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House passes bill to subsidize U.S.-made semiconductor chips in win for Biden

Speaker of the House Nancy Pelosi, D-Calif., walks outside a meeting with California lawmakers on Capitol Hill on July 27, 2022.   (Washington Post )
By Amy B Wang and Marianna Sotomayor Washington Post

The House on Thursday voted to pass the $280 billion Chips and Science Act, a bill that would subsidize domestic semiconductor manufacturing and invest billions in science and technology innovation, in a bid to strengthen the United States’ competitiveness and self-reliance in what is seen as a keystone industry for economic and national security.

The House passed the legislation on a 243-187 vote, with strong bipartisan support – despite a last-minute push by House GOP leaders to whip against the bill.

Twenty-four Republicans defied the leadership and joined Democrats in backing the measure.

The Senate had passed the bill Wednesday in a 64-33 vote. Days earlier, House Speaker Nancy Pelosi, D-Calif., had said there would be bipartisan support for the bill’s passage in the House and vowed to send it to President Joe Biden’s desk as soon as possible.

At the time, House Republican leaders had planned to let their rank and file vote their conscience on the bill.

However, after the stunning news Wednesday night of a deal between Sen. Joe Manchin,‘ D-W.Va., and Democratic leaders on a separate climate, health care and taxes bill, House GOP leaders urged members to oppose the chips bill as retribution, in an effort to deny Biden and Senate Majority Leader Chuck Schumer, D-N.Y., a legislative win.

Before the House GOP decided to whip against the chips bill, proponents of the legislation thought they could garner a sizable amount of Republican support, according to people familiar with the vote counts who spoke on the condition of anonymity to freely discuss the matter.

Before the vote, Rep. Michael McCaul, R-Texas, the ranking Republican on the House Foreign Affairs Committee, told reporters he would still support the bill, calling it a national security issue.

Others, however, said they would toe the party line. Rep. Frank Lucas, R-Okla., the ranking GOP member on the House Science, Space and Technology Committee, said he expected his remarks on the bill would be very different “just 24 hours ago.”

Lucas noted he had worked on the chips-funding legislation for more than three years and lamented that it was now “irrevocably tied to a massive tax hike and spending spree,” referring to the Democrats’ tax bill.

“Regrettably, and it’s more regrettably than you can possibly imagine, I will not be casting my vote for the CHIPS and Science Act today,” Lucas said.

“I want to emphasize that this is in no way a reflection of my feeling about the transformational research policies in this bill.”

Some members of the Congressional Progressive Caucus were also squeamish on the bill – Sen. Bernie Sanders, I-Vt., has been publicly critical and voted against it Wednesday – and there was fear that its passage in the House could be threatened if supporting lawmakers dwindled.

Commerce Secretary Gina Raimondo met with the caucus virtually Thursday afternoon to provide reassurances about guardrails included in the legislation.

On the House floor Thursday, Minority Leader Kevin McCarthy, R-Calif., slammed the legislation as a “$280 billion blank check” to the semiconductor industry, saying he had always opposed it.

Rep. Guy Reschenthaler, R-Pa., criticized the bill as one that would benefit only “a single industry,” and several GOP lawmakers urged their colleagues to vote no.

Rep. Joe Morelle, D-N.Y., countered by saying there were few industries that did not utilize semiconductor chips.

“Chips run everything. So whether it’s your cellphone, your laptop, your automobile, it really doesn’t matter. Children’s toys have chips in them,” Morelle said. “And the fact is we have lost our competitive edge. … This isn’t about a single industry. It’s about every industry.”

Later, Morelle read aloud on the House floor praise for the legislation – from Senate Republicans who had voted to pass it just the day before.

Biden had called the legislation one of the top priorities on his agenda.

Shortly after the House passed the bill, Biden lauded it as “exactly what we need to be doing to grow our economy right now.”

“Today, the House passed a bill that will make cars cheaper, appliances cheaper, and computers cheaper,” Biden said in a statement.

“It will lower the costs of every day goods. And, it will create high-paying manufacturing jobs across the country and strengthen U.S. leadership in the industries of the future at the same time.”

About $52 billion will go to microchip manufacturers to incentivize construction of domestic semiconductor fabrication plants– or “fabs”– to make the chips, which are used in a wide variety of products, including motor vehicles, cellphones, medical equipment and military weapons.

A shortage of semiconductor chips during the coronavirus pandemic has caused price hikes and supply-chain disruptions in several industries.

The bill also includes about $100 billion in authorizations over five years for programs such as expanding the National Science Foundation’s work and establishing regional technology hubs to support start-ups in areas of the country that haven’t traditionally drawn big funding for tech.

In a White House meeting with business and labor leaders Monday, Raimondo noted that the United States used to make 40% of the world’s chips but now makes about 12% – and “essentially none of the leading-edge chips,” which come almost entirely from Taiwan.

The United States has invested “nearly nothing” in semiconductor manufacturing, while China has invested $150 billion to build its domestic capacity, Raimondo said.

She also said it was critical for the United States to be able to compete with countries that have been providing subsidies to semiconductor companies to build factories.

“The chips funding will be the deciding factor on where those companies choose to expand,” Raimondo said. “We want them, we need them, to expand here in the United States.”

Included in the legislation are provisions that would prohibit companies from building most types of new semiconductor manufacturing facilities in China “or any other foreign country of concern” for a decade after receiving federal funding.