House approves $52 billion in chip funding, teeing up debate with Senate

Riley Beggin
The Detroit News

Washington — Members of the U.S. House voted to pass a bill Friday that would appropriate $52 billion for domestic semiconductor chip manufacturing, teeing up debate with the Senate before the policy can become law. 

The provision is part of more expansive legislation aimed at increasing U.S. economic competitiveness with China. The House bill, dubbed the America COMPETES Act, passed 222-210 mostly along partisan lines, with only one Republican and one Democrat voting with the other caucus. 

The Senate version, the U.S. Innovation and Competition Act of 2021, passed last summer with the support of 19 Republican senators. It also includes $52 billion in chip funding, but does not include several of the climate and trade provisions favored by Democrats that have angered Republicans on the House side.

In both bills, $2 billion would be set aside for legacy chips used in autos, provisions pushed by Rep. Debbie Dingell, D-Dearborn, on the House side and Sens. Gary Peters, D-Bloomfield Township, and Debbie Stabenow, D-Lansing, on the Senate side. 

It also includes $45 billion to strengthen the supply chain for manufacturing equipment and other critical goods and funding for technological research and development. 

"The technologies we rely on today, and the technologies of the future, must be made here in America," Speaker of the House Nancy Pelosi said Thursday ahead of Friday's vote. "It's an imperative for America's security and the financial security of America's workers and our families that we are self‑sufficient."

The legislation comes two years into a global semiconductor shortage that has resulted in temporary layoffs, billions in lost revenue for automakers, and increased prices on new and used vehicles for consumers. It's also revealed U.S. reliance on South Korea, China and Taiwan — which is living under threat of Chinese invasion — for the crucial component. 

Modern vehicles can include thousands of chips, powering everything from infotainment systems to power steering. Electric vehicles require even more. Experts estimate that the shortage will likely continue at least through the end of the year, and it's affecting other consumer and advanced technology sectors as well.

"We need these chips. We need the United States to be competitive," Dingell said Friday. "It's a national security issue, it's an economic security issue. We don't have time to screw around, we need to get this done."

Many Michigan members of Congress are pushing for speedy passage of the chip funding, which has bipartisan support and is likely to be retained in any final version of the legislation.

But the House bill also includes several provisions that have drawn opposition from Republicans, including increased tariffs on lower-value Chinese imports, a screening protocol for American companies' investments in China and elsewhere, tighter labor and environmental rules for countries seeking tax reductions on imports, and $8 billion for the U.N. Green Climate Fund aimed at combating global climate change. 

"I hope that it actually gets tougher on China, and I think they need to pull all the Green New Deal aspects out of it," said Rep. Bill Huizenga, R-Holland, who voted no. "They're missing a real opportunity, I think, for some common ground on things."

There's a "real issue" with semiconductor chip supply and "there is no doubt we have to get things on-shored again," he said. "We are at a deficit right now and we should be rectifying that. I don't think this bill does that."

Both Rep. Elissa Slotkin, D-Holly, and Rep. Peter Meijer, R-Grand Rapids Township, expressed frustration Friday that many of the bill's elements stand little chance at surviving the conferencing process with the Senate, potentially slowing the chip funding legislation reaching the president. Both are members of a bipartisan caucus of moderate members that endorsed chips funding last fall. 

"This is Speaker Pelosi not just going for a good legislative win," said Meijer, who voted against the bill. "This is just politics as usual, but it's counterproductive and incredibly disappointing."

Slotkin voted for the measure, but released a statement Wednesday aimed at Pelosi asking leadership not to "screw Michigan's auto workers" on the legislation she fears may get "bogged down" in partisan fights. 

"Most of what's in there is great stuff," she said. "But I'm just sick and tired of us stumbling on process, on the really important stuff that affects my auto workers and my auto suppliers."

But Pelosi and many other Democrats saw the legislation as an opportunity to make big strides on caucus priorities. 

An amendment from Rep. Andy Levin, D-Bloomfield Township, that would expand Pell Grant eligibility for job training programs and would increase transparency of data from colleges was approved for inclusion in the bill Friday. The latter policy had been written by former Rep. Paul Mitchell, a GOP-turned-Independent member from Michigan who died from cancer last summer. 

"We're putting stuff in here not just to compete with China, not just to revitalize manufacturing," he said, "but to make sure that our students and our workers can get the training and the education they need, and that there's equity in all of it."

Twitter: @rbeggin