No easy options as pressure to pass chips funding bill grows

Subsidies for semiconductor industry are popular among both parties, but they can't agree on a vehicle

Commerce Secretary Gina M. Raimondo testifies during a Senate Commerce Committee hearing on her agency's budget request on Wednesday, April 27, 2022.  (Tom Williams/CQ Roll Call file photo)
Commerce Secretary Gina M. Raimondo testifies during a Senate Commerce Committee hearing on her agency's budget request on Wednesday, April 27, 2022. (Tom Williams/CQ Roll Call file photo)
Posted July 13, 2022 at 7:56pm

Bipartisan interest in moving a popular package of semiconductor manufacturing incentives outside of a stalled conference committee is growing, with the August recess viewed as a hard deadline.

The urgency surrounds the $50 billion-plus grants package for companies that invest domestically, which lawmakers and top administration officials say can't wait for negotiations on other more controversial provisions to be settled.

“I think we ought to take [the subsidies] and whatever else people can agree on and get it to the floor within the next 10 days,” Sen. Mark Warner, D-Va., said, citing a fear manufacturers will abandon plans to invest in U.S. semiconductor facilities and instead build in countries that have offered financial assistance.

Warner said he hopes lawmakers can also agree to include funding for “next-generation” 5G along with semiconductor tax credits that would further subsidize chipmakers’ costs, even though the credits weren’t in the base Senate or House bills.

“The economics of these chips without [tax credits] is not going to get us the same level of investment we need,” he said.

Commerce Secretary Gina M. Raimondo said she believes that’s the sort of approach gaining steam.

“It seems to be — talking to senators and talking to members of the House — that they’re coalescing around, you know, a chips-plus kind of a bill. And if that were to happen, we would be very supportive of that,” Raimondo said leaving a classified briefing with senators on Wednesday evening.

Other top Democrats were not ready to throw in the towel on the conference committee.

House Majority Leader Steny H. Hoyer, D-Md., called on 10 of the 19 Republicans who voted for the Senate’s version to buck Senate Minority Leader Mitch McConnell, R-Ky., who said there will be no conference deal as long as Democrats are negotiating a partisan budget reconciliation package.

“We need 10 people . . . to stand up and say, ‘No, this is the best thing for our country,’ and make a deal,” Hoyer said.

Ohio GOP Sen. Rob Portman, who’s retiring, is on board with that approach.

Portman said he went to Tuesday’s congressional picnic at the White House specifically to lobby for the competitiveness package and personally urged President Joe Biden and Raimondo to push lawmakers to wrap up conference negotiations by next week. He said if the subsidies funding moves as a stand-alone bill he’ll vote for it, but he prefers a larger package.

McConnell alternatives

McConnell said Tuesday the conference committee was “stuck” and floated two alternatives: The House passing the Senate version of the competition bill and sending that to President Joe Biden’s desk, or passing a stand-alone measure with just the $52 billion in funding for semiconductor manufacturing subsidies.

Some Republicans on the conference committee are not in full agreement with McConnell on the stand-alone bill idea. Sen. John Cornyn, R-Texas, said he would not support even that until there is a resolution as to whether Democrats move on reconciliation.

“I don’t think they actually have a reconciliation bill, they just need to acknowledge the fact,” Cornyn said. “I do think we need to get the chips [bill] passed, preferably do it in the next week or so."

He suggested the annual National Defense Authorization Act would be another potential vehicle if there’s no deal before the recess. “If we can’t do that, I think we have a shot at the NDAA, but I’d rather do it sooner rather than later,” Cornyn said.

Sen. Todd Young, R-Ind., said a stand-alone subsidies bill doesn’t make sense given that the conference committee has closed out numerous other provisions including “the entire Commerce Committee portfolio.”

“I don’t think that’s where we’re at,” he said. “We’ve got a whole lot of other things that were agreed upon by Republicans and Democrats. Why wouldn't one include that?”

Young did not rule out an approach where both chambers pass the provisions they have agreed upon before the August recess and then continue negotiations on the more controversial elements but said that would be “very messy.”

“It’s much cleaner to have the House go ahead and move [the Senate bill] forward,” he said. “I can’t see anything happening in the near term in terms of splitting things out.”

But House members in both parties are uninterested in passing the Senate version.

“I question whether there would be Republican support for that in the House,” Ways and Means ranking member Kevin Brady, R-Texas, said. “There are a number of, I think, unproven and unvetted trade provisions there.”

Hoyer called the Senate asking the House to pass the Senate version “an unreasonable, arrogant demand.”

‘Reasonable accommodations’

Ways and Means Chairman Richard E. Neal, D-Mass., said he’s discussing with Speaker Nancy Pelosi, D-Calif., whether there’s anything the House can act on in the immediate term that won’t run into trouble in the Senate.

“We’re trying to find some reasonable accommodations,” Neal said.

He said leadership is discussing possible holdups on advancing some form of competitiveness legislation, such as whether House Democrats will require their trade adjustment assistance provisions to be part of any bill, which would run into Republican opposition.

Neal’s counterpart in the Senate, Finance Chair Ron Wyden, D-Ore., is not interested in removing the subsidies from the broader package.

“I’ve been working on the comprehensive bill. I still feel that is very much in the national interest,” he said.

Other Democrats also said they remained focused on trying to get a conference agreement.

Michigan Rep. Dan Kildee said he’d be open to discussing a stand-alone subsidies bill if he has assurances that there’s a viable path to addressing the expansion of trade assistance, which benefits workers who lose jobs to foreign trade. Or instead of a stand-alone, lawmakers could search for a must-pass vehicle like a stopgap spending bill or fiscal 2023 omnibus, he said.

National security nexus

Senators received a classified briefing Wednesday from Director of National Intelligence Avril Haines, Deputy Secretary of Defense Kathleen Hicks and Raimondo on the national security implications of the chips bill holdup.

Sen. Debbie Stabenow, D-Mich., said the briefing was “very geared to the national security risks that we face if we're dependent on China and other Asian countries for the technology we need, both for defense communications and domestic manufacturing and technology. And it's pretty stark.”

“It is an imminent threat because companies now are moving to invest billions and billions of dollars somewhere around the world to meet this semiconductor shortage,” Stabenow added. “If we don't act now, they're going to go to Europe. They're going to go to other countries.”

Stabenow did not rule out voting on a smaller bill focused on the subsidies to ensure something passes before August, but said, “I want to get as much of it as we can get.”

House members will get a similar briefing Thursday, Raimondo told reporters.

‘Blank check’

Not all lawmakers are on board with the subsidies, though a stand-alone measure would likely have enough bipartisan support to pass.

Chief among the opponents is Senate Budget Chairman Bernie Sanders, I-Vt., who delivered another floor speech Wednesday railing against the $52 billion as “a blank check to some of the most profitable corporations in America.”

“In total, it has been estimated that five major semiconductor companies will receive the lion’s share of this taxpayer handout: Intel, Texas Instruments, Micron Technology, GlobalFoundries and Samsung,” Sanders said. “These five companies made $70 billion in profits last year.”

Senate Appropriations ranking member Richard C. Shelby, R-Ala., agreed the $52 billion is just “a big subsidy for some of the biggest companies.”

“They could pay for it themselves,” he said. “Our companies, some of the richest companies in the world, could produce those chips. . . . We're starting to subsidize everything and it's not a good road to go down.”

Paul M. Krawzak contributed to this report.