U.S. Budget Stalemate Crimps Defense Electronics

By Chris Mitchell, IPC Vice President of Global Government Relations

Key Summary

• Congress has not passed full FY24 spending bills, forcing reliance on short-term continuing resolutions
• Continuing resolutions slow federal programs and delay implementation of critical defense initiatives
• DOD cannot fully advance PCB and IC substrate projects without FY24 appropriations
• Domestic PCB fabrication has weakened for decades, increasing national security concerns
• IPC urges Congress to provide timely, robust funding to strengthen the U.S. electronics industrial base

The latest political stalemate over the federal budget is creating headaches for programs of importance to the electronics industry.

The federal government is now almost four months into Fiscal Year 2024 without Congress having passed any full-year FY24 spending bills. In this situation, Congress enacts temporary continuing resolutions (CR) to keep government programs running at prior-year levels until the final spending bills are worked out. It’s practically routine; Congress has used CRs in all but three of the last 46 fiscal years.

However, it is unusual for the annual appropriations process to drag out this long. Last week, Congress passed two CRs to fund two batches of government agencies—one expiring on March 1 and the other on March 8. Appropriations for the Department of Defense (DOD) were included in the March 8 CR.

Colleagues have asked me if the delay in appropriations has any real impact… Yes! The U.S. Government Accountability Office has concluded that CRs lead to increased administrative burdens and delayed implementation of federal programs, even those related to strategically important priorities. 

For example, in March 2023, President Biden issued a “presidential determination” declaring printed circuit boards and IC substrates as critical to national security, and as such, the DOD was directed to leverage Defense Production Act authority to strengthen the nation’s industrial base. To date, the DOD has used prior-year funding to make two awards to meritorious projects, but it is in a holding pattern on other worthy projects as it awaits enactment of the FY24 defense appropriations bill. The DOD can’t spend money it doesn’t have, so it must pause its efforts to tackle matters of critical importance to national security and industrial resiliency. 

What many in Washington may not realize is that for more than two decades, U.S. domestic PCB fabrication capabilities have atrophied. In recent years, a confluence of factors has set the stage for the industry’s revitalization, but the government isn’t doing its part. To achieve that renaissance and mitigate those national security threats, the Pentagon needs timely and robust funding under the Defense Production Act to ensure that the much-needed investments are made. 

On behalf of electronics manufacturers, IPC urges Congress to act soon and with great ambition to strengthen the domestic PCB industry. The industry’s strength is directly tied to U.S. innovation, security, and economic competitiveness, and the U.S. can’t risk falling further behind in global competition.