Yves here. The COMPETES Act is a glaring example of why the US has become too corrupt and lazy to do proper industrial policy. Mind you, we do have industrial policy by default. You can see which sectors are favored by virtue of the combination of subsidies, including tax breaks, and sustained high growth with little moderation of profit levels: health care, higher education, banking and the money management industry, real estate, and arms merchants.
Sanders wanted any industrial-policy-themed handouts to include provisions that had some teeth, like prohibitions on stock buybacks.
Plus any bill with a cute name is almost assuredly putting lipstick on some very big pigs.
By Jessica Corbett. Originally published at Common Dreams
U.S. Sen. Bernie Sanders made clear Tuesday that he would not support the upper chamber’s unanimous approval of a global competition bill without changes to provisions he denounced as “corporate welfare.”
“At a time of massive and growing income and wealth inequality, the American people are outraged at the unprecedented level of corporate greed that is taking place all around them,” Sanders (I-Vt.) began a speech on the Senate floor.
Speaking for more than 20 minutes, the Senate Budget Committee chair laid out his opposition to the America Creating Opportunities for Manufacturing, Preeminence in Technology, and Economic Strength (COMPETES) Act.
“Today, while the working class of this country is struggling with higher gas prices, higher food prices, and higher housing prices, the billionaire class and large corporations are doing phenomenally well and, in fact, have never, ever had it so good,” Sanders said. “The American people want Congress to address corporate greed and make certain that the wealthiest people and most profitable corporations pay their fair share of taxes.”
“And yet, this week, right now, what are we debating here on the floor of the Senate? We are debating legislation to provide some $53 billion in corporate welfare with no strings attached to the highly profitable microchip industry,” he noted. “And yes, if you can believe it… this legislation also provides a $10 billion bailout to Jeff Bezos so that his company Blue Origin can launch a rocket ship to the moon.”
Bezos, who also founded Amazon, has seen his wealth soar during the ongoing pandemic, Sanders pointed out. As of press time, the Bloomberg Billionaires Index ranked Bezos as the world’s second-richest individual, worth $190 billion, behind SpaceX and Tesla CEO Elon Musk at $252 billion.
At a time of unprecedented greed, the Senate is right now debating giving $53 billion to the highly profitable micro-chip industry and a $10 billion bailout to Jeff Bezos so that he can launch a rocket ship to the moon. I'm LIVE on the floor to oppose it. https://t.co/Q1KriJd8gx
— Bernie Sanders (@SenSanders) March 22, 2022
Sanders announced in his Senate speech that he will not back any unanimous consent request to speed up the passage of the America COMPETES Act—which the House approved in February—unless there is a roll call vote on two “extremely important” amendments he has introduced.
Taking aim at microchip firms, the senator said that “providing $53 billion in corporate welfare to an industry that has outsourced tens of thousands of jobs to low-wage countries and spent hundreds of billions on stock buybacks with no strings attached may make sense to some people, but it does not make sense to me, nor do I think it makes sense to the American people.”
Sanders’ first amendment “would prevent microchip companies from receiving taxpayer assistance unless they agree to issue warrants or equity stakes to the federal government,” he explained. “If private companies are going to benefit from over $53 billion in corporate welfare, the financial gains made by these companies must be shared with the American people, not just wealthy shareholders.”
“In other words, all this amendment says is that if these companies want taxpayer assistance, we are not going to socialize all of the risks and privatize all of the profits,” he added. “If these investments turn out to be profitable as a direct result of these federal grants, the taxpayers of this country have a right to get a return on that investment.”
The senator noted that his amendment directed at the microchip industry “would also require these highly profitable companies not to buy back their own stocks, not to outsource American jobs, not to repeal existing collective bargaining agreements, and to remain neutral in any union organizing effort.”
The second amendment “would simply eliminate the $10 billion bailout for Jeff Bezos to fly to the moon,” Sanders said, acknowledging the billionaire’s personal wealth. “If Mr. Bezos wants to go to the moon, let him use his own money, not the taxpayers’.”
While Sanders criticized those two particular elements of the America COMPETES Act, progressives and foreign policy experts have also raised other concerns. As Common Dreams reported last month, an analysis by Ashik Siddique of the National Priorities Project at the Institute for Policy Studies called the bill “part of a dangerous trend of feeding tensions between the U.S. and China.”
“The America COMPETES bill would authorize hundreds of billions of dollars in new federal spending on initiatives intended to boost the United States in its competition with the world’s other largest economy,” Siddique wrote, “even while other critical components of the U.S. economy are chronically underfunded.”
24 comments
Comments are closed.
Over the years the name of a bill tells you wha it is about.It’s the opposite of what the name implies. This is true most of the time.
“Calling Mr. Orwell… Mr. George Orwell to the white courtesy phone…”
If they are going to be forking over billions to the corporations, at least demand equity in shares in exchange for the money.
Otherwise, this is a straight up giveaway. We seem to have a system of socialism for the rich that effectively are getting free money. It’s the worst of both worlds, capitalism and socialism.
