Mandel Ngan | AFP | Getty Images The House on Thursday passed bipartisan legislation to boost US competitiveness with China by providing billions of dollars for domestic semiconductor manufacturing and scientific research. The bill passed 243 to 187, with no Democrats voting against the bill. Twenty-five Republicans voted in favor of the law, even after a last-minute push by GOP leaders to oppose it. The bill, which passed the Senate on Wednesday, now heads to the White House for President Joe Biden to sign. “It’s exactly what we need to do to grow our economy right now,” Biden said in a statement after the vote. “I look forward to signing this bill into law.” Lawmakers pushed to quickly pass the package before they leave Washington, D.C., for the August recess. But the final vote came after years of wrangling on Capitol Hill, with the legislation taking many forms and names in both houses of Congress. The final version, known as the Chips and Science Act, includes more than $52 billion for US companies that make computer chips, as well as billions more in tax credits to encourage investment in chipmaking. It also provides tens of billions of dollars to fund scientific research and stimulate innovation and development of other US technologies. House Speaker Nancy Pelosi, D-Calif., called the bill “an important victory for American families and the American economy.” But House Republican Leader Kevin McCarthy, R-Calif., urged his colleagues to “reject this deeply flawed bill” and “start over” in remarks before the vote. The Senate approved the bill on Wednesday by a vote of 64-33, drawing the support of 17 Republicans. Among those positive votes was Senate Minority Leader Mitch McConnell, R-Ky., who previously warned that Republicans would not support the China Competition Bill if Democrats continued to pursue an unrelated reconciliation package.
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Read more about CNBC’s political coverage: Hours after Wednesday’s bipartisan Senate vote, Senate Majority Leader Chuck Schumer, DN.Y., and Sen. Joe Manchin, DW.Va., revealed they have reached an agreement on a sweeping reconciliation bill. They hope to pass that package next week with a simple majority in the Senate, which is evenly split between Republicans and Democrats with Vice President Kamala Harris casting the tie-breaking votes. Shortly after that deal was announced, House Republican leaders urged their members to vote against the Chip and Science Act. They argued against providing multibillion-dollar subsidies to chipmakers at a time of historically high inflation, while also noting the timing of the Democratic reconciliation deal. “The Democrats’ partisan agenda gave us record inflation and now they are poised to lead our country into a crushing recession,” the office of House Minority Whip Steve Scalise, R-La., said in a memo Wednesday night. Republicans reiterated this new stance during debates before the vote. Rep. Frank Lucas, the top Republican on the House Science Committee, where many of the bill’s provisions were first defeated, said he would unfortunately vote against it because it has been “irreversibly” tied to the reconciliation plan. The chairman of that committee, Rep. Eddie Bernice Johnson, R-Texas, responded by calling on all lawmakers to “put politics aside” and vote for the bipartisan bill. Some Republicans who opposed the bill on its merits said it lacked “guardrails” to prevent any of the funding from falling into Chinese hands. Other critics have argued that the US would have to spend many billions more to have a real chance of competing with the world’s top chipmakers. But supporters of the bill say it’s vital to America’s economy and national security to make more chips, which are increasingly critical components in a vast array of products, including consumer electronics, cars, health care equipment and weapon systems. The brands were in short supply during the Covid-19 pandemic. Factory shutdowns at the start of the outbreak limited chip production in Asia, while consumer demand for cars and upgraded home electronics that require the chips increased during the restrictions. The U.S. share of global chip production has also fallen sharply in recent decades, while China and other nations have invested heavily in the industry. The US also makes some of the most advanced types of semiconductors, which are largely produced in Taiwan, the focus of growing political tensions with China.
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Many modern wars require sophisticated semiconductors — each Javelin missile launch system contains hundreds, for example — leading U.S. defense officials to worry about the country’s dependence on foreign producers for its chip supply. Biden also blamed the chip shortage for the hyperinflation that has plagued his presidency. A shortage of chips available to build new cars has been linked to rising prices for used cars, pushing inflation higher. “America invented the semiconductor. It’s time to bring it home,” Biden said this week.
