Biden-Harris wasted $8.5 billion in taxpayer money to lose 15,000 jobs at Intel
Well, ladies and gentlemen: the chips are down — literally and figuratively.
Two years ago, Joe Biden and Kamala Harris touted their “Chips Act” to bring the semiconductor industry back home from Taiwan, China and Singapore.
The price tag on the bill: a cool $280 billion of corporate handouts. It was arguably the largest corporate welfare bill in American history.
Intel, Micron, Global Foundries, Polar Semiconductor, Taiwan Semiconductor Manufacturing Company, Samsung, BAE Systems, and Microchip Technology have been the direct beneficiaries of the law.
This was supposed to be one of the “Crown Jewels” of the Biden-Harris admin. A massive job creator that would allow America to take back its technological
leadership.
Even many Republicans in Congress shamelessly voted for the handouts at a time when the federal government was already borrowing more than $1 trillion a year.
Heavy failures
But today, the failures far outweigh the successes — and in spectacular fashion.
Intel was one of the biggest beneficiaries of the Chips Act, receiving an $8.5 billion grant announced in March, a $25 billion sweetheart tax incentive and likely the lion’s share of an $11 billion federal loan program. That’s only the opening act.
What did we get in exchange? Intel this week announced it was laying off 15% of its workforce — 15,000
positions.
America lost twice: billions of dollars and thousands of jobs.
Meanwhile, Nvidia, which took no government money, has been the top-performing stock over the past 18 months and has made hundreds of billions of dollars for American shareholders. Its chips are mostly made in Taiwan, but it creates thousands of jobs here at home.
This Chips Act was supposed to be the Biden-Harris crowning achievement. A giant job creator. Hundreds of billions of government handouts to bring the semiconductor industry back home. Now, it’s looking like the Titanic.
Maybe these layoffs make business sense and will help Intel become the powerhouse it once was. But the company’s new government-dependent status means all of its decision-making is being directed by Washington — not the marketplace.
Their strategy has been to maximize taxpayers’ dollars — not creating value for their customers.
How many times can we learn the same lesson? Government is terrible at picking winners and losers. Remember Solyndra and Fisker Auto?
Corporate welfare woes
Politicians gamble — with your money — and go broke again and again.
Corporate welfare almost never works. We’ve tried it with steel, autos, solar panels and electric
batteries.
Just look at how this policy has hobbled the electric-vehicle industry. Biden has handed out tens of billions in handouts, mandates and other Hershey kisses to an industry that was well on its way to success when Donald Trump left office. Now the car companies are losing billions of dollars even as they chase down all this “free” money.
EV sales would be much higher today if politicians had simply kept their paws off of it.
Or consider that the Biden administration passed its Green New Deal —dishonestly called the “Inflation Reduction Act” — with hundreds of billions for solar and wind companies.
Today, the industry is still flat on its back — providing less than 10% of American energy. Meanwhile the nonsubsidized oil and gas and coal industries still supply 80% of our energy. The oil and gas industry actually pays taxes rather than just taking government money.
Poor policy
The theory of national industrial policy is based on the idea that some sectors are of such paramount importance that they can’t be left to the private sector. That may make sense when it come to defense industries.
But as we’ve seen with electric vehicles and green energy in recent years, trusting the government to take charge is about the worst way for any business to succeed.
Ironically, the Biden-
Harris administration wants to raise the corporate tax rate to 28% on our successful corporations — the ones that actually make a profit and don’t need government subsidies — and use that money to prop up the loser industries.
It’s no way to run a country. It is the way socialist regimes have all gone broke.
The two of us have suggested that America should pass a law preventing the government from giving any company a subsidy if it has more than $100 million in sales. Use the savings to cut tax rates for everyone.
The failure of the Chips Act is a reminder of the maxim that the best government policy for the economy is: don’t meddle.
In the meantime, Congress should suspend the $100 billion that the semiconductor industry hasn’t already spent and wasted. Never throw good money after bad.
Stephen Moore is chairman of Unleash Prosperity and Phil Kerpen is executive director. Moore also serves as a visiting fellow at the Heritage Foundation while Kerpen Heads American Commitment.
