Bill targeting $250B in funding for US tech, auto faces uncertainty in House

Odds of the U.S. injecting enormous levels of funding into researching the technology and automotive supply chains are riding on whether Democratic lawmakers in the U.S. Congress can work out intraparty differences while keeping Republicans on board.

The U.S. Senate on June 8 passed the Endless Frontier Act, a $250 billion package of individual bills intended to increase national competitiveness with Chinese industry through federal research and development. A priority of Senate Majority Leader Charles Schumer, D-N.Y., the package was able to pass 68-32 with support from a handful of Republicans, including Senate Minority Leader Mitch McConnell, R-Ky.

Included was an array of goodies for microchip manufacturers, semiconductor producers and the mining industry. The bill would provide $52 billion in emergency supplemental funding to implement semiconductor production and R&D programs enacted in a defense policy bill passed in 2020. It would significantly increase U.S. R&D funding by appropriating $49.5 billion over five years to a new CHIPS for America Fund, with money to be allocated to programs related to legacy chip and semiconductor manufacturing.

For miners, the bill would establish a critical minerals mining R&D program within the National Science Foundation and a U.S. Commerce Department grant program for financing critical minerals and metals pilot projects in the U.S. As passed by the Senate, the bill would allow individual project grants of up to $10 million.

There is a rich history of bipartisan agreement on industrial R&D in the U.S., according to Bill Reinsch, Scholl Chair in International Business at the D.C.-based Center for Strategic and International Studies. However, Reinsch noted the massive proposed spending is "probably … broader and less targeted" than past U.S. endeavors.

"The bill is focused more on the front end than the back end, it's more designed to deal less with today's crisis as it is making the United States more competitive in the long run," Reinsch said June 10.

Lewis Black, CEO of Canadian tungsten mining and processing company Almonty Industries Inc., said in an interview that the legislation was a "step in a right direction and not in a jaded way," despite a "disappointing" focus on larger corporations within the manufacturing segment of the supply chain and less attention paid to the raw materials space.

"I think the good news is both sides of the aisle found a reason to come together. I think that's a really positive step, generally," Black said June 9.

However, bipartisanship aside, the bill could face complications in becoming law as it heads to the U.S. House, where it will have to navigate the priorities of individual committees.

Rep. Gregory Meeks, D-N.Y., the chair of the House Foreign Affairs Committee, recently offered a legislative proposal focused on competing with China through U.S. State Department engagement in the Indo-Pacific region. Meeks' proposal would require U.S. representatives on international bodies such as the United Nations to "commit to significantly increasing" efforts to cut global emissions of black carbon, methane, and hydrofluorocarbons with high global warming potential.

The House Science, Space and Technology Committee has separately advanced bipartisan legislation that would invest more than $72 billion into R&D at the National Science Foundation, including programs related to technology transfer and the protection of research from foreign theft.

In addition, it remains to be seen whether the Endless Frontier Act will run into negotiations on a bipartisan infrastructure package, which is moving on a separate track. The legislation was brought up during now-defunct talks on infrastructure between the White House and Congressional Republicans.

The House has so far not demonstrated "the same urgency" as the Senate to deal with the issues underlined by the bill, consultancy firm Eurasia Group stated in a June 8 research note. A final package is "unlikely to become law until this fall" because of the work needed to be done in House committees.

However, some budget-related components including the provisions funding semiconductor manufacturing could move with the infrastructure package if that legislation advances at a faster pace, the consultancy group stated.

Reinsch said there are "so many variables that it's hard to predict at this point" exactly what form the legislation will take, if and when it lands in the Oval Office for Biden to sign into law.

"I think it's very likely that there's going to be, in the end, a comprehensive strategic approach to China and the competitive challenge that China presents," Reinsch said. "Whether it's stand-alone or part of something else like infrastructure, I couldn't say."