AUSTIN (Nexstar) — A bill designed to encourage more semiconductor companies to build chip plants in the United States passed the U.S. House on Thursday, and now awaits President Biden’s signature.
The $280 billion measure includes federal grants and tax breaks for companies that construct their chip facilities in the U.S. The legislation also directs Congress to significantly increase spending on high-tech research programs that lawmakers say will help the country stay economically competitive in the decades ahead.
Texas Congressman Michael McCaul authored the original bill back in 2020. He said that the legislation is essential for American consumers, businesses, and national security.
“The problem is also in our most advanced national security weapons systems. We can’t build those because we don’t have the chips,” McCaul said. “That’s pretty scary when the United States of America has a shortage of weapon systems because of chips.”
The bill provides more than $52 billion in grants and other incentives for the semiconductor industry as well as a 25% tax credit for those companies that invest in chip plants in the U.S.
McCaul believes that Texas will see benefits from those incentives.
“This will result in trillions of dollars of investment in manufacturing jobs in the U.S., and Texas will be the real big beneficiary of the bill itself,” McCaul said. He pointed to expansion plans from companies like Samsung, Micron, Intel, and Texas Instruments within the state.
Critics of the bill have called this a case of taxpayers funding projects that tech firms have already committed to move forward. Criticism came from both sides of the aisle.
Sen. Ted Cruz (R-Texas) sent a statement after voting no, writing “when the federal government simply gives billions of taxpayer dollars directly to massive corporations, it invites cronyism and corruption.” Sen. Bernie Sanders (I-Vermont) similarly called the bill a “blank check for the highly profitable microchip industry.” Both senators used the term “corporate welfare” to describe the bill.
“It’s an odd argument made both on the far right and far left,” McCaul said of the corporate welfare claims. He pointed to previous tax incentives that have helped lead to technological advancements and jobs. McCaul believes the incentives are essential for the U.S. to compete.
“What makes it different in today’s world is that you have China investing a trillion dollars in a digital economy, Europe… offering these incentives, and Asia,” McCaul said. “If we want to be truly competitive, we’ve got to be on that playing field.”
McCaul added that it will take incentives to boost semiconductor production in the United States.
“Without these incentives, they will go offshore, because they have a duty to their shareholders,” McCaul said. “That’s why this bill is so important to pass.”