House has delayed passage of Senate chip funding bill for 7 months as vehicle prices keep rising

We can "start to get cars back into folks' hands at a cheaper price if we pass this bipartisan legislation," said Sen. Mark Warner (D-Va.), adding that the Biden administration has been focused on other items.

Updated: January 24, 2022 - 4:31pm

The Facts Inside Our Reporter’s Notebook

The Democrat-led House of Representatives has yet to vote on bipartisan legislation the Senate passed over seven months ago that would provide billions of dollars in aid to chip manufacturers at a time when vehicle prices continue to rise for consumers as a result of the chip shortage. 

Democratic Virginia Sen. Warner, a cosponsor of the bill, said the Biden Administration and House Democrats have been focused on other issues since the bill's passage on June 8, 2021 and failed to move it forward. He emphasized that passage of the bill, titled the U.S. Innovation and Competition Act, would lower the average price of vehicles.

Vehicle prices went up by $6,220 in 2021, according to Kelly Blue Book. Some dealers are charging "market adjustment fees" on certain models of vehicles due to the chip shortage and supply chain issues.

Urging the House to pass the chips bill, Warner said, "How this relates to inflation is I think anybody who has gone out and tried to buy a used car has seen probably some of the biggest inflation across the market take place in the used car market."

Warner attributed the rise in used vehicle prices to the new car market not being able to produce enough cars to meet current demand due to the chip shortage.

"Not because our factories aren't prepared to produce those cars, they are — matter of fact, there are cars sitting in lots across the Midwest," said Warner in a press briefing with reporters. "What are they missing? They're missing the semiconductors. So much of our cars now are computer-driven. Without those semiconductor chips that make a lot of the functionality in the cars work, you can't deliver them into the marketplace. So passing the semiconductor legislation, while the fabs won't be built tomorrow, it will send a huge market signal and relieve some of the pressure on the auto industry."

Warner warned that if the U.S. doesn't invest in semiconductor facilities in the U.S. it's share of the market could drop from about 33% down to 12%.

"That's long-term as a security issue, but it's also a signal to the market that this chip shortage may continue," he said. "So the actions that the Congress can take is working with retailers, other providers about how we can smooth out the supply chain." 

Warner attributes inaction on his bill in part to Biden administration distraction.

"What I got frustrated with, and I think the Biden administration was focused on other items, and I've been urging every time I've been with the president, you know, we can get you a win," Warner said. "But we can ... also start to get cars back into folks hands at a cheaper price if we pass this bipartisan legislation."

In the interest of time, Warner urged House Democratic leaders to first approve the $52 billion for the U.S. chip industry and debate the rest of the bill separately. 

"Let's go ahead and get that money into 5G and into the semiconductors now," Warner said, arguing that in the seven months since the Senate passed its version of the bill "we have lost in America the chance to secure some of these additional chip manufacturing facilities ... because other nations have stepped up" to fill the void. 

"If we don't step up, these facilities will be built elsewhere in the world," the lawmaker warned. "That's not good for security. That's not good for inflation. That's not good for secure supply chain issues."

How research dollars are allocated is secondary, Warner stressed. "If we have to have a further debate about where the research funds, how they ought to be distributed, let's have that debate," he said. "But let's not waste any more time on this national security, supply chain issue."

Biden mentioned the need to pass the chip bill on Friday after Intel announced it would spend $20 billion to build a new chip production center close to Columbus, Ohio. 

Texas Republican Sen. John Cornyn was a cosponsor of the chip bill in the Senate, which garnered 18 Republican votes. In June 2021, Just the News asked Warner and Cornyn for their response to the argument that billions in taxpayer funding for chip manufacturers amounts to corporate welfare.

"These are large, large facilities," Warner said. "The question was, is it really safe if the next 25 of these facilities are built in China? Is that a solution that we're happy with if we didn't put an incentive on the table?"

"The driving force here was really our concern that if the supply chain was cut off, just like Jimmy Carter said in 1980, that would be literally an act of war against the United States," Cornyn said.

House Speaker Nancy Pelosi said Friday that a House version of the Senate-passed bill will soon be introduced.