Personally, I am for an industrial policy, but it requires that the government be in control of the rich and shareholder class. That may be true in nations like China, where the government will quickly put the rich in their place when they dare to step out of the line the party has set, but not the US, where the rich own the government.
Plus if the company that gets subsidies buys back stock (which Intel has done in recent years), then they may be getting what is a taxpayer subsidized buyback with no real investment.
A case could be made for US needing to regain semiconductor leadership, which it has lost in recent years to TSMC, but it has to be done in a way that actually benefits society, not one that just lines the pocket of the rich.
Yet another danger is an Intel monopoly. Intel controls the x85 CPU market and AMD, its only competitor nearly failed until their Zen architecture.
X86 Market not X85.
Long story short, that’s a CPU instruction set type, that along with ARM, dominates pretty much every microprocessor you use.
Intel and AMD currently have a duopoly for X86 CPUs and between the time Intel released Conroe and AMD released Zen, a period of over a decade, an Intel monopoly reigned, which is a loss for consumers.
It’s a big deal because of the importance of CPU manufacturing.
Intel is in trouble, this is why they need the money. TSMC and Samsung have taken a large technological lead on the new chip production to the point where Intel will be sourcing some of their own chips from TSMC. This will become more evident in the next two years as TSMC and Samsung move to more advanced manufacturing nodes (5 nm this year and 3 nm in 2024), while Intel struggles to produce its current 10 nm node (equivalent to TSMC 7 nm) in volume.
This is why Intel appointed Pat Gelsinger as the new CEO, an engineer and Intel insider. They have seen their company lose their technological lead due to lack of R&D investment, which was diverted into stock buybacks. Gelsinger is trying to turn the ship around, but it will be difficult, Intel is technologically behind and it lacks the financial muscle to invest in new fabrication technologies because its cash reserves are drained.
Intel major issue is also its complete failure to create a competitive phone chip. Phone chip market is much more lucrative than computer chip market, but Intel’s insistence on sticking with power inefficient x86 architecture prevented it from making a competitive product.
So now they are stuck, their competitors are Samsung and TSMC who are both reaping phone chip market revenues and using them to fund process development that are then used by Apple (Samsung chips) and AMD (TSMC chips) to compete with Intel in the computer chip market. For the sake of competition, I hope Intel recovers and remains competitive, but it’s going to be a tough few years for them.
In some sense Intel has become the Boeing of the semiconductor industry. Once a leader in technology it became mired in financialization and has lost its way. The chip industry has a take no prisoners ethos, so Intel may never recover its past glory even assuming a government bailout which it likely will receive.
Indeed – as with many corporations they have been squandering cash on stock buybacks that were illegal until Reagan’s SEC Chr issued a rule Liberating buybacks – 17 C.F.R. 240.10b-18. Squandering trillions to make themselves rich via stock options owned via price manipulation. Even Harvard Business Review in 1/2020 finally spoke the truth.
Even Senator Warren has finally figured out that buybacks are bad policy.
That is rather astounding since Intel has been given any number of sweetheart deals at taxpayer expense over the years and then failed to follow through on their end of the bargain. Time to let one of the corporate welfare queens fail, pour encourager les autres.
Better Sanders push through admin. To rescind the 1992 SEC Rule allowing stock buybacks. Corporations including Boeing & GE have spent trillions on stock buybacks to enrich the CEO’s & senior mgt which short changing investment im their firms, givinf employee or shareholder dividend bonuses.
Bezos/Musk – the reason I started cheering for the creatures in the Alien movies.
Funding the IRS and raising taxes on everyone perhaps including a VAT, adopting the British NHS healthcare system with better funding with all providers on salary, eliminating federal tax benefits for housing, getting rid of carried interest, and cutting defense would do more for US competitiveness than anything in this stupid bill. High health care costs, high litigaitons costs, and high finance costs add to the cost of workers. It is national and non productive overhead. A society with low healthcare costs, low litigation levels, low levels of rent seekers and high taxes to provide for the needs of citizens can compete. China has its rent seekers and corruption as well. The key is to get the problem under control in the US. Maybe campaign finance reform?
I’ve not seen any compelling analysis of why corporate America tolerates the healthcare system as it currently exists since it seems to benefit only the healthcare and insurance sectors. For everyone else it’s a huge cost. I’ve often wondered if healthcare is conveniently used as a whipping boy to either justify outsourcing where necessary, and used as a means of indenturing employees who would otherwise do something else if it were not for the benefit. The expensive benefit also works against smaller businesses that are trying to compete for labor I suppose. I’m sort of into bicycles, and have noticed there is astonishingly good technology coming very small Germany companies. It has occurred to me that where there is national insurance talent is free to experiment and take risks instead being yoked to a large employer. I’m sure that is not all of it, but it is clear these little companies are being operated by very good engineers, so it make wonder.
I was similarly perplexed by this – why do ANY of the companies, large or small, tolerate being raked over the coals by the health insurance cartel? Certainly they would love to get rid of the rather large line item for benefits paid for employees, freeing them up to make more profits, and reducing the annoying administrative overhead for them.
