Bipartisan group of AGs want Congress to release CHIPS money

By JD Davidson

(The Center Square) — A bipartisan group of attorneys general from across the country wants Congress to agree to more than $50 billion in incentives to increase domestic production of microchips that they say will help both supply chain and national security issues.

Ohio Attorney General Dave Yost and Vermont Acting Attorney General Joshua R. Diamond led the call in a letter that encourages Congress to reach agreement on legislation that has passed the House and the Senate but which remains blocked in conference.

“Virtually every modern product and convenience depends on microchips,” Yost said. “It is therefore absolutely vital that domestic chip production becomes a national priority.”

The letter cited the country’s overreliance on foreign production of microchips and newly built vehicles expecting chips from abroad.

“Increasing domestic production will not only solve supply chain issues for consumer products, it will also serve to ensure that the equipment our nation relies on to defend itself and its allies is available when we need it,” said the letter sent to the leadership of Congress said.

The cash plays a key role in Intel’s planned $20 billion investment in Ohio, which includes a new computer chip facility in New Albany that officials say is expected to create 3,000 full-time jobs. , 7,000 construction jobs and what Gov. Mike DeWine called tens of thousands of additional indirect and support jobs. The project is expected to add $2.8 billion to the state’s annual gross product.

Ohio offered $2 billion in incentives to land the project.

Governor DeWine recently told CNBC that he thinks Intel is threatening to delay the project to get Congress to act. Last month, Intel announced that it was canceling its July 22 groundbreaking.

Intel CEO Patrick Gelsinger also told CNBC that without federal money, it doesn’t yet make sense for the company to move forward.

Gelsinger called the CHIPS Act key to increasing manufacturing in the United States and the European Union and rebalancing the global supply of chips.

“Time is running out,” Gelsinger said at a March hearing in Washington, D.C. “American businesses in every sector of the economy are facing a shortage of semiconductors,” he said. added, “and the only way to alleviate the current long-term supply-demand imbalance is to increase manufacturing capacity by funding and implementing the CHIPS Act.

Others, like Michael Farren, a senior fellow at George Mason University’s Mercatus Center, think government incentives don’t spur job growth.

“Unfortunately, the academic research consensus shows that the vast majority of economic development programs are a waste of money and may even slow economic growth rather than accelerate it,” Farren said. “My best guess is that state and local economic development programs — like the more than $2 billion Ohio gave Intel — waste about $100 billion every year. That’s enough to fund the entire state budget for 13 states.

Mr. Farren also said he believes the CHIPS Act intensifies state competition with other states.

“Worse still, the CHIPS Act actually accelerates this ruinous political competition between states by reimbursing state and local subsidies,” he said. “The last thing Congress should be doing is encouraging this practice.”

The AG letter was also signed by the attorneys general of Connecticut, Delaware, Hawaii, Iowa, Michigan, Minnesota, New Mexico, New York, North Carolina, Oregon, Rhode Island and Virginia.

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