Happy Tuesday! On this date in 1854, Henry David Thoreau’s “Walden” was first published. Here are some more recent developments:
Taking Aim at China, Biden Signs $280 Billion Tech Investment Bill
Calling it a “once-in-a-generation investment in America itself,” President Joe Biden on Tuesday signed a $280 billion legislative package into law that aims to boost semiconductor manufacturing and scientific research in the U.S.
Intended to make the U.S. more competitive with China in key technologies, the legislation includes roughly $52 billion for computer chip manufacturers to spur domestic production. About $39 billion will be used to directly subsidize the construction and expansion of U.S. semiconductor factories, while $11 billion is for research into new technologies, as well as workforce development. And $1.5 billion will be made available through the Public Wireless Supply Chain Innovation Fund, with the goal of helping U.S. telecommunications companies compete with Chinese firms, most notably the telecom giant Huawei.
“We need to make these chips here in America to bring down everyday costs and create jobs,” Biden said at the signing ceremony at the White House. “Unfortunately, we produce zero percent of these advanced chips and China is trying to move way ahead of us to manufacture these sophisticated chips as well. … The United States must lead the world in the production of these advanced chips; this law will do exactly that.”
The bill also includes an $82.5 billion increase in funding for scientific research and development, to be funneled over five years through the National Science Foundation and the Department of Energy's Office of Science. About $13 billion of that will target STEM (science, technology, engineering and math) education through scholarships and fellowships.
A turn toward industrial policy: The bill marks a departure for many lawmakers who have opposed direct federal subsidies for manufacturers, no matter what the product.
“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 longstanding 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,” The New York Times’ Catie Edmondson wrote when the Senate passed the bill in July.
A large portion of the subsidy money is expected to go to a handful of major manufacturers, including Intel, Taiwan Semiconductor Manufacturing and South Korea’s Samsung Electronics, all of which are building new facilities in the U.S., including a $20 billion plant in Ohio for Intel. Earlier Tuesday, Micron Technology announced that it will invest $40 billion in domestic memory-chip manufacturing, which the company said could create as many as 40,000 new jobs.
Micron CEO Sanjay Mehrotra, who attended the bill signing along with other industry leaders, pointed out that less than 2% of memory chips are currently produced in the U.S. “With Micron’s commitment, it will enable us to produce one in 10 chips of the global memory consumption here in the U.S.,” he said.
As the White House noted Tuesday, Qualcomm and GlobalFoundries have announced a new partnership that will involve a more than $4 billion investment in chip manufacturing in New York state. Qualcomm said it plans to increase its U.S. chip production by 50% over the next five years.
The Timeline for Democrats' New Health Care Changes
The climate provisions in Democrats’ $740 billion Inflation Reduction Act have gotten plenty of attention. New York Times columnist David Leonhardt suggests that the health care provisions in the bill have gone relatively overlooked — and that’s despite those changes being the most significant to our health care system since Obamacare passed in 2010.
The bill, as we’ve described before, will allow Medicare to negotiate some drug prices for the first time, and it would cap out-of-pocket costs and monthly insulin expenses for Medicare enrollees. Axios’s Cailtin Owens and Adriel Bettelheim outline some key changes: “Nearly 1.5 million would benefit from a $2,000 cap on out-of-pocket spending in Medicare's Part D drug benefit, and 1.3 million from the elimination of a requirement they pay 5% of total drug costs if they exceed a catastrophic coverage threshold, the Kaiser Family Foundation estimates, based on 2020 data.”
Still, critics of the legislation argue that people covered by their employers won’t see benefits (because the legislation had to be changed to comply with the Senate’s budget process rules) — and Democrats have to worry that even patients who do benefit won’t see those savings for some time.
Here’s the Kaiser Family Foundation’s chart laying out the timeline of health care changes.
Quotes of the Day
“The minimum tax has always been like a 10th-best solution, and when you start taking out more elements, is it now the 12th-best solution?”
