Biden administration officials made an urgent appeal to senators in Wednesday’s classified briefing, urging Congress to act before the August recess and warning of dire consequences if the legislation continues to languish. “The message is that the chip piece is the most important and the biggest vulnerability, but there are other aspects of the bill that are also important,” GOP Sen. John Cornyn of Texas said after the briefing. “This is about the art of the possible and we need to understand that.” Democratic leaders are weighing the best path forward, which Raimondo said could mean removing the chip funding from the broader legislation and passing it as a stand-alone measure. While the Cabinet official made it clear to CNN that she was not going to tell Democratic leaders the best path forward, she noted that she has had a series of phone calls with lawmakers in both parties in recent days. “It looks like people are coalescing around the design of some kind of token package, and they’re moving quickly,” Raimondo said. “And that’s what I hope will happen.” Raimondo, who was joined by Deputy Defense Secretary Kathleen Hicks and Director of National Intelligence Avril Haines, has been pushing lawmakers to move forward on the issue since the administration’s early days. That effort has reached a critical stage, according to Raimondo, as industry players have informed top management that their investment plans must be solidified in the coming months. “Semiconductor companies must get ‘concrete on the ground’ by this fall to meet this increased demand in the coming years,” Raimondo and Defense Secretary Lloyd Austin wrote in a Wednesday letter to congressional leaders. “CEOs of companies across the supply chain have made it clear that the industry is deciding where to invest now.” Administration officials see the stakes as significant and wide-ranging. Or, as Raimondo candidly put it: “Everyone who has studied hard enough has an ‘oh sh*t’ moment.” Several companies have linked significant investment in US manufacturing 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 planned July renovation due to congressional inaction. With inflation 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 within the administration as a long-term necessity. “Clearly inflation is a problem,” Raimondo said. “And so the investment to increase chip supply will have a positive long-term effect on inflation.” The briefing Wednesday, requested by Senate Majority Leader Chuck Schumer, also drew immediate attention to what officials see as a national security funding imperative. “It’s in every American’s best interest — 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 chip element, because that’s the most time sensitive. Raimondo said after the briefing. Based on questions asked by senators, he added, the bill is clearly considered a “national security imperative.” It is something with short-term and long-term implications. Raimondo noted that defense contractors are moving quickly to replenish the supply because of the massive U.S. effort to supply Ukraine with weapons systems — many of which are chip-based. But more broadly, officials acutely aware of significant Chinese efforts to boost domestic chip manufacturing see future defense systems at risk. “The weapons systems used on today’s battlefields and the emerging technologies of tomorrow depend on our access to a stable, secure supply of microelectronics,” Raimondo and Austin wrote in their letter. “Direct passage will revitalize the domestic semiconductor manufacturing industry and enable the game-changing capabilities our warfighters need.” But despite the Senate’s bipartisan passage last year of a sweeping bill that included chip funding, and bipartisan agreement on the issue itself, the prospects for a bill reaching President Joe Biden’s desk have hit a wall. More than a year after the Senate passed its bill, known as USICA, there are still several outstanding issues that have not been reconciled with the House Democratic counterpart. Aides on both sides acknowledge that a short-term resolution is nearly impossible at this point. Things took a turn for the worse 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 Democrats’ separate effort to pass a partisan economic package. line. “Let me be absolutely clear: there will be no bipartisan USICA while Democrats pursue a partisan reconciliation bill,” McConnell said in a June 30 tweet. McConnell did not comment Wednesday when CNN asked if the briefing had changed his mind about the threat to kill the legislation if Democrats move forward with the reconciliation. Democrats, some of whom candidly acknowledged to CNN that they saw a political opportunity, have railed against the proposed obstruction on both sides of Pennsylvania Avenue. But McConnell appeared to chart a possible path toward a resolution this week when he noted that two possible options would be for the House to simply pass the Senate version of the legislation or to cut funding for the chips and move it separately. “There are members that I have who are not overly fond of USICA, but they believe there is a national security aspect to the stamp deficit,” McConnell told reporters Tuesday. Speaker Nancy Pelosi, D-Calif., rejected the idea of passing the Senate version of the bill on Wednesday. Raimondo addressed this series of events directly when asked about management’s view on withdrawing the token funding and moving it immediately. “I’m just saying the time for brands is over,” Raimondo said. As for the political back-and-forth that has clouded the potential end game, Raimondo said she wasn’t surprised. “Political posturing, looking for leverage at the 11th hour, trying to get exactly what you want in an account,” he said. “This is all pretty much standard operating procedure.” But with lawmakers scheduled to depart Washington for the August recess in the coming weeks, that optimistic view won’t last much longer. “Going on break without doing that knowing that puts your country at a huge security risk,” Raimondo said. “Then I’d be surprised. And really disappointed.” This story has been updated with additional developments. Ali Zaslav, Manu Raju, Ted Barrett, Morgan Rimmer and Jessica Dean contributed to this report.
