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A commonsense plan to encourage homegrown computer chip manufacturing should be a slam dunk for Congress to pass before its August recess.
But it should also pass a budget bill that would allow Medicare to negotiate prescription drug prices and continue higher subsidies for people buying insurance under the Affordable Care Act.
The $52 billion computer chip plan would create incentives for computer chip makers to expand capacity and build new plants in the U.S. The bill would offer the financial incentives, $1.5 billion to encourage building of 5G networks and provide a 25% tax credit for investors in semi-conductor manufacturing.
The bill appears to have bipartisan support as Senate Republicans said Monday they will support the bill now the Democrats have reduced the size of another budget bill that included corporate tax hikes.
The Democrats and the Biden administration had proposed a budget reconciliation bill that included $500 billion in spending and raised $1 trillion in revenues, but Sen. Joe Manchin, D-West Virginia, said he couldn’t support that legislation until September when he could see another month of inflation data.
Manchin’s scaled down version would allow Medicare to negotiation prescription drug prices and save about $280 billion. He proposed using $40 billion of that to continue higher subsidies to people getting insurance under the Affordable Care Act that were established during the pandemic.
Republicans were withholding support of the computer chip bill unless Democrats dropped their bigger budget bill. Sen. Majority Leader Mitch McConnell threatened to hold up the semi-conductor bill. That’s more of the same obstruction from Republicans, and it shows how far they are willing to go to stop Democrats.
But President Joe Biden and Manchin appear to be willing to take the good in lieu of the perfect. We agree with that strategy.
The semiconductor bill will boost the U.S. manufacturing and improve national security as we won’t have to rely on foreign sources for the growing need for semiconductors. It may also tamp down inflation in everything that uses computer chips as the domestic production will likely be cheaper than imports.
The scaled down budget reconciliation bill will achieve something Democrats and Republicans have long sought: allowing Medicare to negotiation prescription drug prices. That’s no small win.
The savings will help fund continuation of subsidies for those buying health insurance through the Affordable Care Act.
It’s also critical Congress act before the August recess as computer chip makers are deciding now where they will expand and foreign countries are offering them financial incentives.
Passing both the computer chip manufacturing incentives and the budget reconciliation will be a solid bipartisan win and show that Congress can get things done for the American people.
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