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So the federal government wants to give these chip companies a bunch of money as long as they pinky promise to uphold the requirements of the bargain? Why does

So the federal government wants to give these chip companies a bunch of money as long as they pinky promise to uphold the requirements of the bargain? Why does this situation sound familiar... We should, at the very least, get some ownership of these companies in return for our investment, like any other private investor might. I'm all for investing in these sorts of programs to bring manufacturing back to the US, but not like this.

undersuit 4y ago
I want more than shares. Shares are meaningless when the rest of the shareholders vote to close the factories anyways when the profitable tax breaks end. Partial ownership of the physical facilities and a say in the conditions therein then they can have the money.
treasurebots 4y ago
The government has an implicit return on investment for the entire economy, through the power to levy taxes. Why should the government own stock in specific companies? The only likely outcome for that route is the government playing favorites even more so than at present
- eneumann 4y ago
  Why should tax dollars be sent to a private company without anything but a promise in exchange? The promise of "jobs" isn't enough, as evidenced by just about every single other time that these programs (including the tax cuts) happen. Further, how are we going to hold these companies accountable for their promise? What comes to mind immediately is when we gave telecoms a bunch of wire up rural America, and they purchased and consolidated the cell providers instead. If we just write them a check, they'll do whatever they want with it. They need to be held accountable, and ownership percentage is a way to do that. Alternatively, the gov could take this money, start up a corporation of their own, and make their own fab. The language in part of this bill is that they are trying to ensure that older tech and DoD stuff is made in house. So let's make it in house. We don't necessarily need to say "we're buying intel or nvidia", but we can make the money available to any company in exchange for the ownership percentage. That eliminates the "playing favorites" issue, I would think.
  - JumpCrisscross 4y ago
    > without anything but a promise in exchange? What are you basing this on?
    - eneumann 4y ago
      I don't see any language around how we're going to recover those funds, if they are not spent in ways that align with the requirements laid out in the bill. Did I miss that section? It is a pretty big bill. I do see a section that would allow the suspension of new funds, if it's found that these companies aren't upholding the agreement. I don't think suspension of new funds is sufficient.
      - JumpCrisscross 4y ago
        > don't see any language around how we're going to recover those funds, if they are not spent in ways that align with the requirements laid out in the bill Implementation is left to the agencies. We're only seeing the Congress appropriating money. Contract specifics are being developed.
    - ellisv 4y ago
      IfI had to guess, previous behavior by telecoms, banks, and airline companies.
    - thescriptkiddie 4y ago
      The federal government previously gave the telecom monopolists billions to build out nationwide fiber-optic internet infrastructure... and they just took the money and ran.
  - treasurebots 4y ago
    Let's say Intel takes the deal and trades some ownership percentage for some funds to build more fabs. Suddenly the US government has a multi-billion dollar reason to provide political support for whatever is good for Intel. It's inherently favorable to incumbents who have the market share to make a favorable deal, regardless of whether or not those incumbents are best able to build world-class fabs. The government has plenty of demand-side tools to on-shore development without hurting competition or playing favorites with large incumbents. The DoD and DoE are massive semiconductor purchasers and have a lot of leverage in the market who can adjust their procurement strategies to promote American interests. That's not entirely without the opportunity for corruption and grift either, but at least there's more accountability. I mean, I think we basically agree that handouts to large semiconductor companies without anything in return is a bad idea.
- paulmd 4y ago
