Congress approves $280 billion package to help chip companies, against China

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The House passed a $280 billion package to boost the semiconductor industry and scientific research with the aim of creating more high-tech jobs in the United States and helping it better compete with international rivals, namely China.

The House approved the so-called “Chips and Science Act” by a solid margin of 243 votes to 187, sending the measure to President Biden to sign into law and handing the White House a major victory in domestic policy. About two dozen Republicans voted for the legislation.

“My plea is to put politics aside. Do it,” Biden said ahead of the vote, adding that it would give the United States “the ability not only to compete with China for the future, but also to lead the world and win the economic competition of the 21st century. “.

Republicans have argued that the government should not spend billions on subsidize the semiconductor industry and the GOP leadership in the House recommended a vote against the bill, telling members the plan would provide huge subsidies and tax credits “to a specific industry that doesn’t need additional government subsidies.” .

Rep. Guy Reschenthaler (R-Pa.) said the way to help the industry would be to cut taxes and ease federal regulations, “not pick winners and losers” with subsidies — a approach that Rep. Joseph Morelle (D-NY) said was too narrow.

Biden reacts to a memo given to him saying the CHIPS-plus bill has passed the House.
AFP via Getty Images

“It affects every industry in the United States,” Morelle said. “Take, for example, General Motors announcing that they have 95,000 automobiles waiting for chips. So you want to increase the supply of goods to people and help bring inflation down? offer goods across the United States in every industry.

Some Republicans viewed the passage of the legislation as important to national security. Rep. Mike McCaul (R-Texas), the top Republican on the House Foreign Affairs Committee, said it was critical to protect semiconductor capacity in the United States, which he said was overly dependent. from Taiwan for the most advanced chips. This could prove to be a major vulnerability should China attempt to seize control of the self-governing island which Beijing considers a breakaway province.

“I have a unique insight into this. I get the classified briefing. Not all of those members do that,” McCaul said. “It’s vitally important to our national security.”

The bill provides more than $52 billion in grants and other incentives for the semiconductor industry as well as a 25% tax credit for companies that invest in chip factories in the United States. United. It calls for increased spending on various research programs that would total about $200 billion over 10 years, according to the Congressional Budget Office.

A late development in the Senate — progress Democrats announced Wednesday night on a $739 billion health care and climate change package — threatened to make it harder for supporters to get the bill across the finish line on semiconductors, due to concerns over government spending.

Rep. Frank Lucas (R-Okla.) said he was “disgusted” by the turn of events on Capitol Hill.

Despite bipartisan support for the research initiatives, “unfortunately, and more regrettably than you can imagine, I will not be voting for the Flea and Science Act today.”

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