Bumps, bipartisanship in long fight over semiconductor bill

By JOSH BOAK
Associated press

WASHINGTON (AP) — Five weeks ago, top aides to the Biden administration gathered for their regular Thursday morning meeting on the passage of a bill to revive the U.S. computer chip industry, fearing that he is in danger.

After 18 months, the bipartisan effort to provide $52 billion for semiconductors was nearing the finish line. But they feared Senate Republican Leader Mitch McConnell would block it.

It wasn’t just another so-called bill. Many meeting attendees had attended several Situation Room briefings on scary scenarios if the deal stalled. They had come to believe that the very trajectory of the economy and national security were at stake.

Billions for computer chips and scientific research, they argued, could help reduce inflation, create new factory jobs, defend the United States and its allies, and maintain an edge in the face of a Ambitious and aggressive China.

More than 90% of advanced chips come from Taiwan. If Taiwan were invaded or the shipping channels closed, the United States and much of the world would face a cascading economic crisis and find the weapon systems intended to defend its citizens impossible to maintain and upgrade. day.

The Biden team decided to ignore any possible threat from McConnell as a “false choice” and continue to work with Republican senators who had supported the bill, such as John Cornyn of Texas, Todd Young of Indiana and Roger Wicker of Mississippi.

Brian Deese, director of the White House National Economic Council, recalled the sentiment that emerged from the meeting: “There has been too much progress, too much confidence and there is too much at stake” to see the effort stall. now. “We’re going to keep our heads down and move forward.”

Hours later, McConnell swore on Twitter that the semiconductor bill would be dead if Democratic senators tried to pass a separate budget and national spending package in a party vote.

But the Kentucky senator’s gamble would ultimately fail.

President Joe Biden will soon sign into law the $280 billion CHIPS and Science Act – which also includes substantial funds for scientific research. The event was delayed by Biden’s rebound case of COVID-19. This account of how the bill was crafted is based on interviews with 11 Biden administration and congressional officials, most of whom spoke on condition of anonymity to discuss private conversations.

The back story reveals the complexities of bipartisanship, even when all parties agree on the need for action.

McConnell threatened to block semiconductor investment even if he supported the idea, hoping to avoid separate Democratic legislation. Biden’s team took the unusual step of enlisting former members of the Trump administration — a group typically reviled by Democrats — to find Republican votes. There were GOP lawmakers such as Oklahoma Rep. Frank Lucas who helped craft the bill but ultimately felt compelled to vote against it, unhappy with the Democratic tax increases and spending that may soon follow.

“House Republicans have worked in good faith throughout this time to achieve consensus legislation that can be passed by both houses,” Lucas said in a speech to the House last week. “But time and time again we have been thwarted as Democratic leaders have moved the goalposts, halted the process and chosen their partisan and divisive policies.”

For most of the process, the technical nature of computer chips and scientific research meant talks could take place beyond the din of partisan bickering. Both sides knew that government-funded research after World War II eventually led to the internet, MRIs, coronavirus vaccines and other innovations shaping the world today. It was only towards the end, as success drew closer, that the policy was publicly amplified.

According to administration officials, the bill was approved by Congress last week because of a deep coalition and tireless persistence. But as many Republicans interpret events, they provided key support and then got double-crossed.

McConnell’s two-week blockade ended after West Virginia Sen. Joe Manchin said July 14 that he broadly opposes his fellow Democrats’ spending and tax plans. Assuming Biden’s broader agenda is frozen, Senate Republicans could confidently vote for the computer chip bill.

But four hours after the chip bill passed the Senate on July 27, Manchin announced a major deal with Senate Democratic Leader Chuck Schumer. There was $369 billion to fight climate change, a 15% minimum corporate tax, lower prescription drug prices and some $300 billion in deficit reduction – the kind of package McConnell had wanted to stop. It also cast doubt on Republican support in the House.

In the end, however, Democrats still got help pushing the bill through 24 Republicans, some of whom said it was vital to protect national security.

The process had begun 18 months earlier during an Oval Office meeting with lawmakers on Feb. 25 last year, just a month into Biden’s presidency. The National Defense Authorization Act had approved investment in semiconductor development, but Congress still needed to appropriate the money to make it happen and a bipartisan group was urging the president to help.

