U.S. chipmaker Intel will receive up to $19 billion in corporate benefits, the White House announced Wednesday, likely making it the biggest recipient of taxpayer-funded aid aimed at boosting semiconductor manufacturing. .
President Joe Biden is expected to formally announce the distribution later today during a campaign event at Intel's headquarters in Chandler, Arizona.in statement, the White House said the grant includes $8.5 billion in direct grants to Intel, and Intel also has access to $11 billion in federal loans. With all this funding, Intel is expected to create 30,000 jobs.
In other words, taxpayers would contribute more than $283,000 for every job created, including only $8.5 billion in direct payments to the company.
Reading makes math even more difficult. Intel press releasereveals that 20,000 of these 30,000 new jobs will be temporary construction jobs related to the construction of new facilities in four states.
But the real surprise is the fact that Intel was already planning to build those facilities. This is natural, but Due to the large demand for semiconductors And the market is becoming increasingly concerned about the fact that much of the world's high-end chips are manufactured in Taiwan and are therefore under constant threat from China. Intel said the federal payments „support Intel's previously announced plan to invest more than $100 billion in the United States over five years to expand U.S. chip manufacturing capacity.“
In summary, the federal government spends a lot of money to subsidize successful and growing industries, asking taxpayers to pick up some of the investment costs that the private sector was already funding. It's not that it's using its money in a particularly efficient way. Make it meaningful!
Unfortunately, this is probably just the beginning. The Biden administration still has $39 billion in CHIPS Act grants left to distribute in the coming months. according to new york times. Even before that money got out into the world, and long before anyone had a chance to measure how effective that spending was, administration officials and semiconductor manufacturing company executives were worried that Congress would add more subsidies. We agree that the round should pass.
„I think we're going to need at least CHIPS 2 to get the job done,“ said Intel CEO Patrick Gelsinger. said to times this weekecho Last month's comments According to Secretary of Commerce Gina Raimondo, who oversees the distribution of this corporate benefit.
Again, even though the semiconductor industry needs subsidies from the government; clearly isn't it-Giving subsidies directly to specific projects or companies may not be a good idea.
For proof, please check new paper From Alex Muresianu, Senior Policy Analyst, Tax Foundation reason intern), which contrasts the approach taken by the CHIPs Act with the Tax Cuts and Jobs Act of 2017, signed by then-President Donald Trump. Muresinu concluded that the Trump tax cuts „triggered a significant increase in investment“ by cutting corporate taxes and implementing a series of supply-side reforms.
„In contrast, the targeted subsidies included in the CHIPs Act „have not led to significant increases in private investment outside the subsidized sectors,“ he wrote.
in national reviewDominic Pino explain Why is this distinction important? “Supply-side orthodoxy and industrial policy often have similar goals of increasing capital investment, but the ways in which they pursue those goals are quite different.” Neutral reforms such as tax cuts Capital investment costs will be reduced and private markets will be able to decide how best to allocate new investment.
On the other hand, industrial policies like subsidies for Intel „require a series of attacks from the banks,“ Pino said. write. Of course, governments must choose which sectors of the economy to subsidize, and of course choose particular winners and losers within those sectors. Next, they must also decide how much to invest in each company and ensure those subsidies do not displace private investment, all in the absence of reliable price signals from advocacy groups. This must be done while enduring relentless pressure. . ”
Of course, specific subsidies to specific companies create something that broader economic reforms cannot. It's an opportunity for the president to stand in front of a construction site and take credit for the jobs it creates.
Even if it comes at a huge cost to taxpayers. Even if those jobs are eventually created.