House Democrats are set to approve legislation on Friday that they say positions the United States to better compete with China economically and on the world stage by strengthening the domestic semiconductor industry, strengthening tight supply chains and strengthening international alliances.
Criticizing China has become a bipartisan playbook in Washington, but Republicans call the measure “toothless” and what is needed to hold the country accountable for a range of economic and human rights actions. .
The nearly 3,000-page bill includes massive investments to boost semiconductor manufacturing in the United States. Big-ticket items include about $52 billion in grants and subsidies to help the semiconductor industry and $45 billion to strengthen supply chains for high-tech products.
But Democrats have also incorporated other priorities that have raised concerns within the GOP about the cost and scope of the bill.
It includes $8 billion for a fund that helps developing countries adapt to climate change; $3 billion for facilities to make the United States less dependent on Chinese solar components; $4 billion to help communities with unemployment rates significantly higher than the national average; and $10.5 billion for states to stockpile drugs and medical equipment.
It’s just part of the package, which House Speaker Nancy Pelosi, D-California, said was necessary to ensure that “America can outperform any nation, today and for the decades to come”.
The bill gives Democrats a chance to address voter concerns about the economy at a time when a shortage of computer chips has driven up prices for automobiles, electronics and medical devices. Republicans, who for months have hammered Democrats against rising inflation, say the bill has nothing to do with winning economic competition with China and wastes taxpayers’ money on environmental initiatives and other unnecessary programs.
“This bill is really just a long list of dreamy progressive policies that have nothing to do with China,” Rep. Michelle Fischbach, R-Minn, said.
Commerce Secretary Gina Raimondo met with House Democratic lawmakers on Wednesday to discuss the bill. She said American manufacturing had been in decline for more than three decades, leading to a loss of jobs and know-how.
“During this slow atrophy, we have become incredibly dependent on countries around the world,” Raimondo said. “And, therefore, what this bill is saying is to stop the decline.”
One of the biggest flashpoints is the $8 billion set aside in the legislation to help developing countries reduce emissions and deal with climate change. President Barack Obama pledged $3 billion for the fund, but former President Donald Trump withheld $2 billion.
Rep. Michael McCaul, the top Republican on the House Foreign Affairs Committee, called it an “irresponsible UN slush fund” that has already provided at least $100 million to China.
Meanwhile, America’s share of the world’s semiconductor manufacturing has steadily eroded, from 37% in 1990 to around 12% today. The Biden administration and lawmakers are trying to reverse that trend, which industry officials say is driven by foreign competitors receiving large government subsidies.
The pandemic has put a strain on the chip supply chain. The Commerce Department released a report last week that found median inventory for certain semiconductor products fell from 40 days in 2019 to less than five days in 2021. The report also said stakeholders are not seeing not the problem will go away in the next six months. . The administration cited the findings as calling on Congress to act.
Tensions with China are reflected in much of the legislation. In a nod to concerns about the origins of COVID-19, the bill directs the president to submit a report to Congress on the most likely origin of the virus, the level of confidence in that assessment, and the challenges of making such an assessment.
Republicans dismissed the provision as “no independent investigation, no penalties, no punishment.” They want a select committee of lawmakers to look into the origins of COVID-19. “Instead of taking action to get real accountability, he’s going to ask them for a report,” Republican Leader Kevin McCarthy of California said.
Another provision would subject more lower-cost products made in China to tariffs. Currently, imports valued at less than $800 are exempt from expedited processing and tariffs. The bill eliminates the threshold for certain countries, including China.
“The investments this bill makes in America — semiconductor manufacturing, supply chains, learning — allow America to compete effectively with China,” Raimondo said. “If you’re serious about competing with China, you should vote yes on this.”
The Senate passed its computer chip legislation in June by a vote of 68 to 32, representing a rare episode of bipartisanship on major legislation. If the House bill passes, negotiators will try to find a compromise that both houses could agree to, although it is not clear they could do so before the midterm elections. It would rob the Biden White House of the opportunity to show progress on an important economic issue.
Raimondo called for swift negotiations with the Senate once the bill passes. Anything that emerges will need the support of 10 50-50 Senate Republicans to pass. She said she was convinced that a compromise could be found.
“There are no irreconcilable differences, I can say that,” Raimondo said.
“We will send House Republicans a much better option to vote in the next two months,” said Sen. Todd Young, R-Ind., who worked with Senate Majority Leader Chuck Schumer on the version of the Senate Legislation.