McConnell Threatens to Kill China Competition Bill

Senate Minority Leader Mitch McConnell (R-Ky.) warned Senate and White House Democrats that they could kiss their bipartisan China bill goodbye if they continue to pursue a climate, energy and tax deal with Sen. Joe Manchin (DW.Va .).

News Movement: In a tweet that ricocheted from Washington to Wall Street, McConnell announced his intention to hold the China bill hostage. “Let me be perfectly clear: There will be no bipartisan USICA while Democrats pursue a partisan reconciliation bill,” he said, referring to the Senate bill’s acronym.

Current Status: Manchin and Senate Majority Leader Chuck Schumer (DN.Y.) are making quiet progress in salvaging parts of President Biden’s Build Back Better program and putting together a smaller package.

• Speculation about those talks has intensified over the past 24 hours, including over efforts to address prescription drug costs.
• Details have also emerged in the press about the possibility of raising corporate taxes in a bill that would need only Democratic votes to pass.

Why it matters: McConnell knows the China bill, which includes roughly $50 billion for the domestic semiconductor industry and about $100 billion for the National Science Foundation, is a key priority for Schumer and President Biden.

• With his aggressive statement, the Republican leader left no doubt that he is ready to let the China bill, which he voted for last June, wither on the vine. The bill passed the Senate on a 68-32 vote, with 19 Republicans supporting final passage.
• McConnell is also apparently unafraid of the political ramifications of potentially rejecting a bill that business leaders are urging Congress to act on.

Between the lines: For weeks, Senate Democrats privately feared that McConnell would force them to choose between a watered-down Build Back Better bill and billions of dollars to help America grow its own semiconductor industry and compete more effectively with China in key technology areas.

• Now the minority leader has clarified his strategy.

The big picture: Schumer is making a concerted effort to get House and Senate negotiators to iron out their differences over the Chinese law and finalize the deal by mid-July.