WASHINGTON (Washington Insider Magazine) – Now that Senator Joe Manchin of West Virginia has rejected the idea of levying higher taxes on the wealthy and corporations as part of a separate Democratic-only effort, major Republicans are warming up to passing a legislation that provides nearly $52 billion in incentives for the semiconductor industry.
Despite having bipartisan backing, the computer chips law appeared to be in peril 3 weeks ago. At that point, Mitch McConnell, the leader of the Senate’s Republicans, declared that such a bill would not be introduced as long as Democrats sought what he termed a “partisan reconciliation bill.” However, Manchin’s choice to significantly curtail the Democratic campaign and drop the tax increases seems to have created an opening for Republican support on semiconductors.
Manchin’s decision on taxes, according to Sen. John Cornyn of Texas, who supported McConnell’s strategy, indicates “we’re in a position where we can go ahead with the chip financing and other associated items,” he said on the Senate floor on Monday.
According to ABC NEWS, the Biden administration is urging Congress to move swiftly on the semiconductor bill before they go on their one-month August recess. Chip manufacturers are now deciding where to establish factories in order to meet demand from throughout the world, according to Commerce Secretary Gina Raimondo, and overseas rivals are courting those businesses with financial help.
The measure that the Senate is set to consider this week is significantly more limited than what both chambers of Congress have already passed. The scaled-back proposal includes the $52 billion in financial incentives and research funding in addition to an additional $1.5 billion for a fund that would promote competition among companies developing 5G networks, including Huawei. Additionally, a 25% investment tax credit would be implemented under the law for investments made in the semiconductor industry.
According to a draft of the law acquired by The Associated Press, recipients of funding would also be prohibited from developing new production plans for certain sophisticated semiconductors in China or any unfavorable foreign nation.
Senate Majority Leader Chuck Schumer said Monday that he wants members of the Senate and House to continue working on a more comprehensive bill to support the semiconductor market and scientific research in the United States, but for the time being, he plans to hold the first procedural vote on the more restricted proposal on Tuesday. He said that manufacturers wouldn’t hold out indefinitely.
The financial incentives for the semiconductor chip sector have been hailed by the Biden office as a means of generating employment in the United States while also reducing long-term inflationary pressures on computers, cars, and other high-tech items that depend on computer chips.