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Concerns raised over Wall Street influence in CHIPS Fund allocation
Concerns voiced by lawmakers shed light on the balance required in the allocation of taxpayer funds
Pramila Jayapal / X - @RepJayapal
U.S. Representative Pramila Jayapal and colleges in a letter to Secretary of Commerce, Gina Raimondo, voiced apprehensions about the Department of Commerce's allocation of $39 billion in CHIPS (Creating Helpful Incentives to Produce Semiconductors for America) and Science Act taxpayer-funded manufacturing and R&D subsidies.
Highlighting the Department's decision to rely on Wall Street financiers for the task, Jayapal expressed concerns over the potential misuse of taxpayer dollars. In the letter, lawmakers stressed the risks associated with dealings between the government and the private sector.
They also questioned the decision to staff the team with "a handful of bankers," raising doubts about the abuse of the revolving door between government service and the private sector. They fear that it could result in favoritism, potentially benefiting previous or future employers.
The bipartisan CHIPS and Science Act was designed to address supply chain disruptions caused by the COVID-19 pandemic. Passed by Congress, the act allocated $39 billion in subsidies for chip manufacturing and research and development.
However, instead of forming a diverse team of experts from various sectors, the team included a handful of elite Wall Street financiers, including those with backgrounds in McKinsey, Blackstone, and Goldman Sachs.
“Indeed, ‘the recruitment of an entire team of private-sector professionals is unprecedented’ in such a large and expensive program. While we recognize that private sector perspectives can contribute valuable expertise, without strong oversight, clear guardrails, and the inclusion of other perspectives,” the letter read.
Representative Jayapal and others emphasized the unprecedented nature of recruiting a small team of private-sector professionals to carry out such a large and expensive program. They also underlined the potential risk that CHIPS funding could be disproportionately spent based on industry wish lists and undermine the public interest.
Lastly, Representative Jayapal and Senator Elizabeth Warren urged Secretary Raimondo to provide answers regarding the potential misuse of funds, seeking assurance that the allocation process will be fair and transparent.
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