The Democrats’ ambitious social agenda under President Joe Biden included, among other things, child tax credits paid directly to families and support for green energy investments, but like most of their plans, these programs have been abandoned. Instead, Democrats are preparing to vote for $24 billion in tax credits to boost high-tech chip manufacturing in the United States, part of a $76 billion package benefiting this industry.
As Politico’s Brian Faler reports, some lawmakers are disappointed with the party’s shift from pushing for public investment to more subsidizing private industry. “It looks terrible,” Sen. Michael Bennet (D-CO) told Politico.
Some Democrats point out that the tax credits are a matter of national security, ensuring the country can manufacture key technology while stimulating the economy. “It will create a lot of prosperity in my state and provide many people with good paying jobs,” said Sen. Sherrod Brown (D), whose home state of Ohio is set to receive a new manufacturing plant .
Still, the relatively quick agreement on the contours of the semiconductor bill reminds some Democrats of what their bigger spending agenda might have been had they been able to win the cooperation of conservative caucus members like Sen. Joe Manchin (D-WV). “The ease with which lawmakers move the break stands in contrast to Democrats’ struggles with their reconciliation plans, although the semiconductor plan violates many of the conditions Manchin had set for this legislation,” Faler writes, citing the inability of the bill to cover all of its costs, as Manchin had insisted for the Social Spending Bill.
One of the main differences is that the chip-making subsidies have broad bipartisan support, as well as bipartisan opposition. Condemning the plan as “massive corporate welfare,” Senate Budget Committee Chairman Bernie Sanders (I-VT) joined some of his more conservative colleagues in opposing the bill. .
“There is no doubt that there is a global shortage of microchips and semiconductors, making it harder for manufacturers to produce the cars, cellphones and electronic equipment we need,” Sanders said. . “But the question we should be asking is: should American taxpayers provide the microchip industry with a blank check for more than $76 billion at a time when semiconductor companies are making dozens billions of dollars in profits and pay their leaders exorbitant salaries? I think the answer to this question should be a resounding ‘No’.
Across the aisle and across the Capitol, Rep. Kevin Brady of Texas — the lead Republican on the House Ways and Means Committee who played a key role in passing the cuts Trump’s tax bill in 2017 – expressed his opposition to the bill. “It would provide significant subsidies to a limited group of companies, which I think creates an unwarranted windfall for companies with projects already underway,” he said.
On top of that, the so-called temporary tax breaks could end up sticking around. “As we know, there are some temporary tax credits [already in the code] — they tend to carry on into eternity,” Brady said.