Don’t Give U.S. Chipmakers a $76 Billion Government Handout
Staying a step ahead of China is a recurring theme in U.S. foreign policy. Yet the most expansive effort on the table right now to keep China in check sadly emulates the communist country’s greatest weakness: the blurred line between where the state stops and the market begins. Congress is set to get the government deeply involved in the critical market of semiconductors.
The CHIPS Act, poised to pass the Senate on Wednesday and be signed into law with bipartisan support, traces its roots back to a 2020 bill to provide $16 billion in research and development (R&D) funding for the semiconductor industry. Government R&D funding is often wasteful, but such an amount for this purpose is not unheard of.
The current legislation has swelled to a total cost of more than $400 billion. The core of the bill is $76 billion in direct funding for domestic semiconductor manufacturing through a variety of grants and tax credits. The rest of the money, beyond doubling the budget of the notoriously silly spenders at the National Science Foundation, is predictably a billion here and a billion there for vaguely named programs with even more ambiguous purposes. For example, as the Wall Street Journal editorial board pointed out, “The Commerce Department gets $11 billion, most of which it intends to plow into creating 20 new ‘regional technology hubs,’ which will somehow expand ‘U.S. innovation capacity.'”
If the cost isn’t offensive enough for Americans reeling from the effects of the pandemic-induced spending spree in Washington, the CHIPS Act may as well derive its name from the tortilla-chip flimsy arguments underlying the $76 billion handout to the semiconductor industry at the center of the bill.
Proponents of the legislation would have you believe that the U.S. is overly reliant on foreign, unreliable suppliers of semiconductors, particularly those under threat from China. Semiconductors are unbelie
Article from Reason.com