Larry Kudlow on China chips bill: We should not imitate China's big government, central planning communism
Larry Kudlow reveals what is really in the bill to combat the chip shortage
Folks, I hate to beat a dead horse, but tonight I'm going to beat a dead horse, with all respect to horses.
Tonight's horse is the $250 billion industrial policy, corporate welfare, picking winners-and-losers, Chuck Schumer bait-and-switch. Schumer turned a procedural motion vote into a massive political pork barrel spending bill and 16 Republican senators fell for it.
By the way, Mr. Schumer filed a cloture motion to vote and stop a filibuster as early as Monday, probably for a final vote on this monstrosity Tuesday or Wednesday.
Some of the lowlights in the Schumer amendment include: a $54 billion semiconductor subsidy bill, plus a $24 billion refundable tax credit (also known as government checks written to semiconductor companies), plus $81 billion for the National Science Foundation (a doubling of the present budget), plus $9.6 billion for the Commerce Department's National Institute of Standards and Technology, plus $11 billion for the Commerce Department's regional technology hubs (some serious pork potential there), plus $50 billion for the Energy Department's Office of Science (think Solyndra, run wild), plus $4 billion for the national labs, plus a billion for "distressed" communities and labor markets (gotta have that one, right?).
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I thought Sen. Rick Scott put it very well on FOX Business yesterday when he described this fiasco this way: "Intel corporation made $20 billion last year, so we're gonna give them some money to build a plant, then we're gonna give them a tax deduction for building the plant, and then we're going to give them a tax credit for building the plant, and they can keep doing business in China."
Sound like a terrific idea? Not so much.
As we discussed last night, the pandemic-related global chip shortage has actually given way to massive investment from the private sector — as much as $250 billion in private capital — and now the risk is overcapacity as chip prices are falling everywhere. Many firms now are scaling back investment and hiring in response to waning demand.
Isn't that always the case? Just at the moment the private sector is turning, government comes to the rescue by making matters much worse. In the Biden years, big government socialism has proliferated, but we should not imitate China's big government central planning communism.
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Our great American system has always been based on the innovation and creativity inherent in free market capitalism. We should be thinking about making all American industries more competitive by cutting tax rates and deregulating. Not some industries, but all industries and finally, the Republican Party is running on the inflationary evils of the Democrats' big spending, borrowing and money-printing policy mistakes that have led our previously healthy economy into a stagflationary malaise, but the 16 GOP senators, who are wittingly or not providing Chuck Schumer with a filibuster-proof margin for a $250 billion spending bill, would be forfeiting the election-year high ground.
Either you're for inflation or against it. Either you're for big spending or against it, but you can't have it both ways — and that's my riff.
This article is adapted from Larry Kudlow's opening commentary on the July 21, 2022, edition of "Kudlow."