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McConnell threatens support for China bill, citing budget talks

Move comes after Senate Democrats say they’ve agreed on a plan to lower prescription drug prices in their reconciliation package

Senate Minority Leader Mitch McConnell speaks at a news conference after a luncheon in the U.S. Capitol on June 22.
Senate Minority Leader Mitch McConnell speaks at a news conference after a luncheon in the U.S. Capitol on June 22. (Tom Williams/CQ Roll Call)

Republicans won’t back compromise legislation to boost domestic semiconductor manufacturing and U.S. competitiveness with China if Democrats continue to negotiate a partisan budget package that can pass without GOP support, Senate Minority Leader Mitch McConnell said Thursday.

“Let me be perfectly clear: there will be no bipartisan USICA as long as Democrats are pursuing a partisan reconciliation bill,” the Kentucky Republican tweeted, using the acronym for the expansive competitiveness measure that passed both chambers in very different forms and is now in conference.

McConnell’s pronouncement significantly complicates Democrats’ summer legislative agenda, which includes trying to pass both the competitiveness bill and the tax and spending package formerly known as “Build Back Better” before the August recess.

McConnell made his statement shortly after Senate Democrats announced they reached agreement on a prescription drug pricing plan that’s a key piece of the budget reconciliation package they’ve been renegotiating to appease Sen. Joe Manchin III, D-W.Va. Manchin in December announced his opposition to the $2.2 trillion House-passed tax and spending bill, which was already scaled way back from Democrats’ earlier plans.

“Sen. McConnell is holding American jobs in key US industries hostage to help China and protect his friends in big pharma allowing them to keep screwing over Americans with outrageously high Rx drug prices,” Justin Goodman, a spokesperson for Majority Leader Charles E. Schumer, said in an email.

The White House took aim at the Republican leader as well, specifically calling out plans for chipmaking plant expansions in states like Ohio and Idaho that could be put on hold if the competitiveness bill stalls. Those two states are home to two of the Senate GOP negotiators on the bill: Rob Portman of Ohio, who’s retiring, and Michael D. Crapo of Idaho, the Finance Committee’s ranking Republican.

“This takes loyalty to special interests over working Americans to a new and shocking height,” White House Press Secretary Karine Jean-Pierre said in a statement. “We are not going to back down in the face of this outrageous threat.”

Intel Corp. last week put off a planned groundbreaking ceremony for its new $20 billion investment in Ohio, citing delays in getting the competitiveness bill passed. Boise, Idaho-based Micron Technology has been weighing an expansion in the southeast part of the state, in part prompted by state tax breaks; however, the state legislation is tied to enactment of federal incentives, according to local media.

Slow-moving conference

The House and Senate formed a conference committee in April to resolve differences between their competitiveness bills. Both measures include roughly $52 billion in supplemental appropriations intended to subsidize domestic manufacturing of semiconductor chips, but the bills contain vast differences in other policy areas like trade.

The top four party leaders met last week ahead of the two-week July Fourth recess to discuss the conference committee’s progress.

“There is no reason that we should not pass this bill through Congress in July,” Schumer and Speaker Nancy Pelosi said in a joint statement after that meeting, noting Democrats have made accommodations in hopes of reaching a final compromise package and urging all members “to work with the urgency the situation deserves.”

Republicans have been less publicly optimistic about that timeline.

In an interview this week with CNBC from the Aspen Ideas Festival in Colorado, Portman expressed hope that the bill will pass soon. But he blamed Democrats for loading the measure up in the House with unpalatable provisions.

“So it’s been made more complicated in my view, but understanding that this is an essential and urgent matter for us to address and the bipartisan compromise has largely been worked out,” Portman said. “I think it’s got to get done quickly. I think if not, these companies will make decisions to go elsewhere.”

‘Classic McConnell’

McConnell’s Thursday statement suggests a July vote is now out of reach unless Democrats abandon plans to resurrect their reconciliation package, which is unlikely.

Schumer and Manchin have been holding private discussions on reconciliation for months, but the prescription drug pricing plan announcement is the first significant sign of progress to emerge from those negotiations. They’ve not yet reached agreement on climate or tax provisions, the other primary pieces of the downsized package they’re negotiating, and Schumer has said the legislation could be ready for floor action as soon as late July.

Ways and Means member Donald S. Beyer Jr., D-Va., said in a Twitter thread that McConnell’s announcement that Republicans would block the competitiveness bill was just a public admission of a tactic he’s already deployed.

“This isn’t new, Mitch McConnell has been stalling this bill for weeks; but now he’s admitting it,” Beyer said. “His obstruction is directly harming our economy, preventing job creation, and halting production of a key need to improve supply chains. Classic McConnell.”

McConnell’s move has support within his conference. Sen. Thom Tillis, R-N.C., who was among the 19 Republicans who voted for the Senate bill a year ago, retweeted McConnell, adding: “Couldn’t agree more.”

McConnell also voted for the original Senate bill.

Members of both parties have pointed to the competitiveness legislation as desperately needed to help fix crucial supply chain issues that have contributed to high inflation. Democrats think their reconciliation package will also help cool inflation in the long term, but Republicans argue those spending and tax increases will just exacerbate the current problem.

While Republicans are likely to continue to blame President Joe Biden and congressional Democrats for inflation, their decision to block the competitiveness bill could blunt their midterm campaign argument that voters should elect Republicans to Congress if they want real solutions to rising prices.

“This McConnell threat to kill a bipartisan bill to improve American competitiveness unless we keep prescription drug costs high strikes me as a miscalculation,” Sen. Brian Schatz, D-Hawaii, tweeted.

The GOP tactic could also risk angering corporate donors. It’s not just the big chipmakers pushing the measure — it’s also companies across the manufacturing spectrum that rely on a steady supply of semiconductors.

CEOs of major companies ranging from Microsoft and Google parent Alphabet to defense contractors like Lockheed Martin and Northrop Grumman banded together earlier this month to call on Congress to act urgently to pass a bicameral compromise.

“The rest of the world is not waiting for the U.S. to act,” dozens of CEOs wrote in a June 15 letter to Schumer, McConnell, Pelosi and House Minority Leader Kevin McCarthy. “Our global competitors are investing in their industry, their workers, and their economies, and it is imperative that Congress act to enhance U.S. competitiveness.”

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