Would you like CHIPS with that?
When Joe Biden signed the CHIPS and Science Act into law last August, the White House heralded legislation that “will poise US workers, communities, and businesses to win the race for the twenty-first century” and help Americans “compete in and win the future.” Cut through this hype and the real point of this bipartisan, $52-billion legislation was no less significant: to reinvigorate a semiconductor industry that was born in America but moved overseas in recent years and, in doing so, to strike a major technological and economic blow in the new cold war with China.
However admirable the goals, there were always reasons to worry that the CHIPS Act may not live up to the hype. Industrial policy of this kind has offered poor return on investment in the past, and previous attempts to re-shore semiconductor manufacturing — a highly complicated process — have hit snags. Unfortunately, the more time has passed since the passage of the legislation, the more reason there is for CHIPS skepticism.
Last month, the Commerce Department attached a long list of preconditions to its semiconductor subsidies. These demands on companies setting up shop with government support were a laundry list of the Biden administration’s progressive priorities. Companies will have to offer child care for employees, use union workers, share “excessive profits” and will be limited in offering stock buybacks and dividends. These preconditions mean two of South Korea’s biggest manufacturers have said they won’t be applying for funding.
The Biden administration adding union jobs and free childcare to a government subsidy may not be a surprise, and semiconductor firms aren’t entitled to a blank check from US taxpayers. But it’s easy to see how these preconditions might be come fatal distractions from the already fiendish task of dragging vital semiconductor supply chains out of China’s reach.
If you were already worried about CHIPS’s chances of success, Politico brings bad news this morning. Brendan Bordelon and Caitlin Oprysko report on the K Street feeding frenzy that is the lobbying effort for companies desperate to get in on the action: “a startling array of companies are angling for a payday, some with an unclear connection to microchips. Among them are labor unions, the social media company Snap, FedEx, home heating and cooling companies, cryptocurrency exchange Coinbase and even the American Israel Public Affairs Committee, according to lobbying filings for the last three months of 2022.”
No wonder nervousness about how commerce secretary Gina Raimondo will spend the CHIPS money is intensifying. Absent from the administration’s implementation of the legislation is the laser-focus on the core problem it was designed to address. From the off, as the White House’s boosterish language would suggest, the law was made out to be something much broader than it should be. Last year, Raimondo heralded the bill as a way of “reimagining our national innovation ecosystem.”
The reason the bill attracted the bipartisan support it needed to pass was a compelling and narrow national security argument: the more chips made in America or an allied country, the safer our supply chain and the less leverage China has over the West. Unfortunately, however, the administration, with the help of K Street’s finest, seem to be distracted from this essential task.
On our radar
Turkey gives Finland the green light
Turkey has dropped its opposition to Finnish membership of NATO. The process of ratification will begin in the Turkish Parliament, President Tayyip Erdogan announced today.
Trump back on YouTube
Former president Donald Trump has been allowed back on YouTube. Trump was banned after January 6, and the company said they allowed his return after they “carefully evaluated the continued risk of real-world violence.”
Kerry flies commercial
Cockburn was surprised to spy John Kerry on a flight this week. The 2004 Democratic nominee for president gave him a respectful nod while on the phone in first class — though sadly Kerry wasn’t overheard doing anything juicy like floating himself as an alternate to Joe Biden, as he purportedly did in 2020.
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No Yellen required
Senator James Lankford of Oklahoma made Treasury secretary Janet Yellen look clueless during a Senate hearing yesterday.
Lankford began his turn with a list of issues he wants to discuss with Yellen, before zeroing-in on the current banking fiasco, asking Yellen: “Will the deposits in every community bank in Oklahoma, regardless of their size, be fully insured now? Will they get the same treatment that SVB just got or Signature Bank just got?”
Yellen said a bank only gets such treatment “if a super-majority of the Fed board and I, in consultation with the president, determine that the failure to protect uninsured depositors would create systemic risk and significant economic and financial consequences.” In other words, no necessarily.
Lankford asked Yellen what her plan is to keep large depositors from moving their funds out of community banks and into big banks. He then explained in elementary terms how Yellen’s actions are encouraging the merger of banks. Yellen denied it. Lankford returned unblinking with, “That is happening. Right now.” Yellen then conceded it is happening, but blamed the banks. Lankford refused to let Yellen off the hook, and after several minutes of Yellen making a fool of herself, the meeting moderator called time’s up. Something tells me Yellen isn’t chomping at the bit to meet with Lankford to discuss the host of other issues he wants answers on.
Watch the exchange here.
Trump PAC tells on DeSantis
The game’s afoot: MAGA Inc., a Donald Trump-associated super PAC, has lodged a formal complaint to the Florida Commission on Ethics against Ron DeSantis. The complaint alleges that the Florida governor is in breach of ethics laws by running for president without officially declaring. Cockburn detects a whiff of hypocrisy here: for a man who is always claiming to be the victim of legal warfare, Trump seems to be as willing as anyone to wield the sword of the law.
The complaint argues that DeSantis is “leveraging his elected office and breaching his associated duties in a coordinated effort to develop his national profile, enrich himself and his political allies and influence the national electorate.” A DeSantis official dismissed the claims as “frivolous and politically motivated attacks.” Handbags at dawn!
To Cockburn, Trump’s resorting to these tactics indicate one thing: the Donald is getting jittery. Surprising, considering his heavy poll lead against a thus far undeclared candidate…
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