Biden Cabinet official delivers blunt message on stalled semiconductor chips bill: ‘Time’s up. It’s time to make it happen’

By Phil Mattingly, CNN

Secretary of Commerce Gina Raimondo on Wednesday had a blunt message about stalled legislation that would address a critical shortage in semiconductor chips.

“The message is, time’s up,” Raimondo said in an interview with CNN a few hours before traveling to Capitol Hill with top defense and intelligence officials to meet with lawmakers. “It’s time to make it happen.”

It’s a message that comes as a sweeping proposal that includes $52 billion to turbocharge US semiconductor development and manufacturing is caught in the middle of partisan warfare, threatening its prospects.

The Biden administration officials made an urgent appeal to senators at Wednesday’s classified briefing, calling on Congress to act before the August recess and warning of grave consequences if the legislation continues to languish.

“The message is that the chips part is the most important and the biggest vulnerability but there are other aspects of the bill that are important too,” GOP Sen. John Cornyn of Texas said after the briefing. “This is about the art of the possible and we need to figure it out.”

Democratic leaders are weighing the best path forward, which Raimondo said may mean breaking the chips funding off from the broader legislation and passing it as a standalone measure.

While the Cabinet official made clear to CNN she wasn’t going to tell Democratic leaders the best path forward, she did note she’d had a series of calls with lawmakers in both parties in the last few days.

“It seems like folks are coalescing around the plan of some kind of a chips-plus package and moving quickly,” Raimondo said. “And so that’s what I’m hopeful will happen.”

Raimondo, who was joined by Deputy Secretary of Defense Kathleen Hicks and Director of National Intelligence Avril Haines, has pressed lawmakers to move on the issue since the early days of the administration.

That effort has reached a critical stage, according to Raimondo, as industry players have communicated to top administration officials that their investment plans need to be solidified in the coming months.

“Semiconductor companies need to get ‘concrete in the ground’ by this fall to meet this increased demand in the years ahead,” Raimondo and Secretary of Defense Lloyd Austin wrote in a Wednesday letter to congressional leaders. “CEOs of firms all along the supply chain have made clear that the industry is deciding where to invest now.”

Administration officials view the stakes as significant and wide ranging. Or, as Raimondo candidly put it: “Everyone who has studied enough has an ‘oh sh*t’ moment.”

Several companies have tied significant US manufacturing investments to the passage of chip funding, including Intel, which held a high-profile event at the White House in January to announce a $20 billion facility in Ohio.

The company recently canceled a scheduled July groundbreaking on account of congressional inaction.

As inflation sits at a new 40-year high, the ability to dramatically expand the supply of critical components in everything from cars and washing machines to iPhones is seen inside the administration as a long-term necessity.

“Clearly inflation is a problem,” Raimondo said. “And so investing to increase supply of chips is going to have a positive long term effect on inflation.”

The briefing on Wednesday, requested by Senate Majority Leader Chuck Schumer, also drew direct attention to what officials view as the national security necessity of the funding.

“It’s in the interest of every American — so we can sleep easy at night knowing our national security is protected and China won’t eat our lunch — to pass this bill, particularly the chips component, because that’s the most time sensitive,” Raimondo said after the briefing.

Based on the questions senators were asking, she added, the bill is clearly seen as a “national security imperative.”

It’s something with both near-term and longer-term implications. Raimondo noted that defense contractors are rapidly moving to replenish supply due to the massive US effort to supply weapons systems to Ukraine — many of which rely on chips.

But more broadly, officials keenly aware of significant Chinese efforts to ramp up domestic manufacturing of chips are seeing future defense systems as being at risk.

“Weapons systems employed on the battlefields of today and emerging technologies of tomorrow depend on our access to a steady, secure supply of microelectronics,” Raimondo and Austin wrote in their letter. “Immediate passage will revitalize the domestic semiconductor manufacturing industry and enable game-changing capabilities our warfighters need.”

Still, despite the bipartisan Senate passage last year of a sweeping bill that included the chips funding, and bipartisan agreement on the problem itself, the prospects for a bill to reach President Joe Biden‘s desk have run into a wall.

More than a year after the Senate passed its bill, known as USICA, there are still a myriad of outstanding issues that haven’t been reconciled with the House Democratic counterpart. Aides in both parties acknowledge a near-term resolution is all but impossible at this point.

Things grew more dire in recent weeks when Senate Minority Leader Mitch McConnell, a Kentucky Republican who voted for the Senate proposal, drew his own red-line tied to the separate Democratic effort to pass a party-line economic package.

“Let me be perfectly clear: there will be no bipartisan USICA as long as Democrats are pursuing a partisan reconciliation bill,” McConnell said in a June 30 tweet.

McConnell would not comment on Wednesday when CNN asked if the briefing had changed his mind about threatening to kill the legislation if Democrats move ahead with reconciliation.

Democrats, some of whom candidly acknowledged to CNN they saw a political opportunity, have railed against the proposed obstruction on from both sides of Pennsylvania Avenue.

But McConnell appeared to lay out a potential pathway to a resolution this week, when he noted two potential options would be for the House to simply pass the Senate version of the legislation or breaking the chips funding off and move it separately.

“There are members I have who are not overly fond of USICA but do think there’s a national security aspect to the chips deficit,” McConnell told reporters on Tuesday.

Speaker Nancy Pelosi, a California Democrat, ruled out the idea of passing the Senate version of the bill on Wednesday.

Raimondo directly cited that sequence of events when asked about the administration’s view of spinning off the chips funding and moving it immediately.

“I am simply saying time’s up for the chips portion of it,” Raimondo said.

As to political back and forth that has clouded the potential end game, Raimondo said she wasn’t surprised.

“Political posturing, looking for leverage in the 11th hour, trying to get exactly what you want in a bill,” she said. “That’s all pretty much standard operating procedure.”

But with lawmakers scheduled to depart Washington for the August recess in the coming weeks, that sanguine view won’t hold much longer.

“Going away for recess without getting this done, knowing that it puts your country at a massive you know, security risk,” Raimondo said. “Then I would be surprised. And really disappointed.”

This story has been updated with additional developments.

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Ali Zaslav, Manu Raju, Ted Barrett, Morgan Rimmer and Jessica Dean contributed to this report.