  I mean, when the US government gives out money for student loans, the loan may be on very favorable terms, but it still expects repayment. It's only in business where we hand out money and don't expect it to ever be paid back. I would agree that student loans shouldn't be that way either, but, we shouldn't be handing out money upfront without guarantees that the incentivized behavior will actually happen - the two things that come to mind are the 90's fiber rollout and the Foxconn subsidies in wisconsin, both of which the company took the money and then never actually built the infrastructure. If there are going to be outright subsidies, they certainly need to be contingent on meeting milestones, and not just "pretty please build a plant, here's a big check to encourage you but no strings attached". Think about how the US did the auto bailouts as well - we got a big chunk of equity that we eventually unwound on favorable terms, but we didn't just write a check and be done either. Same thing, maybe if TSMC wants a big grant for expansion, maybe the US should get a big chunk of equity (at guaranteed and favorable terms) and then if milestones are met the equity is again wound down at favorable terms such that the benefit of the "favorable terms" on both sides amounts to the subsidy.
  - rcktmrtn 4y ago
    As I understand it, even though the Foxconn deal was ill-conceived and wasted tax payer money via planning for the deal and funding foolish road projects, the deal does have milestones built in that resulted in not receiving the credit for at least the first few years. I also think the amounts in the deal have also been further diminished after failing to meet the original milestones. That said, I was looking into it today and it looks like they have actually been meeting some sort of revised hiring target recently [1]. I have heard from some peers that the jobs they are hiring for are basically make-work jobs, but the deal doesn't care what they accomplish -- only how many "jobs" they create. It's still shady crap which wasted tax payer money (not to mention abused eminent domain), but I don't think in any way involved a big check with no strings attached. [1] https://en.wikipedia.org/wiki/Foxconn_in_Wisconsin https://en.wikipedia.org/wiki/Foxconn_in_Wisconsin
JumpCrisscross 4y ago
> the federal government wants to give these chip companies a bunch of money as long as they pinky promise to uphold the requirements of the bargain? This mischaracterizes the bill. There are a bunch of programs [1], ranging from funding the National Science Foundation to this thing [2]. (Much of the bill is a tax credit, which involves the government forking over no money up front.) If you're concerned about grants, the Commerce Department is soliciting input for the coming rule making process [3][4]. [1] https://www.commerce.senate.gov/services/files/1201E1CA-73CB-44BB-ADEB-E69634DA9BB9 https://www.commerce.senate.gov/services/files/1201E1CA-73CB... [2] https://sam.gov/opp/656b39ff64ec4d4fa47ff9820d1c554b/view https://sam.gov/opp/656b39ff64ec4d4fa47ff9820d1c554b/view [3] https://www.commerce.gov/news/press-releases/2022/01/commerce-department-requests-information-supporting-strong-us https://www.commerce.gov/news/press-releases/2022/01/commerc... [4] https://www.federalregister.gov/documents/2022/01/24/2022-01305/incentives-infrastructure-and-research-and-development-needs-to-support-a-strong-domestic https://www.federalregister.gov/documents/2022/01/24/2022-01...
- eneumann 4y ago
  I understand that there's a lot of other things in the bill; I'm not trying to dismiss that. But I think the big thing front and center is the desire of the government to bring chip manufacturing back to the states. That's what's driving the majority of the bill, it seems. I love the idea of funding universities for prototyping and discovering new technologies, but the tech developed needs to be open to all, not locked behind a patent owned by MIT. I don't see any functional difference in tax credits vs money up front. At the end of the day, the company reaps that benefit at the expense of our taxes. I'll have to check out links 3 and 4 and see about sending in my comments, thank you.
  - JumpCrisscross 4y ago
    > the tech developed needs to be open to all, not locked behind a patent owned by MIT You would like it to be. It doesn’t need to be. In this case, that line would have tanked the bill. > don't see any functional difference in tax credits vs money up front You don’t see the difference between buying something with a mail-in coupon and being given the cash up front to buy it?

