Congress is looking for a compromise to solve the big problem in the supply chain: a shortage of computer chips
A global shortage of computer chips has made it harder for consumers to get their hands on cars, computers and other modern necessities, so Congress is seeking to boost US chip manufacturing and research with billions of dollars from the federal government.
The House and Senate have passed major legislation on the issue, and the effort is one of lawmakers’ last opportunities before November elections to show voters that they are addressing the nation strained supply chains.
They must now resolve the considerable differences between the two bills. And Senate Republicans are already digging in before negotiations officially begin.
President Joe Biden has made semiconductor legislation a top priority, but he will need the support of 10 Senate Republicans, and possibly more, to get a bill to his desk. Senate Republican Leader Mitch McConnell underscored that point when congressional leaders recently announced which lawmakers would serve on the committee tasked with reconciling the two bills.
“Without major concessions and changes from House Democrats, this legislation has no chance of becoming law,” McConnell said.
House Democrats say their voices need to be heard in negotiations.
“We need to make sure everyone has a say,” said Rep. Suzan DelBene, D-Wash., chair of the New Democratic Coalition, a group that has 19 members participating in the negotiations. “We have a strong bill in the House, and I think there are important things there that the Senate should consider as well.
The Senate bill is expected to increase spending by about $250 billion over 10 years. The House bill would increase spending by more than $400 billion over the period.
Where there’s a lot of agreement
Senate and House bills allocate more than $52 billion to semiconductor production and research. Federal government grants and loans would subsidize part of the cost of building or renovating semiconductor factories.
“Chip funding is absolutely the foundation of this bill — it’s a bipartisan foundation,” said Josh Teitelbaum, senior counsel at Akin Gump, a law and lobbying firm. “I think that’s what drives this to the finish line.”
Both bills authorize a large increase in spending by the National Science Foundation, but they have different priorities for funded research.
The Senate bill provides $29 billion over five years for a new direction focused on strengthening American leadership in artificial intelligence, semiconductors, robotics and other advanced technologies.
The House bill provides $13.3 billion over five years for a new Science and Engineering Solutions Directorate. It lists climate change, environmental sustainability, and social and economic inequalities as part of management priorities.
Both sides will have to work out their competing visions for the National Science Foundation and the new technology direction.
Both bills also establish regional tech hubs — with the Senate committing $10 billion to the program and the House committing $7 billion. The Senate bill calls for 20 such centers, while the House bill authorizes at least 10.
Seed funds would go to regional organizations seeking to advance various economic and national security priorities.
The approach has bipartisan support from lawmakers with large rural and minority constituencies who want to make sure money isn’t funneled into universities or communities where a lot of tech research is already being done.
Where there are major differences
The bills diverge on supply chain issues, trade, immigration and climate change, to name just a few areas of disagreement.
One of the most important is a $45 billion program in the House bill to improve supply chains in the United States. There was no such provision in the Senate bill. The money would provide grants, loans or loan guarantees to businesses, local governments and tribes trying to build or relocate manufacturing plants producing essential goods.
“It’s a real area of focus for businesses and communities that want to try and bring manufacturing back,” Teitelbaum said. “There is a lot of interest in including this funding in the final package.”
Another striking difference concerns trade. The Chamber reauthorizes a program that provides training and financial assistance to those who lose their jobs or have their hours reduced due to increased imports. The Senate does not have such a provision.
“He’s not going to budge without business adjustment assistance,” Rep. Earl Blumenauer, D-Ore., said of the bill.
Meanwhile, the Senate bill includes a trade provision that would exclude more products from the tariffs the Trump administration has put in place on goods imported from China. These exclusions have almost all expired. The Senate bill restores them, a priority of business groups such as the U.S. Chamber of Commerce.
The House bill deals with immigration, while the Senate bill does not. It would create a new category of visa for entrepreneurs and allow those with stakes in successful businesses to apply to become lawful permanent residents.
The House bill, unlike the Senate bill, also touches on climate change. It is committing $8 billion to a fund that helps developing countries adapt to climate change. This could be a failure for Republicans, who oppose the use of US taxpayers’ money for this purpose.
No one expects negotiations to be easy.
“I have a hard time explaining to my friends and constituents,” said Sen. John Cornyn, R-Texas, “that when the White House is in favor of something, when the Democrats are in favor of something, the Republicans are in favor of something, the House is in favor of it and the Senate is in favor of it, we still can’t get it done, but I hope we take advantage of this opportunity.