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chips act
Johnson Attempts Damage Control After Saying GOP, Trump Would Repeal Job-Creating CHIPS Act
"The Republican Speaker of the House just told the tens of thousands of construction workers building New York and America's future they want to send them pink slips ASAP," said Senate Majority Leader Chuck Schumer.
Nov 02, 2024
On MSNBC Friday night, U.S. Rep. Alexandria Ocasio-Cortez issued an unexpected "thank you" to House Speaker Mike Johnson—expressing appreciation for his admission that the GOP will try to repeal the CHIPS and Science Act, which has created more than 115,000 manufacturing jobs, if the party wins control of Congress and the White House.
"What I would like to thank Speaker Johnson for is his honesty and his forthrightness about what they plan to do with a Republican majority in the House of Representatives," said Ocasio-Cortez (D-N.Y.). "You heard it straight from the horse's mouth and we'll see exactly what happens if we allow a Republican majority in the House and a Donald Trump presidency."
The congresswoman was referring to an interview by Luke Radel, a student journalist at Syracuse University, who asked Johnson (R-La.) about Trump's recent comments that the CHIPS and Science Act is "so bad."
"You voted against it," said Radel. "If you have a Republican majority in Congress and Trump in the White House, will you guys try to repeal that law?"
"I expect that we probably will, but we haven't developed that part of the agenda yet," said Johnson before attempting to pivot to talking about Rep. Brandon Williams, a Republican who represents New York's 22nd District, where a $100 billion Micron Technology chipmaking facility has benefited from the CHIPS and Science Act.
"The Republican Speaker of the House just told the tens of thousands of construction workers building New York and America's future they want to send them pink slips ASAP," said Senate Majority Leader Chuck Schumer (D-N.Y.).
The exchange grew increasingly awkward as Radel asked Williams whether he would vote to repeal the legislation, signed by President Joe Biden in 2022, that Micron has said will create 50,000 semiconductor manufacturing jobs in the Syracuse area.
"No, obviously, the CHIPS Act is hugely impactful here, and my job is to keep lobbying on my side," said Williams. "I will remind [Johnson] night and day how important the CHIPS Act is and that we… break ground on Micron."
Speaking with anchor Chris Hayes on MSNBC, Ocasio-Cortez said the CHIPS Act "is not a remote and faraway thing for workers" in Upstate New York, Michigan, Arizona, and other states where jobs have been created by the legislation.
For thousands of workers, the law represents "the jobs and especially the union jobs that result and are created, that people can actually take and will help them put food on the table without having to work triple or double overtime in order to accomplish that," said Ocasio-Cortez. "People in Buffalo, people in Upstate New York, people in Michigan, they hear about the plant that they work at."
The International Brotherhood of Electrical Workers (IBEW) echoed the congresswoman's sentiment, saying Johnson's plan to repeal the CHIPS Act would impact "tens of thousands of IBEW jobs created by this administration."
"We are NOT going back," said the union.
Johnson's remark got the attention of other politicians whose states have benefited from the law, including Sen. Mark Kelly (D-Ariz.), Rep. Jasmine Crockett (D-Texas), and Michigan Gov. Gretchen Whitmer.
Less than two weeks ago, Whitmer announced that through the CHIPS Act, the Biden administration had provided $325 million in direct funding to Michigan manufacturer Hemlock Semiconductor, allowing it to create over 1,000 good-paying construction jobs to build a new facility as well as 180 permanent manufacturing jobs.
"Mike Johnson's asinine admission that he would repeal the CHIPS Act if Republicans and Trump win the election is a complete disaster for thousands of Michigan workers relying on the jobs that this legislation provides," said the Democratic governor. "Make no mistake, a repeal of the CHIPS Act would kill thousands of good-paying manufacturing jobs right here in Michigan."
Johnson attempted to do damage control, saying he had "misheard the question," but Radel noted that he was standing close to the House speaker when he asked about the CHIPS Act and others commented that the word "repeal" was said clearly. Williams and Johnson also tried to backtrack during their exchange with the student journalist, saying they aimed only to reform the law—but as Radel noted, the former president has made clear he opposes the CHIPS Act.
Vice President Kamala Harris' Democratic presidential campaign said Johnson's threat to repeal the CHIPS Act is the latest of several recent questionable "promises" made by Trump and his surrogates in the last days before the election.
