‘Chips and science’ bill on way to Biden’s desk
Measure backed by White House, major semiconductor companies went through various incarnations
The House on Thursday cleared legislation to incentivize domestic semiconductor manufacturing and spur research and development in other science and technology fields, sending the long-anticipated economic competitiveness measure to President Joe Biden for his signature.
The House passed what lawmakers are now calling the “chips and science” bill by a bipartisan vote of 243-187, with 24 Republicans joining all but one Democrat in voting for the measure. That one Democrat, California Rep. Sara Jacobs, voted "present."
The measure includes $54 billion in grants for semiconductor manufacturing and design and 5G wireless deployment and $24 billion to create a 25 percent tax credit for new semiconductor manufacturing facilities.
It also includes various five-year funding authorizations to bolster U.S. scientific research, including $81 billion, or $36 billion over baseline funding, for the National Science Foundation; $11 billion, all above baseline, for the Commerce Department authorization; and $9.7 billion, or a $4 billion baseline increase, for the National Institute of Standards and Technology. The measure also would authorize more than $67 billion for the Energy Department.
And although there are no authorizing funds for NASA, the measure would extend International Space Station operations through 2030 and provide the agency with a comprehensive set of congressional directives. Those include instructions for NASA to reduce risks for exploration, advance basic and applied research and create a “Moon to Mars” program to land the first human on Mars and to place the first American woman and person of color on the moon.
Florida Rep. Stephanie Murphy was the only member of her party to vote against a broader competition bill the House passed in February. Murphy ended up voting for the compromise package on Thursday.
The narrowed chips and science measure drew nearly two dozen more Republican votes than the broader version. Only one Republican, Illinois Rep. Adam Kinzinger, voted for the competition bill in February, which included climate and trade provisions Republicans said were partisan and extraneous.
That Senate passed the bill Wednesday on a 64-33 vote, with proponents arguing that it’s one of the chamber’s most significant bipartisan achievements this Congress.
While senators said the bill largely mirrors the broader competition bill the Senate passed last year, House members were keen to point out their own wins in this compromise measure.
House Science Chairwoman Eddie Bernice Johnson, D-Texas, said the measure was the result of "months of bipartisan negotiations" and long hours put in by staff.
"These provisions were built with rigorous input from the scientific community, industry, academia, and other stakeholders on what they need most to succeed in the 21st century," Johnson said.
A senior House Democratic aide, who requested anonymity, argued that the measure that is on its way to Biden’s desk represents significant movement from the Senate competition bill toward the House, incorporating provisions and smaller component bills that only existed in the House package and other changes to the Senate’s preferred language.
The House fought for robust authorizations for Energy Department and NIST programs that were not in the Senate version and secured language targeting the NSF funding authorizations toward research that will produce solutions for climate change and other threats, the aide said.
Other House wins the aide described included provisions to broaden science, technology, engineering and math participation at small Emerging Research Institutions and in underrepresented and minority populations. Johnson has been working on some of the STEM provisions for 15 years.
One of the big concessions to the House that senators did acknowledge was the authorization of a $1 billion pilot program for the Commerce Department to provide grants to help persistently distressed communities fund economic development activities.
House Republican leaders whipped their members to vote against this latest version of the chips and science bill, despite it dropping some of the most partisan provisions and earning support from a third of the Senate Republican Conference.
A House GOP whip notice sent to members late Wednesday argued that their party members should vote “no” because the chips bill would “send billions of taxpayer dollars in subsidies and tax credits to a specific industry that does not need additional government handouts.” The semiconductor manufacturing incentives lack sufficient guardrails and won’t resolve immediate supply constraints because it will take years for new facilities to ramp up production, the notice argued.
The whip notice also cited the deal struck Wednesday by Sen. Joe Manchin III, D-W.Va., and Senate Majority Leader Charles E. Schumer on a slimmed-down budget reconciliation measure as reason to oppose the chips bill. GOP leaders argued that it makes little sense to pair "corporate handouts" with tax increases that could send the country into "crushing recession."
The roughly $74 billion total in grants and tax credits for semiconductor manufacturers could be better directed toward broader business incentives, the whip notice claimed. GOP leaders offered an alternative of doubling a broader research-and-development tax credit and extending full and immediate R&D expensing through 2025. Those generous expensing provisions that Republicans enacted in their 2017 tax law lapsed at the end of 2021.
House Ways and Means Committee ranking member Kevin Brady of Texas is among the Republicans who opposed the measure because of the semiconductor-specific incentives.
The $24 billion in tax credits the bill would provide through 2026 for constructing new semiconductor manufacturing facilities “aren’t warranted, and I think actually ignore the major national security challenge we have with China,” Brady said on a press call Wednesday. By targeting one industry instead of providing blanket R&D and manufacturing incentives, the bill cedes ground in other industries to China, he said.
While Brady said he expected Republicans to oppose the bill over its excessive $280 billion price tag, which counts both authorizing language and actual appropriations, he said some would back the bill out of concern that semiconductor companies could halt plans to build plants in their states without the subsidies.
House Republicans have led similar measures to deliver funding and tax incentives to the chips industry to spur domestic manufacturing and research and development.
Negotiating the rest
Several senators have made clear that they intend to press ahead with negotiating the remaining provisions from the broader House- and Senate-passed competition bills that didn’t make it into the trimmed chips and science package. Schumer set a goal to get a final conference committee product on the Senate floor in September.
Brady — who was negotiating trade measures with Ways and Means Chairman Richard E. Neal, D-Mass., and their Senate Finance Committee counterparts before the talks dropped off — said he’d love to see agreement by September, but “I’m not necessarily optimistic about that.”
He said he’s hopeful there could be bipartisan agreement on trade provisions by the end of the year to be wrapped into a lame-duck “extenders” package also containing tax and health care measures.