Senate passes $280 billion industrial policy bill to counter China

WASHINGTON — The Senate on Wednesday passed a sweeping $280 billion bill aimed at bolstering America’s manufacturing and technological advantage to counter China, passing in a bipartisan vote overwhelming the most significant government intervention in politics industry for decades.

The legislation reflected a remarkable and rare consensus in an otherwise polarized Congress in favor of crafting a long-term strategy to deal with the country’s escalating geopolitical rivalry with Beijing, centered on US investment. federal money in advanced technologies and innovations to build industrial, technological and military strength.

He passed a lopsided bipartisan vote of 64 to 33, with 17 Republicans voting in support. Margin illustrated how trade and military competition with Beijing — along with the promise of thousands of new American jobs — has radically changed long-held party orthodoxies, generating agreement among Republicans who had once shunned government intervention. on the markets and the Democrats who had withstood the rain. companies with federal largesse.

“No country government – even a strong country like ours – can afford to sit on the sidelines,” said Sen. Chuck Schumer, a New York Democrat and Majority Leader who helped lead the measure, in an interview. “I think it’s a radical change that will stick.”

The bill will then go through the House, where it is expected to pass with some Republican support. President Biden, who has backed the package for more than a year, could sign it into law as soon as this week.

The bill, a convergence of economic policy and national security, would provide $52 billion in additional subsidies and tax credits to companies that manufacture chips in the United States. It would also add $200 billion to scientific research, particularly in artificial intelligence, robotics, quantum computing and a range of other technologies.

Its passage was the culmination of a years-long effort that, according to Mr. Schumer’s account, began in the Senate gymnasium in 2019, when he approached Senator Todd Young, Republican of Indiana, with the idea. Mr. Young, another China hawk, had previously collaborated with Democrats on foreign policy.

Ultimately, this was only made possible by an unlikely collision of factors: a pandemic that laid bare the costs of a global semiconductor shortage, intense chip industry lobbying, the Mr. Young’s persistence in urging his colleagues to break with party orthodoxy and support the bill, and Mr. Schumer’s ascension to the highest office in the Senate.

Many senators, including Republicans, saw the legislation as a crucial step in bolstering America’s semiconductor manufacturing capabilities at a time when the nation has become dangerously dependent on foreign countries, especially an increasingly vulnerable Taiwan — for advanced chips.

A phalanx of former President Donald J. Trump’s national security advisers, from HR McMaster to Mike Pompeo, have spoken out in favor of the legislation, helping Republican lawmakers argue that voting for the bill would be a sufficiently warmongering decision.

Schumer said it hadn’t been too difficult to rally votes from Democrats, who tend to be less opposed to government spending. “But to their credit, 17 Republicans, including McConnell, came in and said, ‘That’s an expense we should be doing’.”

The legislation, which was known in Washington by an ever-changing carousel of lofty names, defied easy definition. At over 1,000 pages, it is both a research and development bill, a short-term and long-term employment bill, a on manufacturing and a bill on semiconductors.

Its initial version, written by Mr. Schumer and Mr. Young, was known as the Endless Frontier Act, a reference to the historical report of 1945 commissioned by President Franklin D. Roosevelt asking how the federal government could promote scientific progress and the workforce.

“New frontiers of the mind lie before us, and if they are launched with the same vision, the same boldness and the same dynamism with which we fought this war,” Mr. Roosevelt wrote at the time, “we can creating a fuller, more successful world, a fuller, more successful job and life.

The enactment of the legislation is seen as a crucial step in bolstering US semiconductor capabilities at a time when the share of modern manufacturing capacity in the US has fallen to 12%. This has left the nation increasingly dependent on foreign countries amid a shortage of chips that has sent shockwaves through the global supply chain.

The chip company grants were expected to immediately create tens of thousands of jobs, with manufacturers pledging to build new factories or expand existing ones in Ohio, Texas, Arizona, Idaho and New York.

The bill also aims to create jobs in research and development and long-term manufacturing, with provisions to build pipelines of workers – through workforce development grants and training. Other programs – concentrated in once booming industrial hubs hollowed out by the relocation of companies.

In an interview, Mr. Young described the legislation as an effort to equip American workers affected by globalization with jobs in cutting-edge fields that would also help reduce the country’s dependence on China.

“These technologies are critical to our national security,” Young said. “We are actually giving grassroots Americans an opportunity, when it comes to chip manufacturing, for example, to play a meaningful role, not only supporting their families, but also harnessing our creativity, talents, and hard work. , to win the 21st century.

The bill is expected to pave the way for the construction of factories across the country and, along with that, tens of thousands of jobs.

Chipmakers lobbied hardand often shamelessly, for subsidies, in recent months threatening out loud to dip their resources into building factories in foreign countries like Germany or Singapore if Congress did not quickly agree to flood them with money federal to stay in the United States.

Most senators, especially those representing states targeted by chip companies, saw these efforts as a reason to quickly pass the legislation. But they have particularly infuriated Independent Vermont Sen. Bernie Sanders, who has bluntly and frequently accused the successful leaders of such companies of undermining Congress.

“In order to make more profits, these companies took government money and used it to ship high-paying jobs overseas,” Sanders said. “Now, as a reward for this bad behavior, these same companies are in line to receive massive taxpayer assistance to undo the damage they have caused.”

On several occasions during the lifetime of the bill, it seemed doomed to collapse or drastic reduction, with long-term strategic provisions being reduced and only the most commercially and politically urgent measure , the remaining $52 billion in subsidies to chip companies.

The bill appeared in jeopardy late last month after Sen. Mitch McConnell, Republican of Kentucky and Majority Leader, announced he would not let it go ahead if Senate Democrats continued. to advance their social policy and tax plan, the centerpiece of Mr. Biden’s national agenda.

In a private conversation, Mr. Young asked Mr. McConnell to reconsider his decision.

Mr. McConnell “saw the short-term value proposition and, frankly, the importance of getting the chip legislation funded,” Mr. Young recalled.

Still, with Mr. McConnell’s position uncertain and other Republicans unwilling to commit to backing the measure, Mr. Schumer decided last week to force a quick vote on semiconductor subsidies, leaving open the possibility that the larger bill be set aside.

It sparked a last-ditch effort by Mr. Young to enlist the support of enough Republicans — at least 15, Mr. Schumer had told him — to restore critical investments in manufacturing and technology. For days, Mr. Young and his allies worked on the phone trying to win over Republicans, stressing the bill’s importance to national security and the opportunities it could bring to their states.

Ahead of the final vote on the passage at a private celebratory lunch on Tuesday, Mr Schumer gave his members his own pitch.

“This bill is going to have one of the largest and most profound effects we’ve ever had on America,” Schumer told Democratic senators. “A lot of your grandkids will have good paying jobs because of the vote you take.”

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