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https://reason.com/2024/02/21/biden-pours-out-another-6-5-billion-for-the-chips-acts-costly-protectionism/
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* Latest * Magazine * Current Issue * Archives * Subscribe * Crossword * Video * Podcasts * All Shows * The Reason Roundtable * The Reason Interview With Nick Gillespie * The Soho Forum Debates * Just Asking Questions * The Best of Reason Magazine * Why We Can't Have Nice Things * Volokh * Newsletters * Donate * Donate Online * Donate Crypto * Ways To Give To Reason Foundation * Torchbearer Society * Planned Giving * Subscribe * Reason Plus Subscription * Print Subscription Search for: LOGIN FORM Username(Required) Password(Required) Remember Me Login Create new account Forgot password Biden Administration BIDEN POURS OUT ANOTHER $6.5 BILLION FOR THE CHIPS ACT'S COSTLY PROTECTIONISM IT'S PART OF THE GOVERNMENT'S EXPENSIVE PUBLIC-PRIVATE PARTNERSHIP MEANT TO ADDRESS CONCERNS OVER A RELIANCE ON FOREIGN COUNTRIES, LIKE CHINA, FOR SEMICONDUCTORS. Varad Raigaonkar | 2.21.2024 3:30 PM Share on FacebookShare on TwitterShare on RedditShare by emailPrint friendly versionCopy page URL Media Contact & Reprint Requests (DIRK WAEM/Belga/Sipa USA/Newscom) The White House this month announced plans for how it will direct billions of dollars in funding toward semiconductors, marking a new phase in the implementation of the CHIPS and Science Act. The $280 billion legislation, signed into law in 2022, aims to bolster semiconductor production in the U.S. President Joe Biden's administration said Monday that it will funnel $1.5 billion to GlobalFoundries, a semiconductor manufacturing and design company, to increase its domestic output. Perhaps more significant, however, was Biden's dispatch earlier this month announcing the administration will use at least $5 billion to establish a National Semiconductor Technology Center (NSTC), which will, among other things, support "the design, prototyping, and piloting of the latest semiconductor technologies," according to the White House. This latest effort is part of the government's expensive and protectionist public-private partnership meant to address concerns over a reliance on foreign countries, like China, for chips. "Semiconductors were invented in America and serve as the backbone of the modern economy," the White House said in a statement. "But today, the United States produces less than 10 percent of global supply and none of the most advanced chips." Powered By 00:00/02:56 10 Sec Fed Is Doing All the Right Things, Says Ariel's Rogers Next Stay The NSTC will supposedly also play a crucial role in expanding the semiconductor workforce to manufacture computing chips that can complement advances in artificial intelligence and related industries. Semiconductors are projected to become a $1 trillion industry by 2030, according to McKinsey & Company. The CHIPS and Science Act has several eyebrow-raising elements, including $81 billion for the National Science Foundation—doubling the agency's budget over five years. Another $24 billion will go toward tax credits meant to subsidize and incentivize private companies to invest in semiconductors. While the legislation was likely well-intentioned, it was doomed to have protectionist ramifications. "To defeat China, the argument goes, the U.S. must adopt the tactics of the Chinese Communist Party, at least when it comes to high-end manufacturing," Reason's Eric Boehm wrote in January 2023. But that ham-handed approach to industrial policy and corporate welfare drives up the deficit and hampers economic growth at very little benefit to the taxpayer, who are forced to fund these initiatives. It's likely unsurprising that many large corporations lobbied for the CHIPS and Science Act, including Meta, Microsoft, Google, Amazon, Apple, Northrop Grumman, Carrier, Trane, and General Dynamics, as well as labor unions like the American Federation of Labor and Congress of Industrial Organizations and the Communications Workers of America. "Big government means big lobbying," wrote David Boaz, a senior fellow at the Cato Institute. "When you lay out a picnic, you get ants. And today's federal budget is the biggest picnic in history." The CHIPS and Science Act passed with bipartisan support. But its detractors were also made up of strange bedfellows. Sen. Bernie Sanders (I–Vt.) and then-Rep. Kevin McCarthy (R–Calif.) both referred to the law as "corporate welfare" and a "blank check." Sanders went as far as to call it a "bribe." "When the government adopts an industrial policy that socializes all the risk and privatizes all the profits, that is crony capitalism," Sanders said. He's not wrong. The law "is another episode of politicians granting favors to their friends in the semiconductor industry," Veronique de Rugy, a contributing editor at Reason and a senior research fellow at the Mercatus Center, wrote last year. Such an approach "punishes those who aren't elite or can't organize to extract favors from politicians." Michelle Nuzzo-Kelly is an apt example. She was among the residents of Burnet Road near Syracuse, New York, who received several offers to purchase her home. But those offers didn't come from private buyers: They came from the government, as Onondaga County sought to expand a plot of land so it could attract a developer. Micron, one of the world's largest semiconductor manufacturing firms, is now set to build a facility there, thanks to lucrative taxpayer-funded subsidies from the state and federal government. "The offers to buy Nuzzo-Kelly's home were never really just offers," Boehm wrote when covering the case in November 2022. "They were demands backed by a threat to use government power to force her to sell." Start your day with Reason. Get a daily brief of the most important stories and trends every weekday morning when you subscribe to Reason Roundup. Email(Required) Email This field is for validation purposes and should be left unchanged. Submit Δ NEXT: The Biden Administration Has Forgiven Another $1.2 Billion in Federal Student Loans Varad Raigaonkar is the spring Burton C. Gray Memorial journalism intern at Reason. Biden AdministrationJoe BidenProtectionismTechnologyChinaEminent DomainSubsidiesCrony CapitalismTax credits Share on FacebookShare on TwitterShare on RedditShare by emailPrint friendly versionCopy page URL Media Contact & Reprint Requests Show Comments (18) LATEST HOW DID KISSINGER BECOME AN AMERICAN CITIZEN? Matthew Petti | 3.12.2024 1:06 PM THE WHITE HOUSE CLAIMS BORROWING $16 TRILLION OVER THE NEXT DECADE IS FISCALLY RESPONSIBLE Eric Boehm | 3.12.2024 11:00 AM DOES THIS LAUNDRY LOOK 'HISTORIC' TO YOU? Christian Britschgi | 3.12.2024 10:40 AM INFLATION ISN'T IMAGINARY Liz Wolfe | 3.12.2024 9:30 AM WITHOUT MORE ACCOUNTABILITY, SUNSHINE LAWS ARE TOOTHLESS C.J. 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