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Before the Congressional Recess, a Few Must Do Items
Congress is set to have its “traditional” August District Work period, five weeks of Congress back home in their states and districts, connecting with constituents and seeing first hand important projects, however, before Congress can recess, two important legislative items: finalizing the “United States Innovation and Competition Act of 2021” (also being referred to as the “chips” bill) and laying the ground work for a Democrat reconciliation package that Leader Schumer hopes to advance in September.
For almost a year, Congress has been advancing a version of the “United States Innovation and Competition Act of 2021” a comprehensive attempt to position the United States to compete against China for greater share of the technology manufacturing industry. The bill establishes investments and incentives to support U.S. semiconductor manufacturing, research and development, and supply chain security. Specifically, the bill provides an income tax credit for semiconductor equipment or manufacturing facility investment through 2026. The bill has bi-partisan, bi-cameral support and in fact, is the first legislation in almost 10 years to go through the “conference” process. However, the bill has become an unfortunate victim of politics. And while the Administration and Congress agree that failing to advance this measure has economic and national security implications, currently the bill is facing significant challenges due to the Democrat’s latest efforts to pass reconciliation. It is likely that Congress will strip the “United States Innovation and Competition Act of 2021” down to a very tailored package on semi-conductor manufacturing and investment.
Behind the scenes, it was announced in July that Leader Schumer (D-NY) had been in close contact with Sen. Joe Manchin (D-WV) on a slimmed down reconciliation that would focus on three things: 1) prescription drug cost, 2) green energy incentives, and 3) a curated package of tax provisions. The news took many by surprise, including the Republican Minority Leader Mitch McConnell (R-KY) who immediately threatened to block any action on the aforementioned, “United States Innovation and Competition Act of 2021” package. The challenge for Democrats in the Senate is that there are 50/50 odds they maintain their majority and they have not utilized the reconciliation process to advance important priorities for their Caucus. However, reconciliation is a tool used by the majority to circumvent the minority and therefore, the only leverage the Republicans have is to block a widely popular bipartisan initiative in hopes of having Democrats (including the Biden-Harris Administration) pressuring leadership to abandon their plans and pick the “chips” bill over reconciliation.
This all might be for not, as this week, following the latest inflation (consumer price index) numbers (the highest since 1980) caused Sen. Joe Manchin (D-WV) to back off of his negotiations with Leadership on a Democrat reconciliation package. Without Manchin, it is unlikely the Democrats would be successful in leveraging reconciliation as it requires 51 votes, which is only attained by keeping the Democrats together and the Vice President voting to break the tie.
We will see what happens as Congress weighs the pros and cons of advancing legislation in a divided government.