Senate strikes deal on $52 billion for chips in China competitiveness bill
Washington — A bill that would put $52 billion toward semiconductor chip manufacturing in the United States and strengthen "Buy American" rules advanced in the Senate Thursday.
Nearly derailed by a last-minute disagreement over trade policy, it's one of the few major pieces of Democrat-led legislation that's expected to get significant Republican support in Congress this year. The Senate voted 68-30 to end debate on the bill Thursday afternoon, moving it closer to a final vote.
The bill, dubbed the "U.S. Innovation and Competition Act," would boost domestic manufacturing of the chips that power electronics and key parts of modern cars, trucks and SUVs, such as power steering and infotainment displays. A chip shortage sparked by the coronavirus pandemic has forced plant shutdowns for automakers nationwide and is expected to cost the industry around $110 billion in lost revenue globally.
It would also authorize funding for research and development of emerging technology, energy-related supply chains and NASA's human landing systems program.
The $250 billion bill is aimed at increasing the United States' economic competitiveness with China, which has been the source of bipartisan concern over intellectual property rights, human rights abuses and, in the auto industry, dominance in the emerging electric vehicle market.
"The focus of the legislation is straightforward: It's about making sure that America continues to be the leader in innovation, the leader in manufacturing, and power our economy in ways that are necessary for us to compete with our global competitors, particularly the Chinese government," said Sen. Gary Peters, D-Bloomfield Township.
The package includes $50 billion for semiconductor chips and an additional $2 billion specifically for "legacy" chips expected to help automakers, which Peters and Sen. Debbie Stabenow, D-Lansing, lobbied their colleagues to include.
"These chips are primarily produced overseas. Through this legislation, our focus is to bring that manufacturing here into the United States," Peters said. "We also want to make sure that we're protecting labor and that labor has the ability to get fair wages for their work as we build these facilities here in the United States."
Automaker industry groups have pushed the Biden administration to include carve-outs for the auto sector, which was one of the first to experience production cuts due to the shortage. Administration officials have pushed back on giving "special treatment" to the industry.
"It took a lot of work — folks thinking about new technologies unfortunately don't always think about manufacturing technologies. I continually have to tell the story that advanced manufacturing is high-tech. The auto industry is high-tech," Stabenow said. "It's really important that we're constantly telling the story and looking out for the interests of manufacturing."
The chips amendment spearheaded by the Michigan senators includes a requirement that any funded projects pay workers prevailing wage — a sticking point that Republicans said could threaten GOP support for the package but which managed to remain in the bill.
The package also includes Stabenow and Peters' legislation to tighten loopholes in a nearly 70-year-old "Buy American" law that prioritizes American companies in government purchasing.
The law includes exceptions and waivers for when there's limited availability and quality of U.S.-made products, it's in the public interest, the goods would be used in a different country or they're being purchased from a country that has special trade agreements with the U.S.
The senators' bill would bar using the public interest waiver if a foreign contract would decrease employment in the U.S. and would require that waivers be posted online with justifications.
It would also create a permanent "Made in America" office within the federal Office of Management and Budget responsible for reviewing waivers and help small- and mid-sized U.S. manufacturers get the first shot at federal transportation projects.
The office can help "give our small businesses a chance to be able to retool to make the products that are needed," Stabenow said. "When you think about Michigan, some of this is certainly vehicles. But it's furniture, it's appliances, it's computer technology, all kinds of things. It's really important that American tax dollars are used to purchase American products made by American workers."
A disagreement over a trade provision nearly blocked the package Thursday and was one of the final negotiations after multiple amendments were added to the proposal on the Senate floor. Members of both parties praised it as an example of bipartisan compromise working as it should — though not all Republicans were happy, with Sen. John Kennedy of Louisiana telling POLITICO "we did a piss-poor job of negotiating this."
It may be one of the last big bipartisan deals of the year, with major fights over the budget and President Joe Biden's economic and social safety net packages on the horizon.