undersuit 4y ago

I want more than shares. Shares are meaningless when the rest of the shareholders vote to close the factories anyways when the profitable tax breaks end. Partial ownership of the physical facilities and a say in the conditions therein then they can have the money.

treasurebots 4y ago

The government has an implicit return on investment for the entire economy, through the power to levy taxes. Why should the government own stock in specific companies? The only likely outcome for that route is the government playing favorites even more so than at present

eneumann 4y ago
Why should tax dollars be sent to a private company without anything but a promise in exchange? The promise of "jobs" isn't enough, as evidenced by just about every single other time that these programs (including the tax cuts) happen. Further, how are we going to hold these companies accountable for their promise? What comes to mind immediately is when we gave telecoms a bunch of wire up rural America, and they purchased and consolidated the cell providers instead. If we just write them a check, they'll do whatever they want with it. They need to be held accountable, and ownership percentage is a way to do that. Alternatively, the gov could take this money, start up a corporation of their own, and make their own fab. The language in part of this bill is that they are trying to ensure that older tech and DoD stuff is made in house. So let's make it in house. We don't necessarily need to say "we're buying intel or nvidia", but we can make the money available to any company in exchange for the ownership percentage. That eliminates the "playing favorites" issue, I would think.
- JumpCrisscross 4y ago
  > without anything but a promise in exchange? What are you basing this on?
  - eneumann 4y ago
    I don't see any language around how we're going to recover those funds, if they are not spent in ways that align with the requirements laid out in the bill. Did I miss that section? It is a pretty big bill. I do see a section that would allow the suspension of new funds, if it's found that these companies aren't upholding the agreement. I don't think suspension of new funds is sufficient.
    - JumpCrisscross 4y ago
      > don't see any language around how we're going to recover those funds, if they are not spent in ways that align with the requirements laid out in the bill Implementation is left to the agencies. We're only seeing the Congress appropriating money. Contract specifics are being developed.
  - ellisv 4y ago
    IfI had to guess, previous behavior by telecoms, banks, and airline companies.
  - thescriptkiddie 4y ago
    The federal government previously gave the telecom monopolists billions to build out nationwide fiber-optic internet infrastructure... and they just took the money and ran.
- treasurebots 4y ago
  Let's say Intel takes the deal and trades some ownership percentage for some funds to build more fabs. Suddenly the US government has a multi-billion dollar reason to provide political support for whatever is good for Intel. It's inherently favorable to incumbents who have the market share to make a favorable deal, regardless of whether or not those incumbents are best able to build world-class fabs. The government has plenty of demand-side tools to on-shore development without hurting competition or playing favorites with large incumbents. The DoD and DoE are massive semiconductor purchasers and have a lot of leverage in the market who can adjust their procurement strategies to promote American interests. That's not entirely without the opportunity for corruption and grift either, but at least there's more accountability. I mean, I think we basically agree that handouts to large semiconductor companies without anything in return is a bad idea.
paulmd 4y ago
I mean, when the US government gives out money for student loans, the loan may be on very favorable terms, but it still expects repayment. It's only in business where we hand out money and don't expect it to ever be paid back. I would agree that student loans shouldn't be that way either, but, we shouldn't be handing out money upfront without guarantees that the incentivized behavior will actually happen - the two things that come to mind are the 90's fiber rollout and the Foxconn subsidies in wisconsin, both of which the company took the money and then never actually built the infrastructure. If there are going to be outright subsidies, they certainly need to be contingent on meeting milestones, and not just "pretty please build a plant, here's a big check to encourage you but no strings attached". Think about how the US did the auto bailouts as well - we got a big chunk of equity that we eventually unwound on favorable terms, but we didn't just write a check and be done either. Same thing, maybe if TSMC wants a big grant for expansion, maybe the US should get a big chunk of equity (at guaranteed and favorable terms) and then if milestones are met the equity is again wound down at favorable terms such that the benefit of the "favorable terms" on both sides amounts to the subsidy.
- rcktmrtn 4y ago
  As I understand it, even though the Foxconn deal was ill-conceived and wasted tax payer money via planning for the deal and funding foolish road projects, the deal does have milestones built in that resulted in not receiving the credit for at least the first few years. I also think the amounts in the deal have also been further diminished after failing to meet the original milestones. That said, I was looking into it today and it looks like they have actually been meeting some sort of revised hiring target recently [1]. I have heard from some peers that the jobs they are hiring for are basically make-work jobs, but the deal doesn't care what they accomplish -- only how many "jobs" they create. It's still shady crap which wasted tax payer money (not to mention abused eminent domain), but I don't think in any way involved a big check with no strings attached. [1] https://en.wikipedia.org/wiki/Foxconn_in_Wisconsin https://en.wikipedia.org/wiki/Foxconn_in_Wisconsin

JumpCrisscross 4y ago

> the federal government wants to give these chip companies a bunch of money as long as they pinky promise to uphold the requirements of the bargain? This mischaracterizes the bill. There are a bunch of programs [1], ranging from funding the National Science Foundation to this thing [2]. (Much of the bill is a tax credit, which involves the government forking over no money up front.) If you're concerned about grants, the Commerce Department is soliciting input for the coming rule making process [3][4]. [1] https://www.commerce.senate.gov/services/files/1201E1CA-73CB-44BB-ADEB-E69634DA9BB9 https://www.commerce.senate.gov/services/files/1201E1CA-73CB... [2] https://sam.gov/opp/656b39ff64ec4d4fa47ff9820d1c554b/view https://sam.gov/opp/656b39ff64ec4d4fa47ff9820d1c554b/view [3] https://www.commerce.gov/news/press-releases/2022/01/commerce-department-requests-information-supporting-strong-us https://www.commerce.gov/news/press-releases/2022/01/commerc... [4] https://www.federalregister.gov/documents/2022/01/24/2022-01305/incentives-infrastructure-and-research-and-development-needs-to-support-a-strong-domestic https://www.federalregister.gov/documents/2022/01/24/2022-01...

eneumann 4y ago
I understand that there's a lot of other things in the bill; I'm not trying to dismiss that. But I think the big thing front and center is the desire of the government to bring chip manufacturing back to the states. That's what's driving the majority of the bill, it seems. I love the idea of funding universities for prototyping and discovering new technologies, but the tech developed needs to be open to all, not locked behind a patent owned by MIT. I don't see any functional difference in tax credits vs money up front. At the end of the day, the company reaps that benefit at the expense of our taxes. I'll have to check out links 3 and 4 and see about sending in my comments, thank you.
- JumpCrisscross 4y ago
  > the tech developed needs to be open to all, not locked behind a patent owned by MIT You would like it to be. It doesn’t need to be. In this case, that line would have tanked the bill. > don't see any functional difference in tax credits vs money up front You don’t see the difference between buying something with a mail-in coupon and being given the cash up front to buy it?