Senate eyes votes on computer chip bill that drastically slims U.S.-China competition plans

Senate Democrats are planning to advance domestic computer chip production legislation as soon as next week, signaling an end to formal talks on a broader China competition bill as the White House presses for action before November.

Majority Leader Chuck Schumer has told senators to expect votes as soon as Tuesday to move forward on $52 billion in initial funding for chip factories, as well as a tax credit for ongoing semiconductor production, a person familiar with the plans said. Any movement would elate vulnerable Democrats who have pressed party leaders to break through a logjam on the bill, which lawmakers have spent nearly two years crafting.

No final decisions have been made, with Schumer and Minority Leader Mitch McConnell still working out the details of floor consideration. It remains unclear whether the chamber has the votes to break a filibuster.

But Thursday’s move means that as the Biden administration blitzes Capitol Hill pushing for standalone legislation to boost chip production, much of the larger China competition package that the chip funding was paired with will likely end up on the cutting room floor.

The White House had urged lawmakers to jettison the broader China-focused legislation and act on the chips money to address national security and supply chain concerns.

“It will be unfortunate. It will be a chips bill, which is critically important, but it won’t be a China strategy bill,” said Senate Foreign Relations Committee Chair Bob Menendez (D-N.J.), whose panel crafted a major China policy section of the legislation.

There’s no guarantee that enough Republicans will vote to break a filibuster on the slimmed-down legislation, especially with so much uncertainty about which other provisions might be added.

“Now we’re at a point where I don’t think anybody really knows what the final bill might look like, or kind of where the votes are,” Senate Minority Whip John Thune (R-S.D.) said. “We know where the votes were last time. But that was a different time and it was a different bill than what we’re talking about today.”

Menendez blamed McConnell for the end result, pointing to the GOP leader’s threat to derail the larger China competition package if Democrats move forward with separate plans to pass a party-line tax and climate package. But McConnell — who later suggested breaking off the chips funding portion and passing it as a standalone — was not the only factor standing in the way of the broader bill, which also got mired in a cross-Capitol impasse.

For the better part of three months, the House and Senate have tried without success to iron out the differences in their respective China competition bills. As a result, there was a growing belief on Capitol Hill that Congress should simply pass the chips funding as a standalone bill before August, given the urgent desire to boost in domestic production.

“The question is, what can we pass in the closing window that we have here before the August recess? And that seems to be some sort of ‘chips-plus,’” said Sen. John Cornyn (R-Texas), the lead sponsor of the chips provisions in the bigger bill. “The ‘plus’ is undefined.”

Other add-ons to the semiconductor funding may be included if lawmakers can reach an agreement in time, said the person familiar with Senate’s plans.

Differences in how to handle trade policy with Beijing — in particular, former President Donald Trump’s legacy of tariffs — had been a key sticking point in talks between the House and Senate that has held up final passage for months. If lawmakers from the Senate Finance Committee and House Ways and Means Committee cannot come to an agreement on those provisions, they are likely to be dropped from the final bill.

“It’s not always easy to reconcile differences between the House and the Senate,” Sen. Ben Cardin (D-Md.), a top Foreign Relations Committee member, lamented.

A potential add-on with a better chance of survival in any final “chips-plus” deal is an amendment to require enhanced government screening of American investments in China. Cornyn and other lawmakers in both parties have worked for months with the administration to refine that portion, which was included in the House’s version of the bill but axed from the Senate incarnation.

The White House this week reiterated its support for the effort, and lawmakers could attach the screening provision to the final bill even if other China-related trade provisions are not included.

As the impasse between the two chambers persisted, some lawmakers were calling for the House to simply pass the Senate-approved China competition bill — which now appears unlikely.

The Biden administration stepped in this week with classified briefings for all senators and House members, during which they urged quick passage of the chips funding.

Many vulnerable Democrats in the House have long hoped to point to the chips funding as evidence that they and the Biden administration are responding to inflation and supply-chain crunches ahead of November’s midterm elections.

On Wednesday, one frontline member, Rep. Elissa Slotkin (D-Mich.), slammed her party’s leadership for lacking a strategy to pass the chips bill. “A briefing is not a plan,” she said. “Get a plan.”

Jordain Carney contributed to this report.

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