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Virginia Senator Mark Warner on Biden's supply chain executive order

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Senator Mark Warner joins CBSN's Lana Zak to discuss President Biden's latest executive order to strengthen American supply chains. He also weighed in on the growing domination of big tech companies and next week's Senate Intelligence Committee hearing on the SolarWinds hack.

Video Transcript

LANA ZAK: President Biden signed an executive order Wednesday addressing US supply chain security. The order directs federal agencies to conduct a review of supply chain for essential products made in the United States, like medical supplies and semiconductors. It's an effort to create more US based jobs by increasing domestic production of certain goods.

The Biden administration also hopes it will help strengthen our national security by relying less on foreign imports. For more, let's bring in Democratic Senator Mark Warner of Virginia, who attended the president's signing. Senator Warner is also the chairman of the Senate Intelligence Committee. Senator, great to have you on the show. So last year--

MARK WARNER: Thank you.

LANA ZAK: --you introduced bipartisan legislation called the CHIPS for America Act. Tell us a little bit about that bill and how it relates to the president's executive order on supply chains.

MARK WARNER: Well, thank you. First of all, semiconductors-- it sounds a little out there. But semiconductors literally are the glue that makes all of our technology work. There are semiconductors in your cell phone. There are semiconductors in your television. There are semiconductors in your appliances. There are literally thousands and thousands of semiconductors in your automobiles.

And 25 years ago, we made the most of them here in the United States. And our numbers have gone down dramatically. And at the same time, the numbers made in China have gone up exponentially.

And to build a new semiconductor manufacturing facility, they're called fabrication plants, literally costs between $11 billion and $15 billion. So John Cornyn, my friend Senator from Texas, and I, said we need to make sure that we bring manufacturing of these semiconductors back to the United States. To do that, we have to invest.

Because the Chinese-- for example, the Chinese Communist Party is investing $150 billion in growing their domestic industry. And right now, we may even not see the production of automobiles in the United States in the second quarter because the backlog on semiconductors is so large. So we need to take a step to bring back that kind of manufacturing here to this country.

We have legislation that actually became law, called the CHIPS Bill, that would continue research and development and would put substantial amounts of American capital to incent those companies to locate here. It's a $36 billion legislation. President Biden not only endorsed this in his executive order, but has subsequently said he wants to see this funded.

This is the kind of 21st century infrastructure that we truly need. And so I'm very hopeful that we can make this a reality. And you take that, and you mention also the pharmaceuticals. Literally, 80% of our generic drugs are now made abroad, oftentimes in China and India. And if they were to cut off that supply midstream during a future pandemic, that would also be a disaster. So I think, you know, coming out of COVID, we're starting to realize supply chains of some of these key essential items is not only good for job creation, but it's actually important for national security.

LANA ZAK: Well, and it's good to see some legislation that actually has bipartisan support. One follow up question, though, for you-- is there any concern, though, that by bringing these semiconductors and other elements of the supply chain back into US production, that it will elevate the cost for consumers?

MARK WARNER: Once the fabrication facility, the manufacturing facility is made, the marginal cost-- these are literally fractions of a penny-- some of their costs are quite low. We will be price competitive. The challenge, though, is if China is putting up for a private company $5 billion, $6 billion, $7 billion in terms of those basic costs of building the facility, then we're not going to get those here in America.

We dominated this industry through the '80s and '90s. It's only into the 2000s that we've seen not only China but South Korea, Japan, other countries-- Taiwan, for example, has the world's largest semiconductor company, TSMC. We're trying to attract some of those companies to go ahead and build facilities here.

But it is going to require us to be competitive. And if we can leverage whatever state resources to the table, with some additional federal dollars, we think at the end of the day, the product that comes out at the other end will not be substantially more costly for the consumer. So this won't be about-- this isn't about the price of the ultimate product. This is about making sure we can have that supply chain secure and the semiconductors chips made here in this country.

LANA ZAK: Understood, and understood also the importance of having good paying jobs here in the country. I want to shift gears a little bit and talk about another hat that you wear. Because next week, the Senate Intelligence Committee, which you chair, will be holding a hearing on the massive solar wind's hack that happened back in December. Who's going to be testifying? And what are you hoping will come out of this hearing?

MARK WARNER: Well, we actually had one of those hearings this week, where we had the CEO of SolarWinds, we had the president of Microsoft, we had two of the largest cybersecurity firms in our country, FireEye and CrowdStrike, testify. And the message is pretty clear. One, it was a foreign adversary. And the Biden administration needs to go ahead and-- we alluded to the fact that it's Russia. But they need to go ahead and put that formal seal of approval.

This is one of the largest hacks in our history, in that there were literally-- the estimate-- testimony was that there were 1,000 hackers in Russia involved in this effort. It penetrated close to 18,000 companies in the United States. Now, luckily the adversary didn't take information out of all those 18,000 companies. They only selected about 150 to exfiltrate information.

But the thing that we should be concerned about and why this should be at the top of mind for all Americans is once they were inside these companies, as opposed to simply doing espionage, they could have literally shut down systems all across our country-- basically stopped our economy. That's why we need a series of, in a sense, cyber norms. We need to make sure what is acceptable, what is not acceptable.

We need to make sure that our adversaries, whether it be Russia or China, that we forewarn them that if they do these kind of attacks that are this broad-based, they're going to suffer consequences. And the remarkable thing is-- thank goodness one of these companies actually came forward, FireEye, that had been hacked. But they didn't have any legal obligation to do anything.

The fact that there is no mandatory reporting requirement when an attack is ongoing- and the Russians were inside these companies for literally six months before it was fully discovered-- shows how vulnerable we are, both in terms of being willing to punch back against our adversaries, having a mandatory reporting regime, and recognizing that cyber is more than about stealing personal information. It is literally about the potential adversary potentially shutting down our system.

And for some of your viewers, they may recall, Russia actually did this a few years ago to a neighboring country, Ukraine, where they shut down hospitals. They shut down power systems. Cyber really is the next step, the next frontier in terms of national security.

LANA ZAK: And it is concerning, as you say, the scope-- the depth to which this hack was able to successfully infiltrate. One final question for you, Senator, because you have criticized Facebook and Google and some of these other large tech companies. And your colleague, Senator Amy Klobuchar, introduced a bill earlier this month that would make it easier to enforce antitrust cases. The House is also seeking to crack down on tech companies over antitrust issues. What actions should or could these tech companies face?

MARK WARNER: Well, we've seen recently in Australia, where Australia tried to a sense charge the tech companies for some of the news they were using. And Facebook, on their own, basically shut down the news to Australians. Now, I'm not saying Australia's approach was the right one. But it demonstrates the enormous, enormous power these companies and these individual CEOs have, when they individually decide what news we see, what's labeled as misinformation, disinformation.

Senator Klobuchar's a great friend. Her approach, which is to really look at the antitrust consequences, I am supportive of that effort. I also think there may be efforts that I've got, for example, bipartisan legislation that would let you know what information Facebook or Google are collecting about you, how much that information is worth, your ability to easily-- if you get tired of the way Facebook treats you, ability to move all of your information and data to a new company that might not have the same kind of broad-based power.

So I'm looking at both pro competition tools in legislation. And then if they don't work, I think we will have to look at the possibility of antitrust, which could result in breaking up some of these enterprises. I think, if you look at them in scale and scope, these are companies that are every bit as big as some of the behemoths at the beginning of the 20th century that literally generated the first kind of antitrust laws in our country. They had that same kind of power and reach.

LANA ZAK: All right, Senator Mark Warner, thank you for joining us.

MARK WARNER: Thank you so much.