Trump Administration's 40 Corporate Stakes Could Benefit Future Democratic President, Critics Warn
The Trump administration has taken ownership stakes in 40 private companies, raising concerns that a future Democratic president could use those holdings to pressure industries like gun, oil, and AI. Congressional Republicans have not moved to stop the practice and are seeking to codify the executive branch's authority to continue it.
The Trump administration has announced or completed deals to take ownership stakes in 40 private companies, a portfolio that critics warn could become a powerful tool for a future Democratic president to influence corporate behavior. The Commerce Department added four more proposed stakes this week, according to a running count maintained by the Cato Institute's Restoring Free Enterprise initiative.
Supporters of the president's dealmaking argue that equity stakes protect taxpayers and bolster national security supply chains. But opponents say the arrangement sets a precedent that could be exploited by the next administration. Former Biden officials are reportedly eager to use government ownership to pressure gun and oil companies, and Doug Farrar, who worked for then-Federal Trade Commission Chair Lina Khan, suggested a future president could leverage ownership to regulate AI companies, particularly a Democrat seeking stricter oversight of the industry.
The White House abandoned an earlier idea for a formal sovereign wealth fund and instead assembled an ad hoc presidential portfolio without clear legal authority, critics say. Congressional Republicans, who frequently label Democrats as socialists, have collectively done nothing to stop the practice and are actively working to give the executive branch legal authority to continue it. The administration's defenders argue that equity stakes are better for taxpayers than direct grants and are necessary for national security, but critics counter that government ownership distorts markets by giving favored companies advantages over competitors and stifling upstart firms.
The value of the shares on the government's books does not equal revenue in the Treasury, and realizing gains requires selling the shares and subtracting taxpayer costs. Even if the administration sold its entire Intel stake today, it would net roughly $28 billion, less than 1.5% of the $2 trillion deficit Washington ran up in the last fiscal year. Critics argue the stakes should be divested and suggest alternatives such as selling excess federal buildings and privatizing government businesses like Amtrak.
The national security rationale also draws skepticism. The federal government already has ways to support companies without becoming an owner, such as easing permitting requirements, removing tariffs on production inputs, and using purchase contracts or stockpiles of critical materials. Invoking national security has a long tradition in Washington as an excuse for actions politicians might not otherwise get away with, critics say. The administration pursued a bailout that could have given the government 90% of Spirit Airlines on dubious national security grounds, and the Federal Aviation Administration is reportedly exploring an ownership stake in a company that develops software for managing air traffic control.
Having the government become an investor in a company it is supposed to evaluate objectively is a bad idea, critics argue, and concerns about federal control over corporate boardrooms are not overblown. The debate underscores a broader question about the role of government in private markets and whether the current approach will outlast the current administration.
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