The Last Gasps of Bidenomics

At its passage in 2022, the CHIPS Act – and the $50 billion it provided to spur U.S. semiconductor manufacturing and innovation – drew bipartisan praise. It was a national security imperative (or so CHIPS advocates argued) that America expand its domestic capacity to make the tiny electronics on which so much other technology depends. Moreover, these billions of dollars would ignite a chips-making industrial revolution, it was said, with untold new investment and a boom of the ever-promised “good-paying jobs.”

Other, more prescient commentators were less sanguine; and they have been vindicated. Even leaving aside the underlying economics that render the success of CHIPS unlikely, the bill’s implementation has devolved into a morass of ideological sidetracking, political favoritism, bureaucratic delays, and other hangups. All the while, a self-referential circle of Biden appointees and private-sector subsidy-takers congratulated themselves on a job well done, notwithstanding the fact that the CHIPS Act’s tangible accomplishments remain scarce.

Now, as the countdown on the Biden administration ticks towards 0, the Department of Commerce is attempting to bring the balance of the CHIPS slush fund to $0. As a Politico headline framed it: “[Commerce Secretary Gina] Raimondo’s urgent mission: Leave no cash for Trump.”

Raimondo likely has little clue that her own policies have slowed the funds dispersal and thwarted their efficacy. Commerce bound funds recipients in red tape like a pre-teen playing the toilet-paper mummification game at a bar mitzvah. Companies must, inter alia, submit to profit limitations, adhere to the Davis–Bacon Act and other pro-union sops, prefer minorities in hiring, provide daycare and other costly benefits to employees, detail a “Climate and Environmental Responsibility Plan,” and, of course, Buy American. National security may demand more domestic semiconductor production, yet, the Commerce Department seems to think, national security must yield before the demands of “diversity, equity, inclusion, and accessibility.”

The Biden administration has also proved itself a poor judge of corporate character. The horse on which it bet was Intel (an aged and flailing company), whose self-inflicted stagnation played no small part in its $16.6 billion loss in the third quarter of this year as well as its announcement in August of 15,000 layoffs. Nonetheless, Intel has received billions in CHIPS dollars — more than any other firm — and Raimondo dubbed it “America’s champion semiconductor company.”

Meanwhile, markets are outperforming central planners. The Taiwan Semiconductor Manufacturing Co. (TSMC) has sprinted forward at its Arizona facility, a project announced a year before the CHIPS Act’s introduction. This “success is not a victory for the CHIPS Act, it is a victory for allowing corporations based in allied countries to invest in the U.S. economy,” National Review’s Dominic Pino wrote. “To the extent that politicians deserve any credit for TSMC’s results at this point, it is for embracing globalization, standing up to communism, and making Arizona a business-friendly state, not for passing corporate welfare.”

As Trump appointees move into the office buildings of alphabet-soup agencies, which pockmark Washington, D.C., they must begin by undoing the Biden administration’s extra-statutory regulatory adventurism. They must end attempts to use economic vehicles to smuggle social past the American voter. This alone would do much good.

Ultimately, however, the buck stops on Capitol Hill. Only Congress can repeal ill-conceived attempts at central planning. Although subsidies for semiconductor manufacturing achieved bipartisan support in 2022, Congress should take stock of the CHIPS Act’s subsequent failures and repeal it, along with the other bloated spending packages that characterized the economic failures of the Biden years.