WASHINGTON (AP) — A bill to boost semiconductor manufacturing in the United States has managed to do the almost unthinkable — unite Democratic socialist Sen. Bernie Sanders and the fiscally conservative right.
The bill, which is moving through the Senate, is a top priority for the Biden administration. That would add about $79 billion to the deficit over 10 years, mostly as a result of new subsidies and tax breaks that would subsidize the costs computer chipmakers incur in building or expanding chip factories in the United States.
Backers say countries around the world are spending billions of dollars to attract chipmakers. The US must do the same or risk losing a reliable supply of the semiconductors that power the nation’s cars, computers, appliances and some of the military’s most advanced weapons systems.
Sanders, I-Vt., and a wide range of conservative lawmakers, think tanks and the media beg to differ. For them it is “corporate welfare”. It’s just the latest example of how spending taxpayer dollars to prop up the private sector can blur the usual partisan lines, creating allies on the left and right who agree on little else. They position themselves as defenders of the little man against powerful interest groups that line the public trough.
Sanders said he is not hearing from people about the need to help the semiconductor industry. Voters are talking to him about climate change, gun safety, preserving women’s abortion rights, and increasing Social Security, to name a few.
“Not many people that I can recall — I’ve been all over the country — are saying, ‘Bernie, get back out there and do the job and you’re giving hugely profitable corporations that pay outrageous compensation packages to their CEOs billions and billions of dollars in corporate welfare,” Sanders said.
Sanders voted against the original Semiconductor and Research bill that passed the Senate last year. He was the only senator to rally with Democrats to oppose the measure, joining 31 Republicans.
While Sanders would like the spending to be directed elsewhere, several GOP senators simply want the spending to stop, period. Sen. Mike Lee, R-Utah, said the spending would help fuel inflation that hurts the poor and middle class.
“The poorer you are, the more you suffer. Even people who are well entrenched in the middle class are getting ripped off significantly. Why we would want to take money from them and give it to the rich is beyond my ability to fathom,” Lee said.
Conservative mainstays such as the editorial board of The Wall Street Journal, the Heritage Foundation and the tea party group FreedomWorks also spoke out against the bill. “Giving taxpayer money to wealthy corporations is not competing with China,” said Walter Lohmann, director of the Heritage Foundation’s Center for Asian Studies.
Opposition from the far left and far right means Senate Majority Leader Chuck Schumer, D-N.Y., and House Speaker Nancy Pelosi, D-Calif., will need help from Republicans to push the bill through the finish line. It would take support from at least 11 Republican senators to overcome a filibuster. A final vote on the bill is expected next week.
Sen. Mitt Romney, R-Utah, is among the likely Republican supporters. Asked about Sanders’ argument against the bill, Romney said that when other countries subsidize the production of high-tech chips, the U.S. should join the club.
“If you don’t play like them, then you won’t be making high-tech chips that are essential to our national defense as well as our economy,” Romney said.
The most common reason lawmakers cite for subsidizing the semiconductor industry is the national security risk of relying on foreign suppliers, especially after the pandemic’s supply chain problems. Nearly four-fifths of global manufacturing capacity is in Asia, according to the Congressional Research Service, broken down into South Korea with 28 percent, Taiwan with 22 percent, Japan with 16 percent and China with 12 percent.
“I am concerned that more and more companies will locate their manufacturing facilities in other countries and that we will be increasingly vulnerable,” said Sen. Susan Collins, R-Maine.
Supporters are confident the bill will pass the Senate. The window to pass the bill through the House of Representatives is narrow if progressives join Sanders and if most Republicans rally in opposition based on fiscal concerns. The White House says the bill should be passed by the end of the month as companies now make decisions about where to build.
Two key groups in Congress, the Problem Solvers Caucus and the Coalition of New Democrats, endorsed the measure in recent days.
The Problem Solvers Group is made up of members from both parties. Rep. Brian Fitzpatrick of Pennsylvania, the group’s Republican co-chairman, said Intel Corp. wants to build its chip capacity in the United States, but much of that capacity will go to Europe if Congress does not pass the bill.
“If a semiconductor-related bill is brought to the floor, it will pass,” Fitzpatrick said.
Rep. Derek Kilmer, D-Wash., said he believes the legislation checks many boxes for his constituents, including on the top issue of the day, inflation.
“It’s about reducing inflation. If you look at inflation, a third of the inflation in the last quarter was in cars, and that’s because there’s a shortage of chips,” Kilmer said. “So this is about, first, making sure we’re making things in the United States, and second, keeping costs down.”
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