WASHINGTON: President Joe Biden and his fellow Democrats won a victory on Thursday when the US House of Representatives passed comprehensive legislation to support the domestic semiconductor industry as it competes with Chinese and other foreign manufacturers. The Democrats are hoping to maintain their slim congressional majority in the November midterm elections.
With one Democratic representative, Sara Jacobs, voting present, the final vote was 243 to 187. The measure received support from 218 Democrats and 24 Republicans. The bill is now on its way to the White House, where Vice President Biden is anticipated to sign it into law as soon as next week.
After more than a year of work, the “Chips and Science” act was finally approved by the Senate on Wednesday with strong bipartisan support. The bill offers about $52 billion in government subsidies for American semiconductor production, which is used in everything from cars and high-tech weapons to electronic devices and video games.
This is a rare significant foray into U.S. industrial policy. Additionally, it contains a $24 billion investment tax credit for chip factories.
Additionally, the legislation would grant $200 billion over ten years to advance American scientific research in order to compete with China. To pay for those investments, Congress would still need to pass separate appropriations legislation.
After Biden’s phone call with Chinese President Xi Jinping, in which Xi cautioned Biden against “playing with fire” over Taiwan, the bill was approved hours later. The leaders of the two largest economies in the world would also discuss supply chains and other economic issues, according to aides.
China had opposed the semiconductor bill through lobbying. According to the Chinese Embassy in Washington, China “firmly opposed” it and described it as “counter to the common aspiration of people” in both countries and reminiscent of a “Cold War mentality.”
Private business HEFTY Subsidies
Many American lawmakers had stated that they wouldn’t typically support sizable subsidies for private companies, but they pointed out that China and the European Union have been giving their chip companies billions in incentives. They also mentioned risks to national security and significant issues with the global supply chain that have impeded global manufacturing.
Michael McCaul, a representative from Texas and the chair of the House Foreign Affairs Committee, cast the lone Republican vote in favour. Before the vote, he told reporters, “We need to manufacture (chips) in this country and not let it go offshore.”
For the sake of our national security, this is absolutely crucial, McCaul said.
When informed that the House had passed the chips bill, Biden left a meeting on the economy with corporate executives at the White House. To thunderous applause, Biden announced with a smile, “The House has passed it.”
After the bill was approved, House members applauded. For more than a year, the proposal had been under consideration. Strong bipartisan support helped the Senate pass a bill in June 2021, but it was stalled in the House for months due to disagreements between Republicans and Democrats over whether it should include provisions addressing issues like climate change and China’s human rights record.
The chips bill narrowly passed the House compared to expectations after some Republicans withdrew their support.
After the announcement on Wednesday of an agreement between Democratic Senator Joe Manchin and Senate Democratic Leader Chuck Schumer, who could open the way for the Senate to pass separate legislation to raise corporate taxes, reduce the national debt, invest in energy technologies, and lower the price of prescription drugs, Republican party leaders advised members to vote against the bill.
Democrats anticipate that these legislative victories will aid them in the midterm elections on November 8. According to some polls, Republicans are expected to win a majority in the House of Representatives in addition to hoping to retake control of the Senate.
