Therefore, Congress is seeking to increase chip manufacturing and research in America with billions of dollars from its federal government.
Both the House of Representatives and the Senate passed major legislation regarding the subject. This is one last chance for lawmakers before the November elections, to show voters that they are working to address the nation's strained supply chain.
They now have to resolve significant differences between the bills. The Senate Republicans are already working on the differences before formal negotiations begin.
The President Joe Biden has made semiconductor legislation a top priority. However, he will need to have the support of at least 10 Senate Republicans to bring a bill to his desk. When congressional leaders announced the members of the committee responsible for reconciling the two bills, Senator Republican Leader Mitch McConnell stressed that point.
McConnell stated that the legislation is unlikely to become law if it doesn't receive major concessions from House Democrats.
House Democrats want their voices to be heard in negotiations.
"We must ensure that everyone has input," stated Rep. Suzan DelBene (D-Wash.), chair of the New Democratic Coalition. This group has 19 members who are participating in negotiations. "We have a strong House bill, and I believe there are important components that the Senate should also look at."
WHERE DO THINGS STAND
Representatives from both the House and Senate have been selected to join a committee that will merge the two bills.
Nancy Pelosi, House Speaker, chose 49 Democrats, and one Republican, Rep. Adam Kinzinger from Illinois. This was the only GOP member who voted for the House bill. Kevin McCarthy, Republican House Leader, selected 31 Republicans to the committee.
Each McConnell and Democratic Senate Leader Chuck Schumer selected 13 senators.
While the House has approved its participants now, the Senate has to complete some procedural work before it can.
Spending is expected to rise by $250 billion in the Senate bill over a period of 10 years. The House bill would increase spending by more $400 billion in the same period.
WHERE IS MUCH AGREEMENT
Both the Senate and House bills allocate more than $52 million for research and production of semiconductors. Federal loans and grants would help to subsidize some of these costs.
Josh Teitelbaum is senior counsel at Akin Gump. He said that chips funding was the "fundament" of the bill. Akin Gump is a law and lobbying company. It is, I believe, what drives this bill towards the finish line.
SOME OVERLAPMENTS, BUT KEY DIFFERENCES
The Senate bill allocates $29 billion to a new Directorate that will be responsible for strengthening the U.S. leadership on artificial intelligence, robotics, and other cutting-edge technologies over five years.
The House bill allocates $13.3 billion over five-years to a new science and engineering directorate. The directorate will be focusing on climate change, sustainability, and social and financial inequality.
Both sides will need to come up with their respective visions of the National Science Foundation, and the new Tech Directorate.
Both bills establish regional technology hubs. The Senate dedicates $10 billion and the House $7 billion. While the Senate bill allows for at least 20 of these hubs, the House bill permits at most 10.
The seed money will go to regional organisations that seek to advance various economic and national security priorities.
This approach is supported bipartisanly by lawmakers representing large rural and minority constituencies. They want to make sure that the money does not go to universities or communities where there is already a lot of tech research.
WHERE ARE THE IMPORTANT DIFFERENCES
There are many areas of disagreement in the bills, including trade, climate change, and supply chain issues.
A $45 billion program to improve supply chains in the U.S. is one of the most important items in the House bill. The Senate bill did not include such a provision. This money could be used to provide loans, grants or guarantees to local governments, tribes, and companies that are trying to relocate or build manufacturing plants that produce critical goods.
Teitelbaum stated that this is an area of real focus for both companies and communities looking to restore manufacturing. There is a lot of interest to include this funding in the final package.
Trade is another stark distinction. The House approved a program providing financial and training assistance to those who are displaced by increased imports. This provision is not available in the Senate.
Representative Earl Blumenauer, D.Ore., stated that the bill was not likely to move without trade adjustment aid.
The Senate bill also includes a trade provision, which would exempt more products from the tariffs that the Trump administration imposed on imports from China. These exclusions are almost all over. They are now reinstated by the Senate bill, which is a priority for business groups like the U.S. Chamber of Commerce.
While the Senate bill doesn't address immigration, the House bill addresses it. It would create a new category of visas for entrepreneurs, and allow people with ownership interests in successful ventures to apply for lawful permanent residence.
The House bill touches on climate change, but not the Senate bill. The House bill allocates $8 billion for a fund to help developing countries adapt to climate change. Republicans could find it difficult to agree to use U.S. taxpayer funds for this purpose.
Negotiations are not easy.
"I struggle to explain to my friends, constituents," Sen. John Cornyn (R-Texas), said that even though the White House supports something, when Democrats support something, Republicans support something, the House supports it, while the Senate opposes it, it still doesn't seem possible to get it done. But I do hope we will seize this chance."