– Steven M. Rosenthal, a senior fellow at the Urban-Brookings Tax Policy Center, quoted in The New York Times about the new corporate minimum tax Democrats are poised to enact. Tax experts have long favored raising the corporate tax rate or cutting back on deductions and loopholes, but Sen. Kyrsten Sinema (D-AZ) objected to raising rates, forcing Democrats to look for other ways to raise revenue in their Inflation Reduction Act. Rosenthal told the Times that relatively few companies would face the new minimum tax: “There may be more government staff dedicated to auditing these companies than there are companies subject to the tax.”
“There have been few summers in modern history in which Congress has done as much as it has this year. From passage of expanded health care for sick veterans to the gun-safety bill to the Inflation Reduction Act, Democrats have been able to muscle through the most consequential series of legislation since the Affordable Care Act.”
— Jennifer Rubin, a conservative columnist at The Washington Post, tipping her hat to Democrats even as she calls for them to do a few more things before the midterm elections: ban stock trading by members of Congress, reform the electoral system and approve a tech antitrust bill. “Democrats have had a remarkably productive summer,” Rubin writes. “With a few finishing touches in the fall, they could go into the midterms with a head of steam. Now is no time to rest on their laurels.”
“We kept hearing ‘Let’s go Brandon,’ so we did.”
— An unnamed White House aide, quoted by Politico, celebrating a string of Biden successes and gloating just a bit by re-appropriating the phrase used by the president’s opponents.
- Biden Signs Bill Boosting US Chip Manufacturing as He Kicks Off Victory Lap – CNN
- How a Last-Minute Lobbying Blitz Watered Down a Climate Bill Tax – New York Times
- How Wall Street Wooed Sen. Kyrsten Sinema and Preserved Its Multi-Billion Dollar Carried Interest Tax Break – CNBC
- House Democrats Concede ‘Line in Sand’ Over Ending SALT Cap – Politico
- Schumer: Senate Will Vote Again on $35 Insulin Cap After GOP Blocked It – The Hill
- How the Inflation Reduction Act Could Lower Your Drug Costs – Time
- Landmark Climate and Health Care Bill Won’t Crush Corporate Profits, Goldman Sachs Says – CNN
- With Deal in Hand, Democrats Enter the Fall Armed With Something New: Hope – New York Times
- Ron Johnson Steps on Political Land Mine With Social Security, Medicare Comments – The Hill
- US Will Stretch Monkeypox Vaccine Supply With Smaller Doses – Associated Press
- Soaring Rent Prices Have Advocates Calling on White House to Intervene – Washington Post
- US to Help Clear Deadly Mines in Ukraine With $89 Million in Aid – Bloomberg
- US States Slash Taxes Most in Decades on Big Budget Surpluses – Bloomberg
- Public Pensions Suffer Worst Investment Quarter Since 2020 – Bloomberg
Views and Analysis
- The Way to Fight Inflation Without Rising Interest Rates and a Recession – Meg Jacobs and Isabella M. Weber, Washington Post
- How the Inflation Reduction Act Might Affect Your Health Care – Rachel Roubein, Washington Post
- Yes, the Inflation Reduction Act Is a Big Effing Deal – Michael Tomasky, The New Republic
- Why Does the IRS Need $80 Billion? Just Look at Its Cafeteria – Catherine Rampell, Washington Post
- How The Senate-Approved Corporate Minimum Tax Works – Thomas Brosy, Tax Policy Center
- The Senate Bill and Biden’s Pledge to Not Raise Taxes on People Making Less Than $400,000 – Glenn Kessler, Washington Post
- Did Democrats Just Save Civilization? – Paul Krugman, New York Times
- Corporate America Needs to Rethink Its Knee-Jerk Reaction to Democrats’ Tax Plans – Allison Morrow, CNN
- Democrats Paint a Target on Their Backs With IRS Cash Infusion – Hugh Hewitt, Washington Post
- 3 More Items Democrats Should Get Done Before the Midterms – Jennifer Rubin, Washington Post
- Was There a Biden Boom? – Paul Krugman, New York Times
- From Great Moderation to Great Stagflation – Nouriel Roubini, Project Syndicate
- Police Training Is Expensive and It's Still Not Enough – Stephen L. Carter, Bloomberg