Soon,
the Senate will vote on a stripped-down China competition package.
Gone
is language combatting China’s unfair trade practices.
Gone
are provisions preventing fentanyl and narcotics from entering the country.
Gone
is my proposal to stop subsidizing China through low-cost World Bank loans.
Gone
are provisions I championed preventing the flood of counterfeit Chinese
merchandise.
And
gone are condemnations of the Chinese Communist Party for the ongoing genocide
of the Uyghur minority.
Last
year, I supported an earlier version of this bill in large part because it
included these tough-on-China policies.
But
now, these policies are out and more spending is in. It includes more than $76
billion in subsidies earmarked for a single industry: semiconductor
manufacturers.
Semiconductors,
or chips, are important, but that doesn’t mean we should write these companies
a blank check.
If
incentives to encourage more semiconductor investment in the U.S. are
necessary, they should be targeted.
I
understand the national security concerns, but simply mentioning “national
security” isn’t the end of the discussion.
Proponents
must show how these subsidies will accomplish their objective.
These
subsidies are not targeted at domestic production of the advanced chips
produced almost exclusively by our allies in Asia
Furthermore,
they fail to include adequate safeguards to prevent companies receiving
subsidies from turning around and investing in China.
A
lot has changed since Congress began talking about these subsidies more than a
year ago. According to a recent Wall Street Journal editorial, the
semiconductor industry has already announced $80 billion of U.S. investment by
2025. Moreover, there is growing evidence that a chip glut is coming.
Yet,
instead of looking to trim back or better target the subsidies, this bill
doubles down on corporate welfare.
This
bill now includes an expansive “tax credit” that will subsidize semiconductor
manufactures to the tune of $24 billion.
In
total, American taxpayers will pay up to 40 percent of the cost of a
semiconductor facility.
That
means individual companies are in-line to receive billions in taxpayer funds.
For
example, Intel has announced plans for a $20 billion facility.
Taxpayers
will write a $4 to $8 billion check for this one facility.
I’m
dumbfounded that my Democratic colleagues can justify this.
President
Biden and his allies in Congress rant and rave about profitable corporations
paying little or no tax.
Yet,
under this bill, some of the largest, most profitable companies in the world
are poised to pay zero tax.
In
fact, unlike typical tax credits that reduce a company’s tax bill, this one
will allow a company to receive the credit as a cash payment exceeding any
taxes paid.
Outside
of Senator Sanders, Senate Democrats seem unconcerned with making these large
profitable corporations “pay their fair share.”
I
hope they keep this in mind when liberal groups inevitably point to more
profitable multi-nationals not paying taxes.
Don’t
try and blame Republicans or the 2017 tax law, which has resulted in record
revenues coming into the Treasury.
In
fact, the 2017 tax law should be the model for how we compete with China.
Instead
of targeting specific industries for lavish subsidies, we reformed our tax code
to eliminate special interest loopholes while helping all industries compete on
a global scale, including against China.
A
competitive tax code, pro-growth policies, and rule of law allows Americans do
what they do best – innovate.
That
is how we will out-compete China.
In
contrast, on-shoring wasteful and inefficient Chinese industrial policies will
only stifle innovation and weaken our dynamic economy, which is our great
advantage.
