Blows, bipartisanship in long fight over semiconductor bill

WASHINGTON — Five weeks ago, top advisers to the Biden administration gathered for their regular Thursday morning meeting on passing a bill to revive the U.S. computer chip industry, concerned that it could to be in danger.

After 18 months, the bipartisan effort to provide $52 billion for semiconductors was drawing to a close. But they knew Senate Republican Leader Mitch McConnell could block it.

This wasn’t just another wannabe good bill. Many at the meeting had attended multiple briefings on scary scenarios if the deal stalled. They were convinced that the very trajectory of the economy and national security was at stake.

The billions for computer chips and scientific research, they argued, could help reduce inflation, create jobs, defend the US and its allies and preserve an advantage over China.

More than 90% of advanced chips come from Taiwan. If Taiwan were invaded or shipping channels were shut down, much of the world would face a cascading economic crisis and be unable to maintain chip-reliant weapons systems.

Biden’s team resolved to ignore any threat from McConnell and continue to work with Republican senators who had backed the bill.

Brian Deese, director of the White House National Economic Council, recalled the sentiment that emerged from the meeting: “There has been too much progress, too much confidence, and too much at stake” to see failure now.

Just hours later, McConnell promised the semiconductor bill would be dead if Democratic senators tried to push through a separate spending package on a party-line vote. His gambit would ultimately fail.

President Joe Biden will soon sign into law the $280 billion CHIPS and Science Act. This account of how the bill was crafted is based on interviews with 11 Biden administration and congressional officials, most of whom spoke on condition of anonymity to discuss private conversations.

The backstory reveals the complexities of bipartisanship even when all sides agree on the goal.

McConnell threatened to block the bill even though he supported the idea, hoping to prevent separate Democratic legislation. Biden’s team took the unusual step of enlisting veterans of the Trump administration to help find Republican votes.

For much of the time, the technical nature of the issue meant talks could take place beyond the heat of partisan bickering. Both sides knew that government-funded research ultimately led to the Internet, MRIs, coronavirus vaccines, and other innovations shaping the world today. It was only towards the end that politics broke out.

Administration officials say the bill passed Congress last week due to deep coalition and persistence. But many Republicans believe they provided key support, only to be betrayed.

McConnell’s two-week lockout ended after West Virginia Sen. Joe Manchin said on July 14 that he was largely opposed to the tax and spending plans of his fellow Democrats. Assuming Biden’s broader agenda was frozen, Senate Republicans could confidently vote in favor of the computer chip bill.

But four hours after the Senate passed the bill on July 27, Manchin announced a deal with Senate Democratic Leader Chuck Schumer to support the kind of sweeping package McConnell wanted to stop. The package commits hundreds of billions to combat climate change, lower prescription drug prices and would increase some corporate taxes.

That put the chip bill in the House in jeopardy. But 24 Republicans joined Democrats in passing it there.

It had all started in an Oval Office meeting with lawmakers a month into the Biden presidency. Existing law approved investment in semiconductor development, but Congress had yet to appropriate the money.

The issue remained largely in the background as the president pushed a coronavirus relief package through Congress in March 2021, then turned his attention to infrastructure and an expansive domestic agenda.

But the risks of the computer chip shortage became clearer as inflation continued to rise last year. A federal survey in September showed manufacturers were down on average to just a five-day supply of chips, compared with 40 days before the pandemic.

On June 8, 2021, the Senate passed its version of the semiconductor bill, and the House followed suit eight months later. But key differences in the bills would have to be reconciled, and that’s where things often get sticky.

Biden used his State of the Union address in March to highlight an announcement by Intel to invest in what could be eight semiconductor plants in Ohio, a commitment that was contingent on final passage of the bill.

Deese and Commerce Secretary Gina Raimondo stepped up their outreach after the speech, and more top advisers got involved. Internal White House records show 85 meetings and events involving companies and stakeholders since the beginning of this year.

Biden’s team also enlisted the help of Trump administration veterans, including two former national security advisers. The commerce secretary cold-called Mike Pompeo, Trump’s former secretary of state, who had criticized Biden in a February speech.

“I’m always happy to help a fellow Italian,” Raimondo recalled Pompeo saying after she asked for his help.

By Raimondo’s count, he had 250 meetings with outside companies and groups and roughly 300 meetings or calls with lawmakers about the bill.

Meanwhile, the Russian invasion of Ukraine had increased energy and fuel costs, a reminder of the havoc that would follow if access to semiconductors were further disrupted.

In June, Intel announced that it would postpone its first plant in Ohio because the bill had not passed. So McConnell decided to stop negotiations. Days later, France announced a new semiconductor plant made possible by investment from the European Union itself.

Raimondo felt a knot in his stomach after learning of McConnell’s decision, but he continued to call out Republicans. “Just constant engagement,” he recalled.

The Senate finally passed the bill when it seemed the separate package from the Democratic agenda was going nowhere. But after Manchin revived it with his deal with Schumer, House Republicans mounted a last-minute push to stop the token bill. Still, it passed as a bipartisan victory.

Some Republicans felt betrayed. Texas Senator Cornyn had been a driving force behind the token bill, but said Manchin had undermined the ability to negotiate in good faith. “That trust was gutted,” he said.

Raimondo evaluated the achievement this way: “It takes a little longer than it should, a lot more drama than you’d like, but it happens.”

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