Big Tech subsidy bill means new era for government

Long ago and far away – – actually, it was last year – – President Joe Biden and Democrats in Congress hoped they might change the focus of public debate from the divisive themes of the Trump years to an emphasis on practical measures to create a fairer and growing economy that could compete with the economic powerhouse that is China.

It has been a long, frustrating trip since then. Biden’s Build Back Better program blew up, largely because of resistance from two Democratic senators. Efforts to fortify the U.S. economy against the China challenge and the need to bring home certain industries – – microchips especially – – languished because of disagreements between House and Senate Democrats.

But with Senate passage on Wednesday of what Senate Majority Leader Charles E. Schumer, D-N.Y., dubbed the “CHIPS and Science” bill, the Biden vision got a bit of life pumped back into it, in significant part because the microchip shortage has fed inflation by wreaking havoc on U.S. supply chains.

The $280 billion measure, expected to pass the House later this week, is rooted in an earlier proposal by Schumer and Sen. Todd C. Young, R-Ind. It includes $52 billion in subsidies to increase semiconductor production in the United States and investment tax credits – – estimated to be worth $24 billion – – to support advanced manufacturing in the industry. The bill also authorizes some $200 billion for various forms of scientific research and education.

Echoing the concerns about the state of American scientific and technological education after the Soviet Union took the lead in the space race with the launch of its Sputnik satellite in 1957, the legislation includes money for the National Science Foundation and other top research institutions. That includes funding for universities, fellowships, scholarships and training in technology fields.

“It’s an economic Sputnik launched by China,” Schumer said in an interview. The bill “says to Americans, we’re going to stay No. 1 in the world economy in the 21st century . . . not give up, sit on the sidelines, say we can’t compete.”

The fact that the bill passed on a bipartisan vote of 6433, with the support of 17 Republicans, underscores two truths: It is a lot easier to get Republicans to vote for business subsidies than social programs, and – – as Schumer’s to-the-barricades comments suggested – – fear of China’s increasing internal authoritarianism and aggressive economic mercantilism spans both political parties.

The measure also marks an ideological turn away from the era ushered in by Ronald Reagan in the United States and Margaret Thatcher in Britain, when free markets, lower taxes and deregulation were hailed as the keys to economic growth. Since the financial crisis of 2008 and a pandemic that required massive government spending to ward off economic collapse, market purism has been on the decline.

“The old laissez-faire theory is: Leave the companies alone, and they’ll do great,” Schumer said. “But now we have nation states in China and Europe that are heavily investing in both science and high-end manufacturing. And if we do nothing, we will become a second-rate economic power.”

Not everyone is convinced. The chips bill drew opposition from a majority of GOP senators, most of whom still embrace versions of the older creed. From the left, Sen. Bernie Sanders, I-Vt., denounced the proposal as “billions and billions of dollars in corporate welfare.”

But Sanders was the lone opponent in the Democratic caucus, and the chips bill, like the infrastructure bill passed last year, marked a rare but timely victory for what might be called Bidenism.

The promise of Biden’s presidency held two objectives in tension: Ushering in a new era of bipartisanship while strengthening the Democratic Party by delivering tangible benefits (in jobs, health care, child benefits and other areas) to working-class voters who had moved to the Republican Party of Donald Trump. The hope was that some of them could be lured back by bread-and-butter politics.

It has been rough going for both ends of the strategy. Large parts of the Biden program failed because Republicans united in resistance to it. Nor could the president’s ambitious plans get the 50 votes in the Senate they needed to pass through what’s known as the reconciliation process, thanks to resistance from Sen. Joe Manchin III, D-W.Va., and, at times, Sen. Kyrsten Sinema, D-Ariz.

A booming economy might have compensated for some of the setbacks. But inflation and now fears of recession – – they will likely be aggravated by the Federal Reserve’s 0.75 percentage point increase in interest rates on Wednesday – – have taken some of the sheen off the large-scale job growth during Biden’s first year.

The chips bill provides Biden and his party a useful reprieve about three months before the midterm elections, and some of its provisions – – aimed, for example, at creating technology hubs outside big and largely Democratic metro areas – – are a direct response to the economic discontent that accelerated Trump’s rise.

And whatever its short-term political effect, its long-term message is that the Era of Hands-Off Government is over.

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E.J. Dionne is on Twitter: @EJDionne.