Biden set to sign $280 billion CHIPS law, critics fear it will worsen debt and inflation

President Joe Biden is expected to sign the CHIPS Act, a $280 billion spending bill intended to incentivize US manufacturers to produce semiconductor chips in the United States.

Critics say the measure contains no accountability requirements for companies receiving taxpayers’ money, will increase the national debt and inflation by 40 years, and will not bolster national security.

The bill passed the US Senate by a vote of 64 to 33, with 17 Republicans joining Democrats in approving it. It passed the House by 243 votes to 187, with 24 Republicans joining 219 Democrats despite opposition from Republican leaders to the bill.

Biden voiced his support, tweeting, “Semiconductor chips are the building blocks of the modern economy – they power our smartphones and our cars. And for years the manufacturing was sent overseas. For the sake of American jobs and our economy, we need to make them at home. The CHIPS for America Act will achieve this.

Democratic Senate Majority Leader Chuck Schumer said the bill “will address the national shortage of semiconductor chips, reduce costs for American consumers, and spur scientific innovation and jobs.”

Key provisions of the bill include $52.7 billion in taxpayer-funded subsidies for U.S. chip manufacturing, a 25% semiconductor manufacturing tax credit, $1.5 billion dollars earmarked for technology development for US companies that claim to be dependent on foreign telecommunications, $10 billion earmarked for the Department of Commerce to develop 20 regional technology hubs, and guidelines to expand the federal government by expanding federal agencies.

The Congressional Budget Office says the bill allocates “about $200 billion over the period 2022-2031, primarily for research activities.”

A section of the bill directs the US Department of Energy to fund research facilities and infrastructure that will cost $5.9 billion. The CBO estimates this will increase direct spending by $3.1 billion over the 2022-2031 period.

Another section authorizes the National Aeronautics and Space Administration to enter into improved use leases through 2032, which will increase direct spending by $80 million over the 2022-31 period, according to the CBO.

Republican Texas Sen. John Cornyn, who joined Democrats in voting in favor of the measure, said it would “help kickstart domestic production of these semiconductors in a way that will prevent a vulnerability in our supply chain since 90% of these advanced semiconductors currently come from Asia.”

He also said that “it could create around 185,000 jobs each year as these new facilities are built. In the long term, this could create an additional 280,000 jobs online. Once these foundries are up and running, they will provide American-made semiconductors that can be used on everything from smartphones and cars to airplanes and missile defense systems.

The bill will also allow the United States to “compete”, “beat” and “overtake” China, he said.

Texas Governor Greg Abbott also welcomed the bill’s passage, saying it will help increase production in Texas, which he said is “a beacon of innovation and has remained the top exporter of semiconductors and other electronic components for eleven consecutive years”.

But Florida Sen. Rick Scott, who has urged his Senate and House colleagues to vote against the bill, says it is a “pro-China” bill that will “weaken the position of America on the world stage”.

With the United States now $30 trillion in debt, “spending another $280 billion that we don’t have,” he said, “sets a dangerous precedent for massive government-funded welfare. taxpayers for the most profitable corporations in the world, with no liability or guarantee of return on investment for the American people.

“Worse still, the bill lacks basic safeguards and would allow companies to use US taxpayers’ money to build factories in communist China and grow their share of the Chinese semiconductor market.

There is no requirement in the bill for manufacturers to build a certain number of factories in the United States, he added, or not to require them to contract out American jobs to the ‘foreign. The bill includes no chip production quota requirements for manufacturers and “works like a blank check with virtually no accountability measures to protect the massive taxpayer spending it authorizes and no return on investment requirements.” “.

It does not improve the national security of the United States and is rather a “huge spending bill funded by American taxpayers’ money that gives corporations and communist China all they want while leaving American workers and American families with little in return,” he said.