Bumps, bipartisanship in long battle for semiconductor bill

WASHINGTON (AP) – Five weeks ago, senior aides to the Biden administration gathered for their regular Thursday morning meeting about passing a bill to revive the US computer chip sector, worried that the crisis would Maybe in.

After 18 months, the bipartisan effort to provide $52 billion for semiconductors was approaching the finish line. But they worried that Senate Republican leader Mitch McConnell might block it.

It wasn’t just another good bill. Several people in the meeting sat at several Situation Room briefings about the dire scenarios if the deal stalls. He was convinced that the pace of the economy and national security were at stake.

Billions for computer chips and scientific research, he argued, could help cut inflation, create new factory jobs, protect the US and its allies, and maintain an edge against an ambitious and aggressive China.

More than 90% of the advanced chips come from Taiwan. Should Taiwan be invaded or shipping channels closed, the US and much of the world would face a wider economic crisis and weapon systems to protect its citizens would be impossible to maintain and update.

The Biden team resolved to ignore any potential McConnell threats as a “wrong choice” and continue to work with Republican senators supporting the bill, such as John Cornyn of Texas, Todd Young of Indiana and Roger of Mississippi. Wicker.

Brian Dees, director of the White House National Economic Council, recalled the sentiment emanating from the meeting: “Too much progress has been made, too much trust and too much at stake” now to see the effort stall. “We’ll keep our heads down and move on.”

Just hours later, McConnell vowed on Twitter that the semiconductor bill would be dead if Democratic senators tried to push through a separate budget and household spending package on a party-line vote.

But the Kentucky senator’s gamble would eventually fail.

President Joe Biden will soon sign the $280 billion CHIPS and Science Act – which also includes substantial funding for scientific research. The event has been delayed by Biden’s rebound case for COVID-19. How the bill came together comes from 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 to act.

McConnell threatened to block semiconductor investment, even though he supported the idea, in hopes of leading to separate Democratic legislation. Biden’s team took the unusual step of enlisting former members of the Trump administration to find the Republican vote – a group commonly denounced by Democrats. Oklahoma Rep. There were GOP lawmakers such as Frank Lucas who helped draft the bill, but ultimately felt obligated to vote against it, who were unhappy with Democratic tax increases and spending that would soon come.

“House Republicans have been working in good faith this entire time to create a unanimous law that can be passed by both houses,” Lucas said in a speech to the House last week. “But over and over again, we have been failed because the Democratic leadership has moved the goalposts, shut down the process, and chose its own divisive, partisan policies.”

For most processes, the technical nature of computer chips and scientific research meant that negotiations could go beyond the noise of partisan controversy. Both sides knew that government-funded research after World War II eventually led to the Internet, MRIs, coronavirus vaccines and other innovations that shape today’s world. It was only toward the end that, as success drew near, the politics were extended publicly.

As administration officials watch, the bill passed Congress last week thanks to a deep coalition and unbelievable perseverance. But as many Republicans interpret the events as they provided significant support, then were double-crossed.

McConnell’s two-week blockade ended after West Virginia Sen. Joe Manchin said on July 14 that he largely opposed the spending and tax plans of his fellow Democrats. Assuming that Biden’s broader agenda was on the ice, Senate Republicans could confidently vote for the computer chips bill.

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

In the end, though, Democrats still got help from 24 Republicans to pass the bill, some of whom said it was important to protect national security.

The process began 18 months ago with lawmakers in an Oval Office meeting on February 25 last year, just a month after Biden’s presidency. The National Defense Authorization Act approved investment in semiconductor development, but Congress still had to use the money to do so and a bipartisan group was urging the president to help.

“I’m 100% for it, but we need to do more than that,” Biden told him, acknowledging that the supply chain also needs to be strengthened.

The issue largely remained 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 infrastructure talks and a broader domestic agenda, which the White House called ” Build Back Better”.

But the risks of computer chip shortages became apparent in the spring and summer of 2021 as inflation continued to rise. A survey by the Department of Commerce from September 2021 showed that manufacturers had reduced their supply of chips by an average of only five days, 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 important differences which would have to be resolved by a Joint Conference Committee.

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

DZ and Commerce Secretary Gina Raimondo intensified their reach after the speech. Internal White House records show 85 meetings and events involving companies and stakeholders since the beginning of this year, with a focus on end users of chips and equipment manufacturers and dealers. Beginning in March, senior aides including White House Chief of Staff Ron Klein, Director of Legislative Affairs Louisa Terrell, Deez, Raimondo and occasionally, National Security Adviser Jake Sullivan began their Thursday morning strategy meeting on the initiative.

Biden’s team also took help from veterans of the Trump administration. Among them were Robert Lighthizer, the US trade representative under Trump, and former national security advisers H.R. McMaster and Robert O’Brien.

The commerce secretary decided to shelve Trump’s former Secretary of State Mike Pompeo, who openly criticized Biden in a February speech, saying, “We’re making sure he doesn’t have a single branch of government “

“I am always happy to help a fellow Italian,” Raimondo recalled after asking Pompeo for his assistance. Pompeo representatives did not respond to requests for this exchange.

By Raimondo’s count, she held 250 meetings with businesses and outside groups and about 300 meetings or calls with lawmakers on the bill in 18 months.

Meanwhile, Russia’s invasion of Ukraine worsened inflationary pressures around the world as energy and food costs soared, a reminder of the devastation that would occur if access to semiconductors was further blocked.

Biden felt the pressure of more domestic production when visiting the world’s largest semiconductor facility in May—the Samsung complex in South Korea, which has buildings decorated in geometric colors by Dutch painter Piet Mondrian and nearly as tall as the US Capitol dome. Clean and futuristic inside.

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

But then Intel announced in late June that it would postpone groundbreaking for its Ohio plant because the bill didn’t pass. Then McConnell decided to stop the conversation with a tweet on the last day of June. Several days later, France announced a new semiconductor plant, made possible by the EU’s own $43.8 billion investment in chip production.

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

“There must be a way,” she said. “Should we shorten the bill? Will he just go for the chips? You know, just constant engagement. ,

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

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

Some Republicans were bitter. Texas Sen. Cornyn warned of a recession if the US lost access to advanced computer chips and was a driving force behind the bill, yet he felt Manchin undermined his ability to negotiate in good faith.

“That belief was eroded,” he said in a floor speech.

Biden received a note that the House had passed the bill when he was meeting with the CEO. He announced the news to thunderous applause and then, with lots of additional work on the economy, carried on with the conversation.

“Sorry for the interruption,” he said.

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