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CHIPS Act: ‘A lot of apprehension among Republicans’ on spending component, expert says

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Brian Gardner, Stifel Chief Washington Policy Strategist, sits down with Yahoo Finance Live to discuss the outlook on the Senate's CHIPS Act vote and party sentiments on the bill.

Video Transcript

[MUSIC PLAYING]

RACHELLE AKUFFO: Welcome back to Yahoo Finance Live. The Senate is debating the CHIPS for America semiconductor bill right now on Capitol Hill. Legislation, which has been several months in the making, would set aside more than $50 billion in subsidies for chip makers in the US. As you can see there, they're still debating there before that vote. And joining us with more on this and the latest in Washington is Stifel Chief Washington Policy Strategist Brian Gardner.

Brian, thank you for joining us. So help people understand what is at stake with this CHIPS Act that's currently about to be voted on.

BRIAN GARDNER: Well, I think you just nailed it. It is a large subsidy for domestic chip manufacturing. 'Cause going through the COVID pandemic and the ensuing supply chain issues, Congress has decided that we need more domestic capacity, and so there's been an ongoing debate in Congress for the last year and a half, two years about a broad China competition supply chain bill. It's gone through different variations, up and downs, as it's been impacted by other legislation, and it's kind of been revived in a new form in the last week, which is mostly the $52 billion in subsidies for, as I said, domestic chip manufacturing.

DAVE BRIGGS: And it's taken some fire on both sides, Brian-- the unlikely alliance between the "Wall Street Journal" editorial board and Bernie Sanders. Yes, both of them calling this bill corporate welfare, which is unusual, to say the least. And then, in the middle, there are those that say it unfairly favors just one company, that, of course, being Intel. What do you make of the criticism?

BRIAN GARDNER: Yeah. You know, anything this big and this significant is going to take a lot of incoming fire. You know, alluding to your point on the "Journal's" editorial board and Senator Sanders, on the conservative side, the Republican side, there's this growing populist movement that has kind of taken over or is growing within the Republican Party, and I think there's a lot of apprehension among Republicans and conservatives about spending this kind of money on subsidies for profitable domestic corporations. There is a national security component.

So national security bumping heads with economic philosophy. So it creates interesting bedfellows. And then smaller firms are definitely concerned that it would benefit one firm more than others. So then there is-- so you have the external debate, philosophical debate. Then you have the more internal to the industry debate about who's benefiting and who may lose.

- Brian, what does this tell us, though, about where we stand in DC? Because this is an issue that you would think and did actually get support on both sides of the aisle, yet we can't come to an agreement on something that both the Republicans and the Democrats support. So where do we go from here when there's a number of issues where they don't exactly see nearly as close to eye-to-eye as they do when it comes to the CHIPS Act?

BRIAN GARDNER: Right. You know, I think this was on a pathway to getting passed, the broader bill. Then it hit this roadblock that Democrats were going to try and revive, the reconciliation bill, the social spending package, at which point Republicans backed away. And that threw a wrench into the ongoing negotiations. So this is-- so they're trying to revive this on the fly.

A lot of what's going on with this CHIPS bill or the USICA bill, the China competition bill, is being done on the fly because they're trying to revive something that was really dead. On the broader question of DC and the ability to get things done, going back to your previous segment with David, you know, I think he made some interesting points on consensus, but the fact is that there is no consensus around the country among voters. Voters are very split, and that gets reflected in Washington.

So it's very tough for Washington to reach consensus when there's very little consensus among voters.

DAVE BRIGGS: Indeed, that is true. Stifel Chief Washington Policy Strategist Brian Gardner, come back and see us prior to the midterms, want to ask you about your notes that suggest big business is challenged if Republicans win the Senate or the House. Interesting notes you sent to us. Thank you, Brian.