Senate passes $280 billion industrial policy bill to counter China
By Catie Edmondson
The Senate on Wednesday passed an expansive $280 billion bill aimed at building up America’s manufacturing and technological edge to counter China, embracing in an overwhelming bipartisan vote the most significant government intervention in industrial policy in decades.
The legislation reflected a remarkable and rare consensus in a polarized Congress in favor of forging a long-term strategy to address the nation’s intensifying geopolitical rivalry with Beijing. The plan is centered around investing federal money into cutting-edge technologies and innovations to bolster the nation’s industrial, technological and military strength.
The measure passed 64-33, with 17 Republicans voting in favor. The bipartisan support illustrated how commercial and military competition with Beijing — as well as the promise of thousands of new American jobs — has dramatically shifted long-standing party orthodoxies, generating agreement among Republicans who once had eschewed government intervention in the markets and Democrats who had resisted showering big companies with federal largess.
“No country’s government — even a strong country like ours — can afford to sit on the sidelines,” Sen. Chuck Schumer, D-N.Y., the majority leader, who helped to spearhead the measure, said in an interview. “I think it’s a sea change that will stay.”
The legislation will next be considered by the House, where it is expected to pass with some Republican support. President Joe Biden, who has backed the package for more than a year, could sign it into law as early as this week.
The bill, a convergence of economic and national security policy, would provide $52 billion in subsidies and additional tax credits to companies that manufacture chips in the United States. It also would add $200 billion for scientific research, especially into artificial intelligence, robotics, quantum computing and a variety of other technologies.
The bill calls for pouring $10 billion into the Department of Commerce — which would also dole out the chips subsidies to companies that apply — to create 20 “regional technology hubs” across the country. The brainchild of Sen. Todd Young, R-Ind., and Schumer, the hubs would aim to link together research universities with private industry in an effort to create Silicon Valley-like centers for technology innovation in areas hollowed out by globalization.
The legislation would steer billions to the Department of Energy and the National Science Foundation to promote both basic research and research and development into advanced semiconductor manufacturing, as well as workforce development programs, in an effort to build a labor pipeline for a slew of emerging industries.
The effort has marked a foray into industrial policy that has had little precedent in recent American history, raising myriad questions about how the Biden administration and Congress would implement and oversee a major initiative involving hundreds of billions of taxpayer dollars.
The passage of the legislation was the culmination of years of effort that in Schumer’s telling began in the Senate gym in 2019, when he approached Young with the idea. Young, a fellow China hawk, had previously collaborated with Democrats on foreign policy.
In the end, the Senate support was made possible only by an unlikely collision of factors: a pandemic that laid bare the costs of a global semiconductor shortage, heavy lobbying from the chip industry, Young’s persistence in urging his colleagues to break with party orthodoxy and support the bill, and Schumer’s ascension to the top job in the Senate.
Many senators, including Republicans, saw the legislation as a critical step to strengthen America’s semiconductor manufacturing abilities as the nation has become perilously reliant on foreign countries — especially an increasingly vulnerable Taiwan — for advanced chips.
Schumer said it had been not too difficult to rally votes from Democrats, who tend to be less averse to government spending. But he also nodded to support from Republicans, including Sen. Mitch McConnell of Kentucky, the minority leader: “To their credit, 17 Republicans, including McConnell, came in and said, ‘This is one expenditure we should make.’”
The legislation, which was known in Washington by an ever-changing carousel of lofty-sounding names, has defied easy definition. At more than 1,000 pages long, it is at once a research and development bill, a near-term and long-term jobs bill, a manufacturing bill and a semiconductors bill.
Enactment of the legislation is considered a critical step to strengthening America’s semiconductor abilities when the share of modern manufacturing capacity in the United States has plummeted to 12%. That has left the nation increasingly reliant on foreign countries amid a chip shortage that has sent shock waves through the global supply chain.
The subsidies for chip companies were expected to produce, in the short term, tens of thousands of jobs, with manufacturers pledging to build new factories or expand existing plants in Ohio, Texas, Arizona, Idaho and New York. While chip companies will not immediately receive the federal money, several of them had said they would make business decisions in the coming weeks based on whether they received assurances that the money would soon be coming.
The bill also seeks to create research and development and manufacturing jobs in the long run. It includes provisions aimed at building up pipelines of workers — through workforce development grants and other programs — concentrated in once-booming industrial hubs hollowed out by corporate offshoring.
In an interview, Young described the legislation as an effort to equip American workers hurt by globalization with jobs in cutting-edge fields that would also help reduce the nation’s dependence on China.
“These technologies are key to our national security,” Young said. “We’re actually giving rank-and-file Americans an opportunity, as it relates to chip manufacturing, for example, to play a meaningful role, not only in supporting their families, but also harnessing our creativity, talents and hard work, to win the 21st century.”