Policy

Pelosi’s USICA dismissal isn’t what you think

House leadership said they weren’t open to a backup plan on the United States Innovation and Competition Act, which includes $52 billion in subsidies for domestic manufacturing of semiconductors.

Chuck Schumer and Nancy Pelosi

Nancy Pelosi wants to force Republicans to negotiate a compromise between the bipartisan Senate version and Democrats' preferred House version of USICA.

Photo: Tom Williams/CQ-Roll Call, Inc via Getty Images

If reconciliation efforts were to fail, Congressional Democrats had a straightforward path to pass the United States Innovation and Competition Act: Send the bipartisan Senate version through to the House. That option was particularly favorable to House Democrats facing tight reelection races, as it would have allowed them to point constituents to a much-needed legislative victory.

But on Wednesday, reports arrived that House Speaker Nancy Pelosi and House Majority Leader Steny Hoyer were not open to that option.

So why rule out the backup plan? It’s not that they want to kill a chips bill outright. Instead, Pelosi and Hoyer want to force Republicans to negotiate a compromise between the bipartisan Senate version and their preferred House version.

The House version passed with only one Republican vote in February. It includes key legislative priorities for the Democrats such as immigration reform and trade adjustment assistance programs.

“I think it’s an arrogant, unreasonable demand,” Hoyer said in a press briefing on Wednesday, responding to questions about the possibility of just passing the Senate version of USICA. He reiterated wanting the bill to pass by the beginning of August.

“Their way or the highway is not Democracy — Democracy is about what can we agree on,” Hoyer said. “I don’t believe that there aren’t 10 [Republican] Senators who can’t agree on some of the additions that we made in the House bill.”

Meanwhile, Republicans have assumed a hard-line stance of their own. At the end of June, Senate Minority Leader Mitch McConnell said Republicans would only pass a bipartisan USICA bill if Democrats give up on their other top legislative priorities. That threat was aimed squarely at Senate Democratic Leader Chuck Schumer’s plan to reintroduce a new version of the Build Back Better bill, which is expected to include some tax hikes, green energy subsidies and an extension of Affordable Care Act funding.

“The policies that are being floated are ruinous,” McConnell said on the Senate floor Monday. He went on to describe the policies as “the worst possible mix to thrust onto a country that’s already teetering on the brink of recession.”

“As Congress returns to DC this week, we should be finalizing my bipartisan USICA bill to invest in critical national security technologies and shore up the supply chain for semiconductors,” Republican Sen. Todd Young of Indiana tweeted on Monday. “Instead, Democrats are working on a proposal to increase taxes by $1 trillion.”

Leadership for both parties share the common goal for USICA to pass with $52 billion in subsidies for the domestic chip industry. Schumer held a classified Senate briefing on Wednesday that attempted to underscore the urgency of subsidies in the context of the geopolitical threat posed by China. That briefing included appearances from Commerce Secretary Gina Raimondo, Deputy Secretary of Defense Kathleen Hicks and Director of National Intelligence Avril Haines.

The semiconductor industry has promoted its own backup-backup plan of stripping the $52 billion in subsidies out of USICA and passing them on their own. Raimondo told Axios on Wednesday that she also supports a stripped-out subsidies plan given the urgency and political stalemate. That would be a tough pill for Democrats to swallow, as it would mean giving up a key point of leverage going into midterms that are expected to swing both the House and Senate to the Republicans.

“What could happen from all this is that you wind up getting nothing,” IBM’s vice president of government and regulatory affairs, Chris Padilla, told Protocol last week. The chip makers are doing what they can to ensure that doesn’t happen. Padilla told Protocol that IBM plans to hold hundreds of meetings with policymakers in the coming weeks.

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