecessary.
In a press release, Rep. Eric Swalwell, D-California, decried “extreme right-wing groups, Heritage Action and Club for Growth” for their opposition.
“This bill was the product of a year’s worth of cooperation between me and Republican leadership,” Swalwell said. “Unfortunately, this hard work was derailed by puppeteering from right-wing groups.”
Heritage Action spokesman Dan Holler said, “Conservatives in the House deserve credit for defeating a bill that would have expanded the government’s role in this important industry.”
The bill sought to “address price volatility for rare earth” elements by creating additional programs within the Department of Energy to research and develop new extraction and recycling methods.
Rare earth elements (REEs) can be found in a number of high-tech products from civilian cell phones to advanced military weapons systems. A heavily subsidized Chinese market currently supplies the majority of U.S. demand.
While recognizing the critical importance of the minerals, Heritage Foundation analysts have long rejected government entry into the market.
Derek Scissors, a former Heritage scholar, dismissed fears over the Chinese supply as conflated. The Chinese control stems from their government’s direct involvement in setting prices. Scissors said this dominance “can only last as long as it is willing to offer REEs at below-market prices.”
Loris, the Herbert and Joyce Morgan Fellow at Heritage, agrees. He noted that the United States controls 13 percent of the world’s supply. Rather than creating subsidies, Loris argued that the “federal government should open access to the 13 states where rare earths are known to lie.”
Without government interference, Loris maintains that the free market would best determine production.