Trump purge hits Chips Act office, two-fifths of staff to be terminated: Report

I don't know that Trump doesn't like the real Chips act, the basic $57b, mostly for fabs. Then there's the *other* $200b that's a slush fund, some part of which may also go to the fab companies, I can't even tell. And he doesn't have to like some of the details even of the $57b that regard DEI or whatever.

That said, two things: One is, I agree that cash awards are the wrong way to do it, tax breaks are better, loans are better, tariffs are better, domestic content is better. The other is, the amounts allocated so far for Intel are probably insufficient for a company that has tried to do most of their work in the USA and still needs support for additional US plants. This is not to approve of all the Intel screwups over the last ten years, but it is what it is.

The probationary employee thing is wild. These are not necessarily people fresh out of college who just started working at the government. Simply switching from one organization to another can put you on probation for a year or two -- it's to stop people from switching positions too often outside of a designated rotational program. Some of these probationary employees may be technical experts or critical to analyzing the compliance of CHIPS recipients.

We should all be alarmed that we were promised meritocracy. The low performers and bloat were supposed to be removed. In reality, they're just targeting the low-hanging fruit. Not good.

JRStern said:

That said, two things: One is, I agree that cash awards are the wrong way to do it, tax breaks are better, loans are better, tariffs are better, domestic content is better.

Grants are needed because spending is front-loaded. Grants also make it easier & cheaper for recipients to secure financing on the rest of the tab for their build-out.

Tax breaks are problematic, because they're limited by a company's profitability and proportionate to its current revenue, rather than sized to meet the scale of what you're trying to create. They're partly workable for established players, but when we're talking about startups who are trying to productize next gen technologies, tax breaks are completely backwards - by the time they have taxable revenues, their funding needs are less and the funding is easier for them to obtain. Finally, tax breaks amount to government spending by another name. They hit the budget deficit exactly the same as grants.

Loans have the downside that the recipient needs to carry them on their balance sheet, which increases their debt burden and doesn't really help them get financing for the rest of the funding they need.

Tariffs are backwards, if instituted at a time when the domestic capacity doesn't exist to substitute for the foreign supply you're trying to replace. In the mean time, they hurt consumers & any companies who use the thing they're applied to, effectively being inflationary. Lastly, they can be repealed by a future administration or Congress, which means just as the fab someone builds to take advantage of the price disparity is about to come online, the entire prospect for getting a return on that investment could evaporate.

Oh, and another thing tariffs don't help with at all is exporters. Tariffs make it more expensive to produce things in the country enacting them, which makes their exports less competitive. Consequently, they can have the effect of causing domestic manufacturers to offshore production intended for export, which neither helps domestic jobs nor the trade deficit.

P.S. there's one more possibility: loan guarantees. These make sense when the fundamentals are solid, but there's not insubstantial risk. They make financing cheaper and easier to obtain. However, if the fundamentals aren't sound (i.e. because a foreign government is subsidizing its semiconductor production, making their products artificially cheap), then loans and loan guarantees aren't enough. You then have to do something to make the venture more profitable, such as one of the non-loan mechanisms mentioned above.

*Nervous whistling intensifies* :sweatsmile: