Jun 29, 2022 - Politics & Policy

Scoop: Schumer's CHIPS Act gambit

Chuck Schumer sticks his finger in the air
Photo: Brandon Bell/Getty Images

Senate Majority Leader Chuck Schumer (D-N.Y.) summoned a dozen Senate Democrats to his office last week with firm marching orders: Call your closest CEOs and ask them to press Republican senators on the China competition bill.

Why it matters: Schumer is trying to engineer an inside-outside pressure campaign to force Republicans to move faster on hammering out their differences with the House by mid-July.

  • Congressional Democrats and top Biden officials are getting nervous that legislation to provide approximately $50 billion to produce semiconductors domestically — as well as more than $100 billion for technology investments by the National Science Foundation — could wither on the vine.

What they're saying: "We must act urgently to pass this bill,” Schumer told Axios in a statement. "Other countries around the globe have mimicked our legislation and are making major investments in innovation and chip production."

  • "If we don't act quickly we could lose tens of thousands of good-paying jobs to Europe," he said.

Driving the news: Schumer huddled with some 13 Democratic conferees last Thursday to urge them to accelerate the negotiations — and get them to commit to calling 10 big-name CEOs to enlist their support in persuading Republicans.

  • Schumer, Senate Minority Leader Mitch McConnell (R-Ky.), House Speaker Nancy Pelosi (D-Calif.) and House Minority Leader Kevin McCarthy met two weeks ago to discuss the bill. Negotiations have continued at the staff level, with policy directors meeting on Monday.
  • Republicans are demanding the House essentially accept the Senate version of the bill, which they say already represents a bipartisan compromise.
  • Last week, Democrats agreed to drop some of the more contentious House provisions — including the SAFE Banking Act, which would make it easier for cannabis business access to banking, and some of the more controversial climate provisions.

The big picture: The White House sees some version of the China competition bill — which has been known at various points as the Endless Frontiers Act, the COMPETES Act and USICA — as one of the president's last chances to pass a major bipartisan bill this year.

  • Congress came together last year on the $1.2 trillion bipartisan infrastructure bill and has recently found some common ground on Ukraine aid and gun legislation.

What we're watching: Big business is getting impatient with the political deadlock, meaning CEOs may not need much prodding to start dialing GOP senators.

  • Last week, Intel warned that construction on its planned $20 billion Ohio chip factory could be delayed if Congress doesn’t pass some version of a China competition bill.
  • A Taiwanese minister also warned this week that the pace of construction on a $12 billion factory in Arizona being built by Taiwan Semiconductor Manufacturing Company — the world's most valuable chips company — depends on Congress passing federal subsidies.

Go deeper: There's some discussion about trimming down the bill and just passing the billions in new money for semiconductors and the National Science Foundation.

  • “Two years ago the Senate passed legislation to advance domestic production of semiconductors — a blueprint that was copied by countries all over the world," Sen. Mark Warner (D-Va.) told Axios.
  • "It will be a monumental mistake if Congress fails to wrap these negotiations ASAP and get this vital funding out the door," he said.
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