The article does not go much into the reasons behind the change so let me make some conjectures. For a long while now, the majority of Ph.D. students in the US came from other countries. As the academic job market in the US got tighter, many of these researchers went back to their home countries and established strong research groups there. Also recent technological changes have taken away some comparative advantage of doing research in the states as communication and access to research papers has become a much easier task.
I welcome the added competition, the more globalization of science that we have, the more we will all push one another with scientific research becoming the big winner. In my own field, I like seeing countries like Israel becoming theory powerhouses and definite growth of theory in places as diverse as India and Australia. A few years ago it would have been unthinkable to have STOC or FOCS overseas but recently STOC 2001 was held in Greece and the upcoming FOCS will be in Rome.
Most of all I hope the article serves as a wake-up call to American legislators. Time to give NSF that large budget increase that they've been talking about for several years now.