"Mike Johnson wants to lose Arizona, Georgia, Michigan, and North Carolina jobs," said James Singer, a rapid response adviser to Harris, posting an image showing where the CHIPS Act has created semiconductor manufacturing jobs.
Johnson's comments came as Ocasio-Cortez, United Auto Workers president Shawn Fain, Rep. Rashida Tlaib (D-Mich.), and others were rallying Michigan UAW members at a labor-focused get-out-the-vote event in Detroit.
"I do not see elections as an endpoint," Ocasio-Cortez told UAW members at the rally. "They are a waypoint... Because the larger task that we have today is organizing a mass movement of labor in the United States of America. We have a generational task ahead of us, and electing Kamala Harris is an opening silo to the movement that we are about to embark upon."
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Chip Firms Poised to Rake In Taxpayer Subsidies Spend Big on Stock Buybacks
Companies in line to receive CHIPS Act subsidies spent a combined $41 billion on share repurchases between 2019 and 2023, a new report shows.
Jul 11, 2024
An analysis published Thursday estimates that semiconductor firms positioned to receive billions of dollars in taxpayer subsidies thanks to a 2022 U.S. law have spent big on investor-enriching stock buybacks in recent years, a finding that amplified calls for meaningful restrictions on companies benefiting from public money.
The new report released by the Institute for Policy Studies (IPS) shows that between 2019 and 2023, the first 11 corporations to reach preliminary CHIPS and Science Act agreements with the U.S. Department of Commerce collectively poured more than $41 billion into stock buybacks—a sum that would have been enough to finance a $27,541 raise for 300,000 employees annually for five years.
Intel, the company set to receive more CHIPS Act money than any other semiconductor firm, spent the most on buybacks: a staggering $30.2 billion between 2019 and 2023.
"We found no evidence that any of the companies with preliminary agreements have publicly committed to suspend their existing share repurchase plans—or to refrain from authorizing new plans—during the grant period," reads the report. "In fact, when members of Congress asked BAE Systems executives if the firm would commit to pausing stock buybacks or to not engage in future ones while receiving a taxpayer-funded CHIPS grant, they declined to answer."
The Biden White House, which worked hard to get the CHIPS Act across the finish line in 2022, has insisted that the law contains "strong guardrails" to prevent the misuse of taxpayer money, including on share repurchases.
But Sarah Anderson of IPS and Natalia Renta of the Americans for Financial Reform Education Fund, the co-authors of the new report, noted Thursday that the statute only prohibits CHIPS Act subsidy recipients from spending the taxpayer money directly on buybacks.
"Since money is fungible, this is not a strong guardrail," the pair argued.
"Congress passed the CHIPS and Science Act and President Biden signed it into law to bolster semiconductor manufacturing in the U.S.—not to waste public dollars on stock buybacks."
Critics of stock buybacks and sky-high executive compensation warned prior to the CHIPS Act's passage that the measure would amount to large-scale corporate welfare unless lawmakers placed serious constraints on how companies could spend the money.
Sen. Bernie Sanders (I-Vt.) tried unsuccessfully to attach an amendment to the measure that would have barred subsidy recipients from buying back their own stock, outsourcing jobs, or attempting to sabotage unionization efforts.
A little over a month after President Joe Biden signed the CHIPS Act into law, a group of Democratic legislators warned U.S. Commerce Secretary Gina Raimondo that while the statute "specifically prohibits the use of CHIPS funds for stock buybacks and dividend payments, these restrictions do not explicitly prohibit award recipients from using CHIPS funds to free up their own funds, which they can then use for those purposes."
The new IPS report notes that four semiconductor firms that have reached CHIPS Act agreements with the Biden administration have "board-approved share repurchase plans that would allow an additional $14.3 billion in buyback spending," with Intel accounting for more than half of that total.
The analysis also found that annual CEO compensation between 2019 and 2023 averaged close to $14 million at firms in line for CHIPS Act funding, while median pay at the companies was $73,046.
"Congress passed the CHIPS and Science Act and President Biden signed it into law to bolster semiconductor manufacturing in the U.S.—not to waste public dollars on stock buybacks that make rich executives richer and exacerbate economic and racial inequality," said Renta, senior policy counsel for corporate governance and power at the Americans for Financial Reform Education Fund.
