The U.S. government is $37 trillion in debt because, according to President Trump’s America First philosophy, Washington’s previous leaders have made “stupid deals.”
Mr. Trump has upended traditional economic and trade policy to fix what he sees as an unprofitable enterprise. Part of that involves making deals for Uncle Sam to pocket a cut of the profits or take an ownership stake in private businesses receiving government support.
He has set his sights on companies ranging from U.S. Steel to Intel Corp., even on a little-known mining company.
The Trump administration said it is negotiating to take an equity stake in Intel, a massive but struggling chip manufacturer. Under the deal, the federal government would take a 10% share in Intel in return for the funding promised under President Biden’s 2022 law aimed at bolstering America’s semiconductor industry.
Intel is the latest private company Mr. Trump wants the federal government to gain at least partial control:
— Last week, Mr. Trump waived the export controls for chip makers Nvidia and AMD, allowing them to license certain chips to China in exchange for 15% of the revenues generated by sales.
— In July, the Defense Department paid $400 million to become the largest shareholder of MP Materials, which mines rare earths. The equity stake will be used to expand MP’s mining and processing capabilities for rare earths, which are used in components of military weapons, including the F-35 warplane, drones and submarines.
— Mr. Trump approved Nippon Steel’s acquisition of U.S. Steel in exchange for a so-called “golden share” of the company. That would give the federal government a permanent seat on the board of U.S. Steel, a private company, and sway over how it operates.
More deals are expected. Mr. Trump said if he can find an American buyer to take control of the popular video app TikTok from China’s ByteDance, he’d like the government to take a 50% ownership stake in a joint venture.
“We have American buyers,” Mr. Trump said Friday. “And I haven’t spoken to [Chinese] President Xi about it. At the right time when we’re set, I’ll do it.”
It is not unprecedented for the government to consider ownership stakes in private companies, but is unusual for one president to take aim at so many different industries at such a massive scope. Previous bailouts of the automobile and banking industries were brief, targeted rescues, not long-term ownership stakes in the private sector.
The Intel plan involves converting $10.86 billion in recent federal grants into an equity share worth about $100 billion. That would be the largest government intervention in a private business since the bailout of the U.S. auto industry under President Obama.
Critics argue that Mr. Trump, who previously championed free-market principles, now is pursuing unprecedented government control of private companies. They suggest his policies echo those of governments that use state power to shape major sectors of the economy.
“I’m reluctant to use the ’S’ word – socialism – but you’ve got to call a spade a spade and it’s socialism,” said Ryan Young, senior economist with the Competitive Enterprise Institute.
The White House counters that these moves are not about nationalizing companies, but about ensuring government participation in industries critical to national security. Administration officials emphasize that acquiring company shares allows taxpayer investment to yield tangible returns.
“It’s a creative idea that has never been done before to ensure that we’re both reassuring these critical supply chains while also gaining something of it for the American taxpayer,” White House press secretary Karoline Leavitt told reporters, when asked about the government potentially acquiring a stake in Intel.
One potential idea would be to place the government’s profits from corporate ownership into a sovereign wealth fund. The fund would invest the government’s financial assets or surplus revenue, and use the proceeds to fund social and infrastructure programs or pay a dividend to American taxpayers.
While the White House may bristle at the socialist label, Mr. Trump’s plan is very similar to an idea proposed by Sen. Bernard Sanders of Vermont, an independent who identifies as a Democratic Socialist.
During Mr. Biden’s push to pass the Chips Act, Mr. Sanders, like the current president, said semiconductor companies are essential to national security. He refused to vote for the bill unless the companies agreed to issue equity stakes to the federal government in exchange for the subsidies. Mr. Sanders ultimately voted against the bill.
Mr. Trump’s moves expand presidential power to allow intervention into the private sector. Republicans and conservative business advocacy groups such as the Business Roundtable and the U.S. Chamber of Commerce have remained mum over Mr. Trump’s foray into private business.
However, if a Democrat wins the White House while the government still owns a stake in these businesses, the new president could use that control to force them to comply with diversity, equity and inclusion initiatives or ramp up green energy spending, all things Republicans have opposed.
“This is Pandora’s box,” said Tad DeHaven, a fiscal policy analyst at the libertarian CATO Institute. “If Republicans are against big government and socialism, they should do something about this.”
Republicans have long opposed government entry into the private sector. When Mr. Obama pushed for an auto industry bailout, the GOP criticized it as “socialism” or “state capitalism” because the government temporarily took substantial ownership in General Motors and Chrysler. Mr. Obama said the ownership stake was necessary to keep the companies from going under because no one in the private sector was willing to put up the capital to save them.
At the time, Republican National Committee Chair Michael Steele blasted the bailout as “a power grab of a private company.”
Commerce Secretary Howard Lutnick disputed in a CNBC interview that Mr. Trump is seeking to interfere with private businesses or direct how they conduct their business.
Yet, Mr. Trump’s second term is littered with efforts to insert himself in private business decisions. Last month, he took credit for Coca-Cola’s decision to roll out a cane-sugar-sweetened soda. He regularly criticizes CEOs such as Apple’s Tim Cook and demanded that Goldman Sachs fire its top economist after the bank said tariffs would raise prices.
Even before the proposed ownership stake, Intel was already in Mr. Trump’s crosshairs. Mr. Trump this month called for Intel CEO Lip-Bu Tan to step down as head of the company. The president complained the tech CEO was “highly conflicted,” a reference to Mr. Tan’s investments in Chinese technology companies.
Mr. Tan later met with Mr. Trump at the White House, where the ownership stake idea was discussed.
“It’s hard to understand the rationale for this beyond this is another example of a president who loves to wield his power,” said Mr. DeHaven. “Trump called for the Intel CEO to be fired and now it turns into an ownership stake in Intel. It’s another power play.”
Critics point to Canada’s air-traffic control system and Amtrak as the difference between success in the free market versus the impact of government control. Canada’s air traffic control system was fraught with delays and hamstrung with outdated technology until it was privatized in 1996. Since then, user fees and accidents have declined.
Meanwhile, Amtrak, which is a majority-owned corporation of the United States, lost $705 million last year. It has struggled to shutter costly routes that are losing money because of opposition from members of Congress in those rural areas.
