American businesses will increasingly need to compete on innovation in the new global economy. They will need to compete on how well they recruit, develop, and utilize the best talent in the world to develop new and improved business models, products, services, and processes as well as push forward scientific and technological advances (Sheets & Tyszko, 2015). As employers and their talent sourcing partners respond to this evolving economy, the debate is growing on how federal higher education and workforce development policy can best support these innovative approaches to closing the skills gaps. This will be a difficult task as federal policies have historically created major silos between the public and private sectors and among higher education, career and technical education, and workforce development. As a result, recent reform initiatives have been carried out at the margins and new policies have not provided the flexibility needed to enable breakthrough innovations with the potential to get results and improve global competitiveness and advance economic opportunity for American workers. Now is the time for more fundamental federal policy reforms that redefine the roles of the public and private sectors and breakdown barriers between higher education, career and technical education, and workforce development policy (US Chamber of Commerce Foundation, 2018). This article first provides a brief history of the changing global economy and federal policy initiatives in higher education, career and technical education, and workforce development. It then discusses what is changing in the new innovation-based economy and the organization of work that now requires the breaking down of these silos. The article concludes by proposing new directions for federal policy that can support creative approaches for closing the skills gap.