House OKs measure subsidizing semiconductor chip production, sending bill to Biden

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Aug 3, 2022 , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

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Washington — The House on Thursday approved legislation that would provide billions of dollars in subsidies for the domestic production of semiconductor chips, sending to President Biden’s desk a measure the administration says is crucial to the U.S. economy and national security.

The bill cleared the lower chamber with a 243 to 187 vote, with 24 Republican lawmakers joining all but one Democrat in voting for its passage.  The House progressives, including Reps. Alexandria Ocasio-Cortez and Pramila Jayapal, all voted for the bill, despite Sen. Bernie Sanders’ vote against it on Wednesday.

The plan is the culmination of months of negotiations and passed the Senate with broad bipartisan support earlier this week.

Called the Chips and Science Act, the measure has been a top priority for the Biden administration, and Mr. Biden said the legislation will lower prices, create jobs and spur U.S. production of semiconductors, which are used in an array of products from cell phones to automobiles to medical devices.  

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In remarks from the White House ahead of the vote, the president praised the Senate’s passage of the semiconductor measure and said it “has the added benefit of creating tens of thousands of additional good-paying jobs, lowering inflation.”

“It’s giving us the ability to not only compete with China for the future, but to lead the world and win the economic competition of the 21st century,” he said. 

Mr. Biden said the legislation will help reduce the cost of cars, smartphones, consumer electronics and appliances, all of which are powered by the chips.

“Put politics aside, get it done,” he said.

Democrats have lauded the legislation as a major victory for the U.S. economy that will spark innovation, but House Republican leaders urged their members to vote against it, calling it a “corporate welfare” bill that lacks guardrails and fails to adequately address the threat China poses to U.S. supply chains.

The recommendation from GOP leaders came after Senate Majority Leader Chuck Schumer and Sen. Joe Manchin, a moderate Democrat from West Virginia, announced a deal on legislation that aims to address health care costs, combat climate change and tackle the deficit, providing a boost to Mr. Biden’s domestic policy agenda.

That agreement, which had evaded Democrats for months, was revealed after the Senate’s vote on the chips bill, which Senate Minority Leader Mitch McConnell had threatened to thwart if Senate Democrats pushed forward with their spending plan. Democrats are using a process called budget reconciliation to pass the package with a simple majority.

The chips bill, meanwhile, would designate $52 billion in subsidies and provides roughly $24 billion in tax credits for new chip manufacturing facilities. It also includes more than $100 billion in authorizations over five years to three agencies to boost investments in research and development.

Mr. Biden and top administration officials have been pushing Congress for weeks to clear the semiconductor plan. On Monday, the president met virtually with CEOs and labor leaders to discuss the bill and lamented that the U.S. relies too heavily on China for chips that power electronics, medical supplies and defense equipment. 

Commerce Secretary Gina Raimondo told CBS News’ “Face the Nation” on Sunday that the U.S. currently doesn’t make any of the “leading edge” semiconductors, the sophisticated chips needed for military equipment and high-end computing. 

“We buy almost all of them from Taiwan … 90% we purchase from Taiwan,” she told moderator Margaret Brennan. The U.S., she argued, needs American companies to expand their production. Other European countries also provide incentives, Raimondo noted.

Raimondo was confident the bill would reach Mr. Biden’s desk, predicting Sunday that “This will be a big bipartisan vote in the House and the Senate.”

She also pushed back against criticism from both the left and the right. Sanders has called the bill a blank check for the the microchip industry. Raimondo said the bill clearly has bipartisan support.

“I fully dispute Sen. Sanders’ characterization of this. It isn’t a blank check,” Raimondo said on Sunday. “There are many strings attached. Strings attached — companies can’t use this money to build facilities in other countries. Companies who accept this money can’t then turn around and be building facilities in China for leading edge technology. There’s a lot of strings attached around the quality of jobs that have to be created, working with small contractors and minority-owned contractors. There are labor protections. So to say it’s a blank check is just dead wrong.” 

— Jack Turman contributed to this report.

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