“I’m 100% for this, but we need to do more than that,” Biden told them, saying supply chains also needed to be strengthened.

The issue remained largely in the background as the president pushed a $1.9 trillion coronavirus relief package through Congress in March 2021, then turned his attention to bipartisan talks on infrastructure and a vast national program that the White House has called “Build Back Better”.

But the risks of computer chip shortages became clearer in the spring and summer of 2021 as inflation continued to rise. A Commerce Department survey from September 2021 showed that manufacturers were on average just five days away from chip supplies, compared to 40 days before the pandemic.

On June 8, 2021, the Senate passed its version of the semiconductor bill, and the House followed suit eight months later. But there were key differences that would need to be reconciled by a joint conference committee.

Hoping to keep the pressure on this year, Biden used his State of the Union address in March to highlight an announcement by Intel to invest $20 billion in what could be eight semiconductor factories in outside of Columbus, Ohio – a commitment that depended on the bill’s final passage. Biden called Intel’s planned 1,000-acre (400-hectare) site a “field of dreams” on which “America’s future will be built.”

Deese and Commerce Secretary Gina Raimondo stepped up after the speech. Internal White House records show 85 meetings and events involving companies and stakeholders since the start of this year, with a focus on chip end users and equipment manufacturers and resellers. Starting in March, senior aides — including White House Chief of Staff Ron Klain, Director of Legislative Affairs Louisa Terrell, Deese, Raimondo and, occasionally, National Security Adviser Jake Sullivan — began their strategy meetings. Thursday morning on the initiative.

Biden’s team has also brought in veterans of the Trump administration. Among them were Robert Lighthizer, U.S. Trade Representative under Trump, and former national security advisers HR McMaster and Robert O’Brien.

The Commerce Secretary decided to cold-call Mike Pompeo, Trump’s former secretary of state, who openly criticized Biden in a February speech, promising “we’re making sure he doesn’t own a single branch of the government”.

“I’m always happy to help a fellow Italian,” Raimondo told Pompeo after asking for his help. Representatives for Pompeo did not respond to inquiries about this exchange.

By Raimondo’s tally, she had 250 meetings with companies and outside groups and about 300 meetings or calls with lawmakers on the bill over 18 months.

Meanwhile, Russia’s invasion of Ukraine had added to inflationary pressures around the world with soaring energy and food prices, a reminder of the devastation that would occur if access to semiconductors was lost. still disturbed.

Biden felt the pressure to have more domestic production as he visited the world’s largest semiconductor factory in May – a Samsung campus in South Korea with buildings decorated in the geometric colors of Dutch painter Piet Mondrian and almost as tall as the dome of the US Capitol, their sleek, futuristic interiors.

“We have to do it in America,” Biden told Raimondo. “We have to build this in America.”

But then Intel announced in late June that it would postpone the grand opening of its Ohio plant because the bill had not passed. Then McConnell decided to halt negotiations with a tweet on the last day of June. A few days later, France announced a new semiconductor factory made possible by the European Union’s $43.8 billion investment in chip production.

Raimondo felt a hollow in his stomach after learning of McConnell’s tweet, but continued to work on the phone over the weekend with Republicans.

“There must be a way,” she said. “Should the bill be reduced? Would he just go for the chips? You know, just constant commitment.

The Senate eventually passed the bill when it appeared the separate Democratic agenda was going nowhere. But after Manchin revived it with his Schumer deal last week, House Republicans mounted a last-minute push to stop the potato chip bill. White House officials kept calling lawmakers and it passed off as a bipartisan victory.

“I feel good about America today,” Raimondo said after the vote. “It takes a little longer than expected, a lot more drama than you would like, but it happens.”

Some Republicans were bitter. Texas Sen. Cornyn had warned of a recession if the United States lost access to advanced computer chips and had been a driving force behind the bill, but he felt Manchin had undermined the ability to negotiate well. faith.

“That trust has been gutted,” he said in a speech on the ground.

Biden received a memo saying the House passed the bill while he was in a meeting with the CEOs. He broke the news to loud applause and then, with plenty of extra work to do on the economy, moved the conversation forward.

“Sorry for the interruption,” he said.