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Senate to push ahead on semiconductor manufacturing bill

An initial procedural vote on a limited competition bill could come as soon as Tuesday

"We'll advance chips because of the national security and the economic urgency of it," said Republican Sen. Todd Young of Indiana.
"We'll advance chips because of the national security and the economic urgency of it," said Republican Sen. Todd Young of Indiana. (Tom Williams/CQ Roll Call file photo)

The Senate is likely to begin floor consideration next week on a narrower economic competitiveness bill that would provide $52 billion in funding for semiconductor manufacturing grants and investment tax credits for the chip industry.

Senate Majority Leader Charles E. Schumer told senators to expect a procedural vote as early as Tuesday to begin the floor process on a limited competition measure that would include those two items and any other provisions from rival, broader bills that have bipartisan consensus and will be ready to move, according to a source familiar with the plan who spoke on the condition of anonymity. 

A bicameral conference committee on the broader Senate and House competition bills has stalled amid disagreement over trade and other controversial provisions that are likely to be left out of the more limited measure. 

The conference committee negotiations ground to a halt after Senate Minority Leader Mitch McConnell announced two weeks ago that Republicans would not support a bipartisan competition bill so long as Democrats are pursuing a partisan budget reconciliation package. The Kentucky Republican offered more flexibility this week when he said his party would accept the House passing the Senate version — which both parties in the House rejected — or a stand-alone measure that spun off the semiconductor manufacturing grants. 

It’s not yet clear whether McConnell would support what lawmakers are calling a “chips-plus approach” that would add other provisions like the semiconductor tax credits, which were not in either the House or Senate versions of the broader bill.  McConnell’s office didn’t respond to a request for comment.

But other key Republicans said they support a more limited bill that goes beyond the manufacturing grants. 

Indiana Sen. Todd Young, who was the lead Republican on the Senate version of the competition bill, said the conference committee was “very close to a final agreement” before the talks broke down and he would like to see as much of that work included in the more limited measure as possible. 

“There are a number of issues that were — many within hours, others within a couple of days — of being completely closed out, so what we need to do is take a chips-plus approach,” Young said. “So we’ll advance chips because of the national security and the economic urgency of it. We should also advance those things on which there was already agreement or closed out or on the cusp of being agreed, which have national security implications.”

Business groups and local officials have been urging swift approval of the chip funding, saying semiconductor companies may decide to build new plants overseas unless Congress provides domestic subsidies. “We must prioritize and reinvest in the semiconductor industry to reemerge on the global stage as a technology leader,” the U.S. Conference of Mayors wrote in a letter to congressional leaders Thursday.

Young said that while the “plus” part of the chips-plus approach is still being negotiated, he thinks there will be bipartisan support for including the Commerce Committee title, which had been agreed to already in the conference negotiations. That includes “research and development funds for things like hypersonics, quantum computing, so the Chinese can’t break our codes and figure out where our nuclear submarines are” and “artificial intelligence so we can fight and win the wars of tomorrow,” he said.

Commerce Secretary Gina M. Raimondo, who was among administration officials who gave House members a classified briefing Thursday afternoon on the national security imperative to pass the bill, said the administration will accept whatever version can pass Congress before the August recess.

“All options are on the table because we’re out of time,” she told reporters. “So this is about, you know, what can we get the votes for? We cannot wait.”

‘Determined’ 

Speaker Nancy Pelosi said Democrats are “more interested in” a chips-plus bill than a chips-only measure. 

“We had been working constantly on the chips bill. And we need to have the transformative nature of research and education and the rest to make us continue to be preeminent in the world,” the California Democrat said at her weekly news conference. “How it shapes up in the next short period of time, we’ll see. But we are determined that we will pass a bill.”

Senate Commerce Chairwoman Maria Cantwell, D-Wash., one of her party’s lead negotiators on the measure, said she supports moving a limited bill given Republicans are trying to hold the broader bill “hostage” to get Democrats to abandon their reconciliation bill, which they’re not going to do. But she doesn’t know what provisions will make it in a more narrow competition package.

“I can’t say what’s happening right now,” Cantwell said. “I think people are just trying to move ahead and would like to see this done and would like people who’ve worked so hard on eight different committees see their pieces included.”

Ohio Sen. Sherrod Brown, another Democrat on the conference committee, said lawmakers on both sides have already given up a lot of provisions they’d prefer to have in a final bill in the interest of getting agreement and they’re not going to let McConnell’s threat stop them from producing as broad of a bill as possible before the August recess. 

“We’re going to move it. We’re going to go ahead no matter what McConnell is trying to do,” he said.

Tax credit addition 

The more limited bill is expected to add tax credits that weren’t part of the broader measures.

Senate Finance Chair Ron Wyden, D-Ore., and ranking member Michael D. Crapo of Idaho sponsored a stand-alone bill to provide new credits worth 25 percent of what a company spends building, reconstructing or buying U.S.-based semiconductor manufacturing facilities or equipment. Companies could elect “direct pay” of the credits, which would allow them to get the subsidies in the form of a cash refund. 

The duo serve on the conference committee for the competition bills and had been pushing to add their tax bill in the final product, so the decision from Schumer to do so is a win for them and other senators who backed the measure. 

Cantwell said the conference committee had been discussing the tax credit measure during the July Fourth recess and was “really close to solving that” before McConnell’s blockade. 

Sen. Mark Warner, D-Va., a co-sponsor of the tax credit bill, said Wednesday that without those incentives, the $52 billion in chips funding wouldn’t generate the needed level of investment from companies in manufacturing semiconductors in the U.S.

Young and other Republican conferees such as Sen. John Cornyn, R-Texas, said they’d support including the tax credits. 

GOP resistance?

But Cornyn said it would be a “mistake” for Schumer to try to move a limited bill next week without abandoning the downsized “Build Back Better” reconciliation measure that Democrats are eager to pass and Republicans oppose. While in theory a chips-plus measure would have “broad support,” Cornyn said, it faces a “contrived situation” because of the reconciliation threat.

Cornyn said he would vote against the limited bill if Schumer brings it to the floor next week but would be more open to supporting it in two weeks, near the end of the session before the scheduled August recess, if it’s more clear Democrats don’t have agreement on a reconciliation bill and that threat “is no longer on the table.”

It’s not yet clear how many Republicans will share Cornyn’s view or if there would be at least 10 willing to vote with Democrats to break a filibuster and allow the limited competition bill to proceed next week. Sens. Susan Collins, R-Maine, and Shelley Moore Capito, R-W.Va., both said they’d vote to begin debate on a limited bill. Sen. Rob Portman, R-Ohio, has said he would support whatever is the broadest version of the bill that can pass before the August recess. 

Senate Republican Whip John Thune of South Dakota said the level of GOP support would depend on what ends up in the limited bill. The Senate passed its own version of a competition bill last year with bipartisan backing on a 68-32 vote.

“I don’t think anybody really knows what the final bill might look like or kind of where the votes are,” he said. “We know where the votes were last time, but that was a different time and it was a different bill than what we’re talking about today.”

Thune said he expects the Republican Conference will be divided, as it has been on previous iterations. 

“We have people [who] have different equities in this,” he said. Those “who are interested in it for the chips part of it probably would like to see a narrower bill. The people who have [advocated for] a lot of the elements that were added to the broader bill in the Senate may want to hold out to try to get those.”

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