Congress and the Biden administration are preparing a bloated bill on creating useful semiconductor production incentives for America, but the CHIPS for America Act runs the real risk of undermining America’s economic freedom and competitiveness. America, rather than improving it.
The Senate is due to vote this week on the bill, the price of which has jumped to $250 billion from the initial $76 billion. The legislation does little to counter the economic challenge posed by China and the Chinese Communist Party, but instead spends billions of dollars in subsidies to tech companies and more funding for federal agencies.
Despite a handful of useful foreign and security policy provisions, the hugely expensive legislation would hand out $250 billion with few firewalls to prevent those funds from helping China, and it blatantly ignores the fact that inflation , which was fueled by the Biden administration. spending out of control, exceeded 9%.
To be clear, the United States is in a long-term struggle with the Chinese Communist Party. This is the most critical and important international challenge facing the United States. However, the CHIPS for America Act is not the way to solve this serious problem, either effectively or practically.
Heritage Foundation President Kevin Roberts made this point succinctly:
The Chinese Communist Party poses a threat to American values, interests, and freedoms like no other we have faced in our history. Unfortunately, the CHIPS Act does little to counter these threats and protect our way of life.
The answer to the CCP’s malevolent ambitions is not to spend billions of dollars to help Fortune 500 companies, with no guarantee that those dollars won’t end up supporting those companies’ business operations in China.
Moreover, the $250 billion price tag of the act will contribute to record inflation and increase the already historic cost of living for working and middle class Americans.
China’s challenge, which America must meet and win, runs the gamut of national power – economic, military, diplomatic and informational. We need effective and strong policies in all these areas.
Economically, in particular, this means an approach based on empowering the American engine of growth with greater economic freedom, not a politically motivated spending spree.
For more than a quarter century, The Heritage Foundation’s annual Index of Economic Freedom has measured the impact of free enterprise underpinned by the rule of law, limited government, regulatory efficiency and open markets. in countries around the world. The strongly positive correlation between a nation’s level of economic freedom and the general standard of living and competitiveness of its citizens highlights how essential economic freedom is in practice.
Yet after scoring high in 2006, the United States fell from the “free” to “mostly free” category in 2010. Economic freedom continued to decline, reaching an all-time low in 2022, placing America behind 24 other nations. .
America’s economic freedom is under attack by massive government spending bills that are driving the country and its citizens into ever-increasing debt. The taxes that ultimately have to pay for the government’s unbridled spending transfer the freedom of choice from the individual to the government.
Economic freedom is also eroded by many layers of political regulations. Contrary to what some politicians claim, America’s competitive position is not threatened because the federal government is not spending or doing enough. Instead, the problem is that government has become too big in scale, scope, and power over people’s daily lives.
America needs limited government, not expansive and costly government, to ensure a transparent and competitive economic environment in which citizens enjoy the freedom and opportunity to prosper to the fullest extent possible.
In reminding us of what policy steps should be taken to address the unfortunate state of the US economy, Roberts of Heritage and Sen. Mike Lee, R-Utah, wrote in a joint op-ed earlier this year:
Since the founding of America, based on the principles of market capitalism that the elites hated, then as now, we have been the living thing in the global economy. For two centuries, we have defied the cronyism and timidity of insiders in business and politics and entrusted our economy to our people – and it has made all the difference. …
[E]Economic freedom is not something Americans should apologize for, but rather exploit, spur on, and give free rein to.
In fact, 2022 is the year to act on that reminder to restore America’s economic freedom, now more than ever.
Despite claims by backers, the CHIPS for America Act is not intended to deal effectively with China, whose lack of economic freedom has severely distorted markets beyond its borders. The law is just another unacceptably bloated spending bill that resembles the derailed Build Back Better Act. More spending will compound America’s 40-year high inflation problem and further erode America’s overall economic freedom and competitiveness.
The United States can and should rise to the challenge of China, but to do so policymakers in Washington must go beyond their old-fashioned political spending instincts and beyond the CHIPS for America Act.
This piece originally appeared in The Daily Signal