In the next COVID-19 bill, target innovation and entrepreneurship
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The surprise decline in the unemployment rate has shifted the discussion regarding additional COVID-19 relief legislation. Appearing on CNBC on Monday, White House senior adviser Kevin Hassett said that, while a fourth legislative package is highly likely, another positive jobs report in June would “absolutely affect the things that we pursue.”

A fourth legislative package is needed to complete America’s economic comeback. And, this time, the legislation should focus on accelerating the economy’s growth and job creation potential by strengthening the nation’s commitment to innovation and entrepreneurship. The content of such a package are two major bills introduced into Congress in the last 90 days.

The Endless Frontier Act was introduced on May 27 by Sens. Charles SchumerChuck SchumerTrump announces opening of relations between Sudan and Israel Five takeaways on Iran, Russia election interference Pelosi calls Iran 'bad actor' but not equivalent to Russia on election interference MORE (D-N.Y.) and Todd YoungTodd Christopher YoungRepublicans: Supreme Court won't toss ObamaCare Vulnerable Republicans break with Trump on ObamaCare lawsuit Senate GOP eyes early exit MORE (R-Ind.), along with Reps. Ro KhannaRohit (Ro) KhannaDozens of legal experts throw weight behind Supreme Court term limit bill Expiring benefits raise economic stakes of stalled stimulus talks Overnight Defense: Pentagon IG to audit use of COVID-19 funds on contractors | Dems optimistic on blocking Trump's Germany withdrawal | Obama slams Trump on foreign policy MORE (D-Calif.) and Mike GallagherMichael (Mike) John GallagherFederal commission issues recommendations for securing critical tech against Chinese threats Government watchdog recommends creation of White House cyber director position Hillicon Valley: 'Fortnite' owner sues Apple after game is removed from App Store | Federal agencies seize, dismantle cryptocurrency campaigns of major terrorist organizations MORE (R-Wis.), and is intended to enhance U.S. leadership in science and technology.

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Scientific and technological innovations drive gains in productivity, which in turn drive economic growth, job creation, and expanding opportunity. Unfortunately, over recent decades U.S. government investment in research and development as a share of gross domestic product has fallen near historic lows. Meanwhile, other nations – China in particular – have dramatically increased their investments in scientific discovery and technology. To remain a global innovation leader in an increasingly competitive world economy – and to accelerate the economic recovery from the COVID-19 crisis – the United States must renew its commitment science- and technology-driven innovation.

The Endless Frontier Act will address this national priority in several important ways. The Act would expand the National Science Foundation (NSF), to be renamed the National Science and Technology Foundation (NTSF); establish a new Technology Directorate within the NTSF; authorize $100 billion for the new directorate to reinvigorate American leadership in the discovery and application of ten key technology areas that will define global competitiveness; authorize an additional $10 billion for the Commerce Department to designate at least 10 regional technology hubs; and fund programs to accelerate the transfer of new technologies from the lab to the marketplace.

The principal way new innovations and technologies are transmitted to the marketplace is through new businesses, or “startups.” Repeated research has demonstrated that startups are disproportionately responsible for the innovations that drive economic growth and job creation. Indeed, according to the Kauffman Foundation, startups – not large businesses – are responsible for almost all net new job creation.

Despite their importance, startups are extremely fragile because they are new and the COVID-19 crisis has taken a devastating toll. Thousands have been forced to lay-off employees or have failed. A paper released by the National Bureau of Economic Research (NBER) showed that business ownership among African-Americans plunged 41 percent – or by 440,000 businesses – between February and April. Another NBER paper released last month showed that early-stage venture capital investment dropped by 38 percent over the same period.

Simply stated, the COVID-19 emergency has imperiled an entire generation of the nation’s most innovative and promising young companies – and, in turn, the demise of thousands of these companies imperils the post-COVID economic recovery.

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The New Business Preservation Actintroduced in the Senate on March 18 by Sens. Amy KlobucharAmy KlobucharStart focusing on veterans' health before they enlist Durbin says he will run for No. 2 spot if Dems win Senate majority Democrats seem unlikely to move against Feinstein MORE (D-Minn.), Chris CoonsChristopher (Chris) Andrew CoonsBipartisan group of senators call on Trump to sanction Russia over Navalny poisoning Schumer says he had 'serious talk' with Feinstein, declines to comment on Judiciary role Durbin says he will run for No. 2 spot if Dems win Senate majority MORE (D-Del.), Tim KaineTimothy (Tim) Michael KaineDemocrats have no case against Amy Coney Barrett — but that won't stop them Pence-Harris debate draws more than 50M viewers, up 26 percent from 2016 Five takeaways from the vice presidential debate MORE (D-Va.), and Angus KingAngus KingCollins says running as Independent 'crossed my mind' Susan Collins and the American legacy Coordinated federal leadership is needed for recovery of US travel and tourism MORE (I-Maine), and in the House on March 26 by Reps. Dean PhillipsDean PhillipsPelosi and Trump go a full year without speaking Chamber-backed Democrats embrace endorsements in final stretch Trump orders aides to halt talks on COVID-19 relief MORE (D-Minn.), Terri SewellTerrycina (Terri) Andrea SewellCentury of the Woman: The State of Women and Voting Rights Female lawmakers, officials call for more women at all levels of government to improve equity The Hill's 12:30 Report - Sponsored by The Air Line Pilots Association - Country reacts to debate night of mudslinging MORE (D-Ala.), Ro Khanna (D-Calif.), and Tim RyanTimothy (Tim) RyanNow's the time to make 'Social Emotional Learning' a national priority Mourners gather outside Supreme Court after passing of Ruth Bader Ginsburg Lincoln Project hits Trump for criticizing Goodyear, 'an American company' MORE (D-Ohio) – would address this threat to the nation’s startups and economic resilience.

The legislation would incentivize continued venture capital investment in America’s most innovative and promising young companies by establishing a program, administered by the Treasury Department, which would allocate $2 billion in federal dollars to the states on a straightforward population basis to attract private venture capital by offering a 1-to-1 match of federal dollars with venture capital investment in promising startups, particularly in states outside the major venture capital centers.

The legislation is modeled on Israel’s “Yozma” program of the late-1990s, which successfully incentivized U.S. venture capital firms to invest in promising Israeli startups, and builds on recent successful federal-state partnerships to support small businesses, such as the State Small Business Credit Initiative (SSBCI).

Importantly, the legislation is carefully structured so that the federal government will not “pick winners and losers,” but rather will rely on private entities to source and manage investments in promising early-stage companies in every state. All investment decisions will be based entirely on private investor determination of the economic prospects of the new companies receiving equity capital.

New innovations and technologies, coupled with the survival of America’s most innovative and fastest growing new businesses, are essential for a strong economic recovery following the COVID-19 emergency. To ensure America’s comeback and longer-term prosperity, Congress should swiftly pass the Endless Frontier Act and the New Business Preservation Act.

John Dearie is the President of the Center for American Entrepreneurship and Rustin Finkler is Communications and Research Manager at Village Capital, the largest supporter of seed-stage, impact-driven startups in the world. The views and opinions expressed in this article are those of the author and do not necessarily reflect the official position of Village Capital.