One month ago, it seemed unlikely that the Senate would pass its sweeping $280 billion “chips-plus” package to subsidize U.S.-made semiconductor chips before the August recess. A number of lawmakers in both parties objected to the idea of subsidizing a private industry, and Republicans refused to negotiate after Minority Leader Mitch McConnell threatened to tank the bill unless Democrats agreed to drop their climate-heavy reconciliation package.
But on Wednesday, the CHIPS and Science Act cleared the Senate on a 64-33 vote, garnering support from several key Republicans including McConnell. It then passed the House on Thursday. The bill’s ultimate success in the upper chamber came about after a pivotal closed-door national security briefing in mid-July and crucial interventions with Republicans by former top Trump officials, according to sources involved in the process.
Commerce Secretary Gina Raimondo, who played a lead role in the Senate passage, tells TIME that the briefing was one of the “turning points” in negotiations, putting pressure on lawmakers to break the year-long impasse on semiconductor legislation. To convince reluctant Senators to spend more money to produce semiconductors domestically, Raimondo marshaled a national security argument about the risks of relying on foreign nations like China for chips.
On July 13, Democratic Sens. Chuck Schumer of New York and Maria Cantwell of Washington invited all 100 Senators to a meeting in a secure room on the Hill, along with top members of President Joe Biden’s national security apparatus to discuss the bill. Roughly 60 Senators split equally among party lines attended, along with Raimondo, Deputy Defense Secretary Kathleen Hicks and National Intelligence Director Avril Haines. They met for nearly two hours.
The group of Senators asked around 30 to 40 questions on the various national security implications of relying on chips made in China or Taiwan, according to a senior Commerce Department official, particularly for defense applications. Other questions focused on the timeline for building up U.S. semiconductor capacity, and whether Congress would be too late if they passed the legislation after the August recess. One of the main points that struck lawmakers, according to Raimondo, came from Hicks: 98% of the chips purchased by the Department of Defense are tested and packaged in Asia. “That briefing really moved members who were on the fence,” Raimondo says.
The Senate-passed bill aims to address that. It includes $52 billion in subsidies to domestic semiconductor manufacturers, $24 billion to create a tax credit for new semiconductor manufacturing facilities, and more than $170 billion over five years to boost U.S. scientific research. The measures were designed to make the U.S. more competitive on the global stage, particularly as China becomes a world leader in semiconductor production—an industry that many in Washington view as key to economic and national security. During the briefing, Haines walked the group through the various scenarios that could arise if the U.S. remained reliant on foreign chips, using geopolitical threats like Taiwan being at risk of annexation by China as an example of how losing access to chips could further harm global supply chain disruptions.
Several Republican Senators told reporters after the briefing that they were spooked by the national security risks of not acting. “If access to jets were cut off or restricted we would be up a creek without a paddle,” Republican Sen. John Cornyn of Texas, a key driver in the effort to pass the legislation, said on the Senate floor on July 26. “We couldn’t produce a stockpile of javelin missiles to supply Ukraine or produce the raiders and communication devices that keep our troops and our allies connected.”
And GOP leader McConnell agreed to come back to the negotiating table after he had ordered his party in early July to stop cooperating with the chips discussions as long as Democrats pursued a climate policy-focused reconciliation bill. Less than a week after the national security meeting on chips, Democratic West Virginia Sen. Joe Manchin said he wouldn’t reach a deal with his party on reconciliation, so McConnell signaled he was open to voting yes on the chips bill. “This is about national security,” McConnell said on July 26. “I wish it were inexpensive, but it is not.” (Manchin and Schumer reached a surprise deal on July 27.)
While it seemed the national security briefing had swayed some Republicans, Raimondo towards the end of July decided to call former Secretary of State Mike Pompeo, who served in the Trump White House and has a military background, to see if he could urge any Republicans still on the fence to support the chips bill. “I’m not sure there’s many things that he and I would agree on,” Raimondo says of Pompeo. “But I called him and he did it. We need to keep the American people safe, and that won the day with him.” She also enlisted Trump’s former National Security Adviser Robert O’Brien to make calls to Republican lawmakers.
The last-ditch effort to collaborate with the former President’s officials helped convince a number of Republicans in both chambers to vote for the bill—including clinching McConnell. “I was persuaded by our former colleague, Mike Pompeo,” McConnell told Fox Business on July 26, particularly by Pompeo’s argument that American adversaries would be emboldened further if the U.S. lost access to semiconductors, he said.
In the end, 17 Republicans voted for the bill, and 32 Republicans and Sen. Bernie Sanders of Vermont voted against it. Many shared concerns that the bill didn’t have enough guardrails to prohibit semiconductor companies from investing in China, according to the senior Commerce Department official. “I understand the national security concerns,” said Republican Sen. Chuck Grassley of Iowa, who voted no. “But to simply mention the words national security isn’t the end of the discussion. Proponents must show how these subsidies will accomplish their objectives.” He said the bill failed to include adequate safeguards “to prevent companies receiving these subsidies from turning around and investing in China.”
The bill passed the House on Thursday, with the support of 24 Republicans, and will now go to Biden for his signature.
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