Key Republicans are poking holes in a $52 billion incentive for U.S. semiconductor manufacturers included in Congress’ massive China competition bill as the Senate prepares to inch the legislation forward and into a tough round of negotiations with the House.
Industry leaders say the measure is vital for U.S. manufacturers to remain competitive with Chinese other foreign producers. And lawmakers from both sides of the aisle have pointed to recent semiconductor shortages as evidence that Congress needs to act fast.
But Sen. Rick Scott, Florida Republican, said the measure amounts to a massive government handout to a hugely profitable industry, with little return for the taxpayer.
“I keep asking, ‘Where is the return?’ ” Mr. Scott said Wednesday. “I’m sick and tired of all of these bills. You get nothing back. We just spend peoples’ money, and we get absolutely nothing back.”
He said that while top industry executives have made the case for how the boost would benefit their companies, Mr. Scott said none have made the case as to how the boost will benefit the taxpayer.
For many Republicans, the $52 billion boost for semiconductor manufacturing has remained one of the more palatable provisions included in both versions of omnibus China competing bills that have inched their way through Congress over the past year.
The Senate’s $250 billion U.S. Innovation and Competition Act passed in June with the support of 18 Republicans and 50 Democrats.
The $335 billion House counterpart, the America COMPETES Act, includes a hodgepodge of spending including $8 billion to help developing countries address climate change, funding to make the U.S. less reliant on Chinese solar technology, and $45 billion to shore up U.S. supply chains.
House Republicans railed against the bill, which passed 222 to 210 last month, as a “foreign policy failure” that funnels taxpayer dollars into an “unaccountable U.N. slush fund”
President Biden has pressed Congress for quick passage of the sweeping legislation but after months of delays, the Senate has just this week begun the process to set up final negotiations to work out key differences between the two versions.
Chief executives of leading U.S. semiconductor manufacturers urged members of the Senate Commerce Committee on Wednesday to quickly pass the measure.
“Our economic and national security are dependent on semiconductors,” Intel Corp.’s Chief Executive Officer Patrick Gelsinger told members of the committee. “Digital transformation has led to unprecedented demand for chips, made more acute by the COVID pandemic and global disruptions in our supply chain. The chip shortage cost the U.S. economy $240 billion last year. We now expect the shortage to continue into at least 2024.”
But Mr. Scott said the executives still fell short in showing significant upside for taxpayers.
“You guys want us to spend $52 billion but nobody comes back and says ‘okay for $52 billion, the taxpayers of this country will get a certain dollar back,” Mr. Scott told the executives during the hearing. “None of you, if you were the fiduciary would say ‘I’m going to do it without getting a return.’”
Mr. Gelsinger pushed back, saying the investment would bring states revenues, and added that “it’s also about returning this industry from Asia to American soil.”
“It’s also about national defense,” he said. “These are policy issues for the nation that stretch well beyond just the economic direct benefits associated with it.”
During the hearing, Mr. Scott also pressed Mr. Gelsinger for apologizing to the Chinese Communist Party in December in response to a dustup over a letter Intel sent telling its suppliers not to source products or services from China’s Xinjiang region after President Biden signed the Uyghur Forced Labor Prevention Act into law.
Mr. Gelsinger stood by the move when pressed.
“Our letter makes it very clear that we do not support slave labor anywhere in the world,” Mr. Gelsinger said. “However as a global letter, we shouldn’t have been calling out any particular region.”
Mr. Scott was incensed by the response.
“He defended apologizing to China over our sanction,” Mr. Scott told reporters after the hearing. “He defended it. And then he said, ‘Well, we’re going to be a global company,’ which meant that when Taiwan gets invaded, he’s going to keep doing business. That’s an American company that decided they’re not an American company in my opinion.”
Mr. Scott was joined by Sen. Ron Johnson, Wisconsin Republican, in a discussion with reporters following the hearing in which both Senators drilled into the shortfalls they see in the bills.
Mr. Scott said it should not be on the U.S. taxpayers to incentivize American companies not to manufacture in China.
“If you buy a house in a bad neighborhood and it gets worse, whose fault is that?” he said. “Yours. It’s not our government’s fault. They put their money into a bad neighborhood: China. I’m not bailing them out. It’s a bad neighborhood.”
• Joseph Clark can be reached at jclark@washingtontimes.com.
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