Home Finance News Congress expected to vote on $280bn Chips and Science Act

Congress expected to vote on $280bn Chips and Science Act


Congress is expected to vote on the $280bn Chips and Science Act as soon as Thursday evening, handing US president Joe Biden an eleventh-hour legislative victory before the upcoming midterm elections.

The vote would come just hours after Senator Joe Manchin announced a surprise deal with Senate Democrats on a sweeping tax, climate and social spending bill. Manchin had opposed a large tax-and-spend package until Wednesday evening on the grounds that it would fuel soaring inflation, and his U-turn surprised both Senate Republicans and his own party.

If both the chips and tax-and-spend bill make it through Congress and to the president’s desk, it would mark a significant victory for Biden, whose approval ratings are hovering near all-time lows heading into the midterm elections. A gay marriage bill might also garner enough votes from Senate Republicans next week — a third legislative win and an outcome that seemed all-but impossible just a few weeks ago.

The chips legislation will provide $52bn in subsidies for US chip manufacturers and more than $100bn in technology and sciences investments, including the creation of regional innovation hubs and expanding the work of the National Science Foundation.

The bill, which aims to make the US more competitive with China, has garnered support from across the political aisle and passed the Senate on Wednesday in a bipartisan 64-33 vote.

However, the chips legislation is expected to face a tougher fight in the House amid Republican anger due to the tax-and-spend deal agreed by Manchin and Chuck Schumer, the Democratic leader in the Senate.

The so-called Inflation Reduction Act of 2022 includes $369bn of spending on climate and energy reforms and $64bn of healthcare spending, paid for in part by a new 15 per cent corporate minimum tax, curbs on carried interest loopholes, and allowing the government to negotiate drug prices.

Some lawmakers suggested that Schumer and Manchin had engaged in a bait-and-switch manoeuvre to trick Mitch McConnell, the Republican leader in the Senate. McConnell had said he would not support the Chips act if Democrats passed the tax-and-spend bill using a process known as reconciliation that allows them to push the legislation through with a simple majority rather than relying on Republican votes.

But just hours after the Senate passed the Chips bill, Manchin announced his about-face on the larger piece of legislation.

Senator John Kennedy, a Republican from Louisiana, told Fox News: “They sucked Republican votes up like a Hoover Deluxe and then got their votes [on the Chips bill] and then bam, announced this new tax increase.

“We look like a bunch of . . . well, I’m not going to say what we look like,” he added.

To pass the House, the Chips bill will need the support of some Republicans, who had previously signalled they would back the bill and a majority of progressive Democrats, some of who have spoken out against subsidies for profitable semiconductor makers. Democrats have a thin 220-211 majority in the lower chamber of Congress.

In a statement on Wednesday, Biden praised the Chips and Science Act, saying it would lower “prices on everything from cars to dishwashers”. He said the legislation would also create new jobs and ensure “more resilient American supply chains, so we are never so reliant on foreign countries for the critical technologies”.

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