White House sees China bill as fix for some of its problems

A White House beaten down by voter unhappiness with inflation and supply shortages is pressing Democrats to move ahead quickly with a China competitiveness bill it believes can be sold to voters as a fix for those pocketbook issues.

The legislation, which was introduced in the House just last week and is expected to get a floor vote on Friday, would boost domestic production of semiconductors, which have been in short supply and have contributed to rising prices for cars, among other products.

The legislation would invest billions in production, manufacturing and scientific research of semiconductors in the United States.

“We ended up with a severe imbalance between offshore supply chain and domestic production, and we need to bring those component production resources back to the U.S. We absolutely have to rebalance,” said Ellen Hughes-Cromwick, a senior resident fellow at the centrist Democratic think tank Third Way.

The Senate has already approved a version of the legislation in a 68-32 vote, providing a bipartisan victory for the White House similar to the infrastructure legislation signed by President Biden last fall.   

Like the infrastructure bill, the measure is more of a partisan issue in the House, where Republicans have launched a full-throated effort against the bill.

“The name of Speaker Pelosi’s America COMPETES Act must be ironic or a joke, because after looking through the text, no sensible person would ever say this will help Americans confront the China threat much less compete with China, as this legislation is being advertised,” Rep. Jim Banks (Ind.), the chairman of the Republican Study Committee, wrote in a memo to members of the group this week.

Getting the legislation past the finish line is also important to the White House because of the stalemate surrounding the Build Back Better social spending package.

It’s not clear if that bill will make it to Biden’s desk, but the White House thinks if the House makes quick work of the China competitiveness bill, the measure can be reconciled with the Senate version to earn the administration a new victory.  

“Let’s get another historic piece of bipartisan legislation done,” Biden said in a speech celebrating a new Intel semiconductor plant last week. “Let’s do it for the sake of our economic competitiveness and our national security.”

Commerce Secretary Gina Raimondo, a leading voice in Biden’s drive for the legislation, is expected to meet with members of the House Democratic Caucus at their weekly meeting Wednesday to discuss the legislation, according to a person familiar with the administration’s talks with Congress.    

The White House has focused on the semiconductor shortage in the auto industry. Both versions of the bill include $52 billion for the U.S. semiconductor industry over five years.     

The House bill would also provide $45 billion in grants, loans and loan guarantees through the Commerce Department to help bolster supply chains and would take steps to apply diplomatic pressure on China by levying sanctions for its alleged human rights abuses against the Uyghur ethnic minority.  

Inflation, which hit a 40-year high in December, has become a political vulnerability for Biden and the Democrats as they try to hold onto their slim majorities in Congress. Biden’s poll numbers have remained deflated as voters have expressed frustrations with inflation and the seemingly never-ending pandemic.    

Most of the power to address inflation lies with the Federal Reserve, but the White House has taken limited steps to ease price increases, like working with the ports of Los Angeles and Long Beach to move them to 24-hour daily operations.

Still, the China competitiveness bill won’t have an immediate impact on inflation, experts say.

Hughes-Cromwick said that the measure would help eliminate the risks of supply chain disruptions and the surge in prices caused by them over the next three to five years.

“That’s a medium-term proposition,” she said. “You’re not going to fix the supply chain overnight.”

The White House is not yet setting a target deadline for Congress to pass a bill, instead asking lawmakers to send it to Biden’s desk as soon as possible after the measures go to conference so that lawmakers can work out differences.

Raimondo has spoken about the bill with more than 60 lawmakers from both parties and both chambers since the start of January, according to the source familiar with the talks. White House officials are also “deeply involved” in conversations with the House and Senate, White House press secretary Jen Psaki told reporters last week.

The Senate version, known as the United States Innovation and Competition Act, passed the upper chamber last June. House Democrats did not unveil their own version, known as the America Competes Act, until last week.  

The bill includes several bipartisan provisions that have already passed the House, but Republicans objected to the final version over the inclusion of climate provisions and changes to trade rules and accused Democrats of hastily assembling the legislation.

Still, the source familiar with the administration’s negotiations with Congress said Biden officials are confident that lawmakers agree enough on the urgency to get an agreement on the chips and science funding that other provisions will not hold up the bill.

Having bipartisan support for a compromise bill is less important in the House than it is in the Senate, where Democrats need 60 votes to advance most pieces of legislation.

“This bill lowers prices, strengthens supply chains and brings home the good-paying manufacturing jobs this administration has made a priority of bringing back to America,” Raimondo said in a statement to The Hill.

“America Competes was crafted with strong Democratic and Republican proposals for rebuilding American manufacturing and moving our economy forward,” Raimondo said. “I look forward to House passage and getting these crucial proposals one step closer to the President’s desk.”