On The Money — Semiconductor bill gets floor vote

The Senate is eyeing a standalone bill to subsidize domestic chip production. We’ll also look at the Fed’s stock trading probe, Treasury Secretary Janet Yellen’s most recent inflation comments and the upcoming weed decriminalization bill. 

But first, the Secret Service is under fire for deleting some potentially important text messages. 

Welcome to On The Money, your nightly guide to everything affecting your bills, bank account and bottom line. For The Hill, we’re Sylvan Lane, Aris Folley and Karl Evers-Hillstrom. Someone forward you this newsletter? Subscribe here.

Schumer moving on semiconductor bill 

Senate Majority Leader Charles Schumer (D-N.Y.) plans to hold a vote soon on a bill to provide $52 billion to $54 billion in assistance to the domestic semiconductor manufacturing industry and a tax credit for semiconductor manufacturers, according to Senate sources.   

Schumer has told senators to expect a floor vote as early as Tuesday of next week.   

The slimmed-down Creating Helpful Incentives to Produce Semiconductors (CHIPS) for America bill at a minimum will include emergency funding for semiconductor manufacturers and the investment tax credit from the Facilitating American-Built Semiconductors Act.   

• The legislation likely wouldn’t include tough-on-China trade provisions included in the larger China competition bills passed by both chambers, a disappointing result for Democrats and some Republicans.  
  
• Senate Minority Leader Mitch McConnell (R-Ky.) threatened to block the China competition bills, which include the semiconductor funding, but he signaled that a narrower chip subsidy bill could pass. 
  
• The big question is whether the legislation can get more than 10 Republican votes to overcome a filibuster.   

The background: Congress is running out of time to come to an agreement on a larger China competition bill, and manufacturers are warning that they won’t build chip facilities unless lawmakers greenlight funding soon. A slimmed down bill to subsidize U.S. chip production is one potential solution, but it’s already drawing backlash from progressives who see it as corporate welfare.   

Alexander Bolton has more here.

LEADING THE DAY 

Powell, Clarida cleared in Fed probe of financial trades 

Federal Reserve Chairman Jerome Powell and former Vice Chairman Richard Clarida were cleared in an internal probe of their financial transactions, according to a memo from the Fed’s internal watchdog released Thursday. 

The Fed’s inspector general (IG) office, an independent internal watchdog, investigated several financial transactions conducted by the bank’s top two officials in 2019 and 2020, but “did not find evidence” they “violated laws, rules, regulations, or policies related to trading activities as investigated by our office.” 

• The Fed board of governors asked the IG in October to investigate financial trades conducted by Clarida, former Federal Reserve Bank of Dallas President Robert Kaplan and former Boston Fed President Eric Rosengren. 
  
• Clarida came under fire after disclosing — and then revising — several purchases and sales of investment funds as the Fed was plotting its initial response to the COVID-19 pandemic in February 2020. The trades raised questions of whether Clarida moved his money based on his knowledge of the Fed’s plans. 
  
• Both Kaplan and Rosengren invested in and traded millions of dollars in stocks and bonds throughout 2020 while the Fed was actively propping up financial markets with unprecedented support. 

All three have since stepped down from their positions, though Clarida’s term at the Fed was to end this year regardless. The Fed IG also looked into Powell’s financial trades during December 2019 after some media reports raised questions about his conduct. 

In a Wednesday memo to Powell, Fed Inspector General Mark Bialek said the watchdog office had not yet completed its probe of Kaplan and Rosengren. But Bialek said the investigations into Powell and Clarida turned up no evidence of serious misconduct. 

Sylvan has more on this here. 

‘UNACCEPTABLY HIGH’ 

Treasury Secretary Janet Yellen described the U.S. inflation rate as “unacceptably high” on Thursday, adding that it is the Biden administration’s “top economic priority to bring it down.” 

Consumer price data released by the Labor Department on Wednesday showed inflation hit new heights last month. 

• The consumer price index (CPI), a benchmark to measure inflation, rose
  1.3 percent in June and 9.1 percent annually, according to the report. Economists had expected less of an increase, but annual inflation hit its highest rate since 1981. 
  
• Yellen in particular pointed to rising prices in areas like energy, which economists say is traditionally volatile and has seen a spike in recent months amid Russia’s ongoing war with Ukraine: “That was reflected in yesterday’s CPI data, which showed almost half of the increase coming from higher energy prices.” 

Aris has more on this here. 

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ROLLOUT

Senate Democrats to roll out weed decriminalization bill next week 

Senate Democrats are planning to roll out long-awaited legislation to decriminalize marijuana next week, despite expected resistance from Republicans. 

Sen. Cory Booker (D-N.J.), who has been leading the legislative push along with Senate Majority Leader Charles Schumer (D-N.Y.) and Sen. Ron Wyden (D-Ore.), confirmed reports that senators are set to unveil the Cannabis Administration and Opportunity Act in the coming week. 

• “We’re introducing it soon,” Booker told The Hill later on Thursday, adding that the legislation will be “very similar” to a draft plan released by the senators last year, though with “very important changes” made. 
  
• The bill seeks to remove cannabis from the federal list of controlled substances and is expected to include measures aimed at criminal justice reform. The news comes months after the House voted to pass legislation to nationally legalize marijuana, dubbed the Marijuana Opportunity Reinvestment and Expungement Act. 

Aris has more here.

Good to Know

The state of the nationwide housing crisis shifted significantly in the mid 2000’s, moving from primarily a coastal issue to one dispersed throughout the U.S., according to a new report.  

A report from Up For Growth shows the U.S. fell short of meeting housing needs across the country by more than three million homes in 2019 – up from 1.6 million
in 2012.   

These are the 10 states where the housing shortage is the worst. 

Here’s what else we have our eye on: 

• AP: “Inflation at the wholesale level climbed 11.3% in June compared with a year earlier, the latest painful reminder that inflation is running hot through the American economy.” 
  
• A new survey released Wednesday found Sens. Alex Padilla (Calif.), Mazie Hirono (Hawaii) and Cory Booker (N.J.) have the most diverse staff of Senate Democrats’ personal offices — even as a separate study found racial pay disparity runs rampant through all Capitol Hill offices. 
  
• GOP Sen. James Lankford (Okla.) on Thursday blocked a Democratic request to unanimously pass a bill seeking to protect interstate travel for abortion. 
  
• A technology trade organization is pushing the Justice Department (DOJ) to reevaluate its position on electronic communications privacy to protect women seeking to obtain an abortion. 

That’s it for today. Thanks for reading and check out The Hill’s Finance page for the latest news and coverage. We’ll see you tomorrow. 

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