Politics, Not Economics, Motivates Semiconductor Subsidies

Scott Lincicome and Alfredo Carrillo ObregonAmidstmounting pressure from the Biden administration and led bySenate Majority Leader Chuck Schumer, the Senate last night began a  final push to fast‐​track$76 billion in new taxpayer subsidies for domestic semiconductor manufacturers. (The initial subsidy proposal wasa  mere $16 billion, but —unlike in the real world—inflation hasalways been a  problem in Washington.) House Democratic leadership has alsosignaled their desire to quickly approve the subsidies, should the Senate send them a  final package.Politically, Democrats ’ intense motivation to deliver these funds now makes perfect sense. According to various reports, the subsidies would not only provide a financial windfall for semiconductor companies in Schumer’s home state of New York (something he openlyadmits), but also reportedly constituteone of the few“political wins” that the Democrats can deliver to President Biden and candidates in key battleground states like Arizona and Ohio ahead of the midterm elections in November—“huge leverage” that chipmakers and other subsidy supporters are perfectly willing to exploit today. Meanwhile, several of the congressional Republicans who support the subsidies—smaller in number than Democratic supporters but essential to the subsidies’ legislative success—alsohost semiconductor companiesorlarge semiconductor consumersin their states or districts.As a  policy matter, however, the already‐​weak ...
Source: Cato-at-liberty - Category: American Health Authors: Source Type: blogs