Democrats’ ambitious social agenda under President Joe Biden included child tax credits paid directly to families and support for green energy investment, among many other things, but like most of their plans, those programs have fallen by the wayside. Instead, Democrats are preparing to vote for $24 billion worth of tax credits intended to boost high-tech chip manufacturing in the U.S., part of a $76 billion package benefiting that industry.
As Politico’s Brian Faler reports, some lawmakers are disappointed by the party’s shift from pushing for public investment to further subsidizing private industry. “It looks terrible,” Sen. Michael Bennet (D-CO) told Politico.
Some Democrats emphasize that the tax credits are a matter of national security, ensuring that the country can manufacture a key piece of technology while boosting the economy. “This will create a lot of prosperity in my state, and provide a lot of people good-paying jobs,” said Sen. Sherrod Brown (D), whose home state of Ohio is expected to receive a new manufacturing facility.
Still, the relatively quick agreement on the contours of the semiconductor bill reminds some Democrats of what could have been with their larger spending package, if they had been able to win the cooperation of conservative members of their caucus like Sen. Joe Manchin (D-WV). “The ease with which lawmakers are moving the break contrasts with Democrats’ struggles with their reconciliation plans, though the semiconductor plan violates many of the conditions Manchin had laid down for that legislation,” Faler writes, citing the bill’s failure to cover all of its costs, as Manchin had insisted for the social spending bill.
One key difference is that subsidies for chip manufacturing have plenty of bipartisan support – as well as bipartisan opposition. Condemning the plan as “massive corporate welfare,” Senate Budget Committee Chair Bernie Sanders (I-VT) joined with some of his more conservative colleagues in opposing the bill.
“There is no doubt that there is a global shortage in microchips and semiconductors, which is making it harder for manufacturers to produce the cars, cellphones and electronic equipment that we need,” Sanders said. “But the question we should be asking is this: Should American taxpayers provide the microchip industry with a blank check of over $76 billion at a time when semiconductor companies are making tens of billions of dollars in profits and paying their executives exorbitant compensation packages? I think the answer to that question should be a resounding ‘No.’”
Across the aisle and on the other side of the Capitol, Rep. Kevin Brady of Texas – the senior Republican on the House Ways and Means Committee who played a key role in passing the Trump tax cuts in 2017 – expressed his opposition to the bill. “It would provide large subsidies to a limited group of companies, which creates, I think, an unjustified windfall for companies with projects already underway,” he said.
On top of that, the supposedly temporary tax breaks could end up sticking around. “As we know, there are a few temporary tax credits [already in the code] — they tend to get extended into eternity,” Brady said.