WASHINGTON (AP) — The Biden administration and Democrats in Congress are warning of serious ramifications for the economy and national security if Congress does not pass a bill by the end of July designed to boost semiconductor manufacturing in the United States.
His calls have become increasingly urgent as Senate Republicans led by Mitch McConnell threaten to block legislation on computer chips, creating a showdown that threatens to derail one of the biggest bipartisan initiatives in Congress. Republicans have linked their cooperation to Democrats not moving forward with a separate package of energy and economic initiatives that GOP lawmakers warn would raise taxes on small businesses and hurt the economy. It is a demand that the Democrats dismiss out of hand.
Commerce Secretary Gina Raimondo said computer chipmakers are being offered lucrative incentives from other countries such as South Korea, Japan, France, Germany and Singapore to set up plants there. She cited STMicroelectronics and GlobalFoundries’ Monday announcement to build a semiconductor factory in France as an example of other countries moving faster than the US on this issue.
“The bottom line is that there are very real and very devastating consequences if Congress doesn’t do its job in the month of July,” Raimondo told The Associated Press.
Those consequences mean not only lost job opportunities for the US, but also an over-reliance on other nations for semiconductors that could become a critical vulnerability because they are so important to products ranging from cars and cell phones to computer systems. of modern weapons.
Raimondo was to be part of a closed-door briefing with senators on Wednesday to discuss the national security implications of the semiconductor legislation. She was joined by Deputy Secretary of Defense Kathleen Hicks and Director of National Intelligence Avril Haines.
Raimondo and Defense Secretary Lloyd Austin, in a letter to congressional leaders, said semiconductor companies must have “concrete on the ground” by this fall to meet increased demand. Cabinet members said their assessment was that further delays in passing the legislation “will result in a shortfall in investment in semiconductors from which we may not be able to recover.”
Both houses of Congress have passed bills that include about $52 billion in financial support for the US semiconductor industry, but are scrambling to coalesce the legislation into a final compromise that could win 60 votes in the Senate, the number needed to overcome procedural hurdles.
McConnell, R-Ky., suggested Tuesday that the House could simply accept the version passed by the Senate, allowing it to go to President Joe Biden’s desk to become law. Or the two chambers could simply adopt a much narrower bill focused on semiconductor incentives, leaving out provisions on trade and new research priorities.
Both options face major obstacles. A Democratic leadership aide in the House said the Senate bill has too many fundamental problems to get the necessary 218 votes in the House. Meanwhile, senators from both parties are wary of settling for the $52 billion in financial incentives after working for years on other bill priorities.
“It’s just that there are so many other things that we work so hard on. Why would we reduce that?” said Sen. Tim Kaine, D-Va. “If it’s about being truly competitive, why would we say we just want to be a little bit competitive?”
Sen. Charles Grassley, R-Iowa, said he might support legislation focused solely on financial incentives, “but has problems with other conference members” who insist on additional provisions.
Democrats have surpassed their goal of reaching an agreement on the principles of the final bill by the end of June so that staff can prepare the text and the two chambers can vote in July. Raimondo said he had been talking to several Republicans about bridging the gap between the House and Senate before McConnell tweeted about the bill, known by the acronym USICA, for the United States Competition and Innovation Act: “ Let me be perfectly clear: There will be no USICA while Democrats pursue a partisan reconciliation bill.”
“Obviously Senator McConnell’s tweet a couple of Fridays ago has slowed down the work,” Raimondo said.
Still, he said he sees the bill at the “5-yard line” and that negotiators could be done within a week to 10 days if both sides cooperate. He said that if lawmakers can’t complete the bill, “it’s not the Republicans who win. China wins if this doesn’t pass.”
Raimondo is trying to appeal to lawmakers’ concerns about how the United States relies on foreign countries, namely Taiwan, for the production of advanced computer chips.
“Look, I mean, I know a lot of these Republicans. they are patriotic. They want to do what is right for America. They are afraid that we are so dependent on Taiwan for exactly the kind of chips that our military is dependent on,” Raimondo said.
Sen. Thom Tillis, RN.C., was among the Republicans who voted in favor of the Senate version of the semiconductor legislation. Before making a decision on a final compromise bill, he wants to see the price of the separate economic and energy package that Democrats seek through a process called reconciliation, which would allow them to pass a bill without any Republican support. .
Tillis also doesn’t believe the warning that lawmakers must pass a semiconductor bill this month or it may not happen at all.
“This is not the only vehicle that chips could be traveling in before the end of the year,” Tillis said.