U.S. House Speaker Nancy Pelosi (D-CA) holds her weekly news conference with reporters on Capitol Hill in Washington, July 14, 2022.
Elizabeth Frantz | Reuters
The House on Thursday approved bipartisan legislation to boost US competitiveness with China by pouring billions of dollars into domestic semiconductor manufacturing and scientific research.
The bill passed 243-187, with no Democrats voting against it. Twenty-five Republicans voted in favor of the legislation, even after a last-minute push by Republican leaders to oppose it.
The bill, which passed the Senate on Wednesday, now heads to the White House for President Joe Biden to sign.
Lawmakers pushed to quickly pass the package before leaving Washington, DC, for the August recess. But the final vote came after years of wrangling on Capitol Hill, with the legislation taking numerous forms and names in both houses of Congress.
The final version, known as the Chips and Science Act, includes more than $52 billion for U.S. companies that make computer chips, as well as billions more in tax credits to encourage investment in manufacturing of chips It also provides tens of billions of dollars to fund scientific research and to stimulate innovation and development of other US technologies.
House Speaker Nancy Pelosi, D-Calif., called the bill “an important victory for American families and the American economy.”
But House Republican Leader Kevin McCarthy, R-Calif., urged his colleagues to “reject this deeply flawed bill” and “start from scratch” in floor statements before the vote.
The Senate approved the bill on Wednesday by a vote of 64-33, with 17 Republicans supporting it. Among those favorable votes was Senate Minority Leader Mitch McConnell, R-Ky., who previously warned that Republicans would not support the China competition bill if Democrats continued to pursue a package of unrelated reconciliation.
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Hours after a bipartisan vote in the Senate on Wednesday, Senate Majority Leader Chuck Schumer, D-N.Y., and Sen. Joe Manchin, D-W.Va., revealed they have reached an agreement on a bill of broad reconciliation. They hope to pass that package next week with just a simple majority in the Senate, which is evenly split between Republicans and Democrats with Vice President Kamala Harris casting any tie-breaking votes.
Shortly after that deal was announced, House Republican leaders urged their members to vote against the Chips and Science Act. They argued against giving multibillion-dollar subsidies to chipmakers at a time of historically high inflation, while also pointing to the timing of the Democrats’ reconciliation deal.
“The partisan Democratic agenda has given us record inflation, and now they are about to send our country into a crushing recession,” said the office of House Minority Whip Steve Scalise, R-La. , in a note Wednesday night.
Some Republicans who opposed the bill said it lacked “guardrails” to prevent any funding from ending up in China’s hands. Other critics have argued that the US would have to spend many billions more to have a real chance of competing with the world’s leading chip makers.
But proponents of the project say it’s vital to the U.S. economy and national security to build more chips, which are increasingly critical components in a wide range of products, including consumer electronics, automobiles, health equipment and weapon systems
Chips have been in short supply during the Covid-19 pandemic. Factory shutdowns at the start of the outbreak sidelined chip production in Asia, while consumer demand for upgraded cars and home electronics that needed the chips surged during the lockdowns. The US share of global chip production has also fallen sharply in recent decades, while China and other nations have invested heavily in the industry.
The US also makes few of the most advanced types of semiconductors, which are largely produced in Taiwan, the epicenter of growing political tensions with China.
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Much of modern warfare requires sophisticated semiconductors (each Javelin missile launch system contains hundreds, for example), leading U.S. defense officials to worry about the country’s dependence on foreign producers for its supply of chips
Biden has also blamed the chip shortage for the sky-high inflation that has dogged his presidency. The lack of chips available to make new cars has been linked to rising used car prices, which are fueling inflation.
“America invented the semiconductor. It’s time to bring it home,” Biden said this week.