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When Government's 'Strings' Create Business Puppets

Here’s a quote from Department of Commerce Secretary Gina Raimondo that should make any business considering taking federal subsidies rethink that decision. 

According to the New York Times, when it became clear that President Joe Biden wouldn’t get some of his pet progressive projects included in the bills he did get passed, Raimondo gathered aides around a table and told them “if Congress wasn’t going to do what they should have done, we’re going to do it in implementation” of bills that did pass. 

The CHIPS Act, legislation that provides $52 billion to expand U.S. semiconductor manufacturing, is just the latest weapon to force progressive changes. 

It can’t be said often enough: Government subsidies come with strings attached. 

The Biden administration has decided to use those strings to implement a progressive agenda that it couldn’t get through Congress. The CHIPS Act strings getting the most media attention: Companies (1) must ensure affordable child care is available for workers; (2) will be limited on stock buybacks; and (3) will be required to share certain “excess profits” with the government. 

Biden tried to impose much more sweeping versions of all three elements in legislation but failed. So, he will use the administrative state to do what he couldn’t get Congress to do. 

Of course, if the Commerce Department can impose these strings, it won’t stop with general guidelines. It will likely set pay and benefit levels, as well as other mandates, for the child care workers, just as it has tried to do with federal contractors. 

In addition, the government will get to decide what will be considered “excess profits,” which will almost certainly be a lot more than what a company considers excess.  

More importantly, if Commerce can make these demands, it can make many more. It is already hinting that not nearly enough women work in the semiconductor industry. Will gender quotas be imposed? What about racial quotas? Will Commerce require paid family leave? Will management or the board be forced to look the way Washington thinks they should? 

Will Washington require the factories to be carbon neutral? Use only clean energy? Will it demand that all plants be unionized? 

Biden is already trying to impose all of these measures on companies that aren’t taking federal subsidies. It will be even more aggressive with companies that do. 

Biden and his bureaucrats are attaching so many strings to the subsidies—and many more will be coming once they get away with these—that it raises the question: 

How many strings does it take to turn a private business into a federal puppet?