Republicans Should Not Play Investor With Tax Dollars

Republicans should not turn Washington into an investor that takes stakes when companies need something from it. I want Washington to enforce the rules of a market, not assemble a portfolio of its participants. Ronald Reagan^[1] promised in his first inaugural address to curb the federal government’s size and influence. On August 22, Intel announced an agreement giving the government a 9.9% equity stake.^[2] Three days later, President Donald Trump promised, “I will make deals like that for our Country all day long.”^[3] A Republican administration is playing investor with tax dollars and promising to keep going.

All $8.9 billion committed to the equity purchase comes from money already awarded. The August 22 announcement^[2] identifies $5.7 billion of unpaid CHIPS Act grants and $3.2 billion previously awarded under the Secure Enclave program. A separate $2.2 billion of CHIPS grants had already been paid, bringing the combined funding to $11.1 billion; those earlier grants sit outside the equity purchase. Washington agreed to pay money it had already awarded and take a 9.9% holding in exchange. The policy changes at that point: delivering an existing funding commitment becomes an occasion for the government to acquire ownership.

Federal funding to Intel and the August 2025 equity stake, $ billions

Taking equity has a serious defense. If public support is necessary, taxpayers should share in the gains rather than simply write a check. The U.S. trade representative’s 2024 assessment of China’s state-directed economy^[4] gives the strategic argument weight: a government may need to finance resilience that private purchasers would leave unfunded. The announced Intel terms^[2] specify passive ownership, no board representation or special governance or information rights, and voting with the board on most shareholder matters. A minority financial interest is not an order directing production. On August 25, National Economic Council Director Kevin Hassett also cited Fannie Mae and Freddie Mac as precedents for federal stakes.^[3] I would rather see the government recover value from necessary support than write an unconditional check.

But the earlier grant already gave taxpayers profit-sharing and claw-back provisions. The August 22 announcement says those protections on the $2.2 billion grant will be eliminated “to create permanency of capital.”^[2] The public gives up those contractual protections while taking a shareholding it has agreed largely to vote with the board. Federal negotiators owe taxpayers an explanation of that exchange, rather than treating an equity claim as an automatic improvement. Hassett said, “We’re absolutely not in the business of picking winners and losers,”^[3] while describing the scale of the CHIPS grants as a special justification. He placed the policy in a strategy that also uses tariffs to encourage domestic production. Every stake selects a company for federal ownership. The shareholder is also the government setting the tariffs, and its agreement to follow a board’s votes leaves that public power in the same administration’s hands.

U.S. Steel’s merger also required Washington’s permission. Trump’s June 13 order kept Nippon Steel’s acquisition of U.S. Steel prohibited unless the companies signed a national security agreement and remained in compliance.^[5] The companies’ June 18 announcement said that agreement and the golden share together give the government a director appointment and presidential consent rights.^[6] Washington acquired special rights as the condition for allowing a transaction, just as it agreed to acquire shares by paying already-awarded grants. MP Materials^[7] said on July 10 that the Defense Department agreed to purchase $400 million of convertible preferred stock and a warrant. The $8.9 billion commitment comes with passive rights; the golden share, with no purchase amount stated in its announcement, comes with a director and specified vetoes. A special veto is not a small version of ordinary equity.

Selected federal equity commitments announced in 2025, $ billions

The presidential consent rights cover, among other matters, changes to U.S. Steel’s name and headquarters, material acquisitions of competing U.S. businesses and certain decisions to close or idle existing U.S. facilities.^[6] A national-security restriction should stand or fall on a stated security need. It should not become harder to scrutinize because it sits inside a share certificate and an agreement rather than a regulation. I want those restrictions and their security purposes stated publicly. Companies without a federal shareholder deserve the same published standards as companies with one.

Trump’s February 3 executive order gave Treasury and Commerce 90 days to propose a sovereign wealth fund,^[8] including its financing, governance and any necessary legislation. It commissioned a plan rather than creating an operating fund. On May 7, White House spokesman Kush Desai said in a statement reported by CBS News that the departments had formulated plans but “no final decisions have yet been made.”^[9] On August 25, Hassett linked the prospect of further transactions in other industries to the fund ambition.^[3] Congress should settle the governing objective before endorsing a wider program. Maximizing a financial return and maintaining a capability for national security are different instructions. When they conflict, a fund manager needs a rule, not a fresh conversation with the White House.

The fund order promises to promote fiscal sustainability and lessen Americans’ tax burden.^[8] For the first 10 months of fiscal 2025, from October 2024 through July 2025, Treasury recorded $4.35 trillion in receipts against $5.98 trillion in outlays,^[10] a $1.63 trillion deficit. That is a budget gap, not an endowment. We are being offered an investment fund while borrowing to keep the lights on. A larger fund would require resources redirected from another use or newly raised, with borrowing costs and investment risk borne by the public if debt supplied the money. A return is possible; so is a bill. Republicans should demand the financing case before endorsing a larger portfolio.

Hassett’s precedent comes with a clock. The Federal Housing Finance Agency’s^[11] June report describes ongoing conservatorships of Fannie Mae and Freddie Mac that began in September 2008. That is nearly 17 years. Conservatorship is a different legal arrangement from passive equity, but that history should make an exit plan part of the argument for intervention, not an afterthought. Imagine a Democratic successor redirecting an industrial investment fund toward clean-energy start-ups. The authority would belong to that president too, however Republicans felt about the new priorities. I would apply the same objection to that portfolio. Republicans should write powers they would be willing to see exercised by an administration they oppose.

Congress should refuse a general-purpose corporate investment fund and make the administration defend national-security spending on its own terms. Set a spending limit and write down what the public is buying. That may mean paying openly for resilience a commercial buyer would leave unfunded. I accept that cost; an ownership arrangement does not make it disappear. Before the next deal, Congress should require the administration to say, in writing, how federal ownership or special control rights will end.