But then, doomscrolling through the bird app, I read a rather compelling argument that I haven’t been able to entirely shake – the companies, specifically the big ones, would rather have it this way. They’re big enough to afford the significant overhead and administrative burden (whole departments devoted to that, which smaller companies can’t manage), and it serves some convenient functions:
– keeps smaller players from nipping at their heels
– keeps regular employees lashed to jobs they hate for fear of losing benefits
– keeps wages, as a whole, down
– keeps deductible expenses up (this might be a wash with wages)
The third bullet was the one that really struck me, but I should have realized that these big companies, even while ‘competing’ with each other, are more than capable of collective action to protect that caste.
If employees had guaranteed health care (and guaranteed housing, but that’s another topic), they could just get up and leave if things sucked at their employer. That extra mobility would all but necessitate higher overall salaries to attract the best talent, and you’d still have to keep them happy. As it stands now, plenty of people stay in garbage jobs because some of them offer otherwise unaffordable insurance coverage. And if it wasn’t the employer responsibility to cover health care, well, the best talent might either start their own shops or join the smaller players, creating more and better competition. And if these big companies couldn’t expense health care costs, those already large profits might look even more offensive. It might get offset by the general rise in wages, but maybe not.
It’s all about power and leverage. It’s offensive to these companies to give employees even a modicum of power, so they’d rather deal with the murderous parasite we already have. It’s no real skin off their teeth anyway.
The government already has a de facto ownership stake of every C-corporation in America thanks to its corporate taxation prerogative.
The reality is that American style laissez-faire industry cannot compete on an open playing field against subsidized competitor firms without failing, withering and dying – though I agree that the US has used all its tricks to try to level the playing field without overt support before.
If anything I would suggest rewriting the tax code to address rampant vapid deductions and credits that strive to quietly cut Uncle Sam out of the equation. Our tax code is built to raise nominal taxes, but lower effective taxes.
Quite a policy to match up to the, “Print Button for Me/Mine, not We/US”, and ZIRP Forevah.
Game theory places far too much faith on the existence of a positive sum game, no?
What if instead of giveaways to a company like Intel, the government purchased non-voting, non-dividend paying shares. These shares could be sold to the market over 10-15 years, and become regular shares upon those transactions. The company could continue to buy back shares in the market if they so wished.
That’s funny. Bernie had no problem supporting the Elon Musk Trillionaire Act (sorry, the “bi-partisan infrastructure act”). I guess different billionaires call for different actions.
I just want to replace the word “billionaire” with “oligarch”, but let’s not forget the vast fortunes that our oligarchs hide on their Treasure Islands.
Yeay, Bernie! Only problem is he’s 80. BTW, can we get a yuge can of cosmic RAID and spray all the FIRE and PNAC cockroaches to death? An old gal can dream….
This is how we pay for Washington’s war on Russia: Corporations and billionaires get subsidies while we pay more for food fuel cars and most everything.
Senator Sanders is quoted as referring to an, “unprecedented level of corporate greed …” I believe he misspoke. There is plenty of precedent for any and all levels of corporate greed.
When push comes to shove we can all be sure that Bernie Sanders will cave as he always does. He gives great speeches on the Senate floor, and then votes with the majority. Same as it ever was.
This Act sounds a lot like McMasters “competitive cooperation” idea, in the real world – it’s just plain old competition. We do have to rebuild our microchip industry. Not just because Taiwan will be reunited with China. But because it is clear now that we ned to be self sufficient. And insure our own supply chain. I think, instead of begging the big corporate recipients of this “50Bn” (undoubtedly there is much more) to be fair to labor and unions, we should use this largesse by the taxpayer (also a fiction) to lay the foundation for the New Human Rights Act. To legislate once and for all what things all business enterprise must do to support workers and communities. In fact an HRA could be completely separate because it is legislation whose time has come anyway. Most importantly we need actual laws with teeth for good health care; good pension guarantees; decent housing – lots of things. If people are neglected under good laws then the people who failed to provide the human services go to jail. And that HRA will require training an army of workers and building new facilities. I really don’t think Bezos should be getting another 10BN for Blue Origin to go to the moon unless his efforts are in behalf of NASA and the country. Then OK. If Bezos is really trying to get a space tourism business off the ground, it is too laughable. A weekend on the moon requires full hazmat – because moon dust is like razor blades. And of course there’s no water. And then the diapers… so this 50Bn sounds like a cover story. And because the US military – as profligate as they are – are just not that ditsy. I’m sure they took note of how the public responded to Jeff and Richard in their last spectacle – calling them “twats in space” and etc. And the propaganda was heavy – pictures of their antics. Disembarking, Branson ran over to his grandkid and gave him/her a big hug. Grampa’s doing it for the children. For their future. So whatever. Give them space. Fine. And give us legislated human rights in detail and with consequences.
How do you co-opt and otherwise neuter a pesky thorn in your left side?
Give him a committee chairmanship and then ignore.