While simple, tax credits are a passive tool. Discretionary funding grants, like those in the CHIPS Act, allow government agencies to actively negotiate for specific strategic outcomes, such as compelling a company to build an extra fab or onshore a critical technology that a tax credit alone would not incentivize.

To prevent promising startups from failing from funding gaps—the "Valley of Death"—the DoD actively "crowds capital" around them. This stack includes rapid R&D contracts, manufacturing grants, and low-cost loans from a $200B lending authority.

It's a common error to conflate the CHIPS Act and the October 2022 chip controls. The CHIPS Act was a legislative effort for domestic manufacturing resilience. The executive export controls were a separate national security policy focused on denying China access to high-end compute for military applications.

The CHIPS Act's success came from a 'happy medium' design. Congress set a clear, bipartisan objective (semiconductors) but granted the executive team broad discretion on implementation. This structure proved more effective than an overly broad mandate (e.g., 'economic security') or overly prescriptive legislation.

A U.S. national security document's phrase, "the future belongs to makers," signals a significant policy shift. Credit and tax incentives will likely be redirected from financial engineering (e.g., leveraged buyouts in private equity) to tangible industrial production in order to build resilient, non-Chinese supply chains.

JPMorgan hired Berkshire Hathaway's Todd Combs to lead a $10B strategic fund targeting US re-industrialization in defense, supply chains, and semiconductors. This move shows a major financial institution actively partnering with the government to rebuild domestic capacity, blurring the lines between private investment and national economic security.

A complete national industrial strategy requires a dual approach. It needs large, congressionally-approved programs for trillion-dollar sectors like semiconductors, paired with a smaller, more flexible fund to quickly address emerging choke points in smaller markets like rare earths or APIs without new legislation each time.

The Pentagon created a "submarine czar" role reporting directly to the Deputy Defense Secretary. This structure establishes a single point of accountability, enabling faster decisions, risk-taking, and the ability to cut through traditional bureaucracy that stalls critical defense programs.

Emil Michael describes his role not as a procurement officer but as a "chief venture capitalist" for the Department of War. The strategy is to identify and fund promising new defense tech companies, creating a virtuous cycle where success attracts more private capital and talent to the sector.