"Commerce Secretary Raimondo must finalize CHIPS contracts with strong stock buyback restrictions to make sure public money serves the public good, as intended, not narrow, private interests," Renta added.
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Billions in Taxpayers Subsidies Shouldn't Be Used for Stock Buybacks to Enrich Greedy Investors
Public money should serve the public good.
Jul 11, 2024
The 2022 CHIPS and Science Act created a huge opportunity to boost domestic production of the semiconductors that power everything from refrigerators and trains to whatever electronic device you’re reading from right now.
The Biden administration has also taken important steps to make sure these and other public investment dollars create good jobs, particularly for disadvantaged workers.
For instance, CHIPS grantees must submit plans to provide affordable, high-quality child care services for their manufacturing and construction workers. And President Biden has ordered all construction firms involved in large public infrastructure projects to negotiate collective agreements with their workers.
But if you take a look at the track records of corporations in line to pocket CHIPS manufacturing subsidies, you’ll understand why some Democrats are urging the administration to do more to prevent corporate executives from misusing these funds to enrich themselves and wealthy shareholders.
Between 2019 and 2023, these companies spent more than $41 billion on stock buybacks — enough to provide 300,000 employees a $27,541 bonus every year for five years.
A new report from the Institute for Policy Studies and Americans for Financial Reform Education Fund provides detailed data on stock buybacks and CEO pay at the first 11 corporations to sign preliminary CHIPS agreements with the Department of Commerce: Intel, TSMC, Samsung Electronics, Micron Technology, Global Foundries, Microchip Technology, Polar Semiconductor, Absolics, Entegris, BAE Systems, and Rocket Lab. These companies are in line for subsidies totaling nearly $30 billion.
What did we find? Between 2019 and 2023, these companies spent more than $41 billion on stock buybacks — enough to provide 300,000 employees a $27,541 bonus every year for five years.
Intel had the largest outlay. With the more than $30 billion the company spent on buybacks from 2019 to 2023, the giant chipmaker could’ve given each of Intel’s 124,800 employees a $48,000 bonus every year. Intel is in line to receive as much as $8.5 billion in CHIPS subsidies – the most of any firm.
Stock buybacks have come under greater scrutiny as large corporations have spent record sums on this financial maneuver to artificially boost the value of their shares — and the value of CEO stock-based pay.
In many of the high-profile labor battles of 2023, unions skewered corporate executives for blowing profits on buybacks while claiming they couldn’t afford to raise worker pay. Analysts have also documented a connection between buybacks and reduced capital investment and innovation, as well as the exacerbation of economic inequality and the racial wealth gap.
In response to public concerns, the Commerce Department announced they would give a leg up in the awarding of CHIPS subsidies to companies that agree to forgo all stock buybacks. But so far, none of the companies in line for these subsidies have publicly committed to suspend existing share repurchase plans (which currently authorize $14.3 billion in buyback spending) or to refrain from adopting new plans during the grant period.
The CHIPS law does forbid subsidy recipients from spending CHIPS funds directly on stock buybacks, but since money is fungible, this is not a strong guardrail.
In a recent letter to Commerce Secretary Gina Raimondo, Senator Elizabeth Warren, Congressional Progressive Caucus Chair Rep. Pramila Jayapal, and several other lawmakers note that the federal agency has the “statutory authority to fully ban CHIPS grant recipients from engaging in stock buybacks as a condition of award.”
Unless the administration asserts this authority, the lawmakers warn, they will “leave the door open for semiconductor companies to take millions or even billions in CHIPS grants, move some money around, and then engage in more stock buybacks.”
Our report found that CEOs with preliminary CHIPS agreements are sitting on company stock holdings worth more than $2.7 billion ($306 million on average). In other words, these executives are positioned to reap huge personal windfalls from share price pops related to continued buyback spending.
President Biden has spoken out repeatedly against wasteful stock buybacks and his economic agenda centers on an industrial policy to create good jobs and long-term prosperity, particularly for communities and workers who’ve been left behind.
Strong buyback restrictions in final CHIPS contracts would help maximize the benefits of these vital investments. Public money should serve the public good — not narrow, private interests.
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