OPINION:
The White House announced last month that the federal government would convert roughly $8.9 billion in previously pledged funds into a nearly 10% nonvoting equity stake in Intel. The administration presented it as a strategic investment to secure the U.S. semiconductor supply chain and protect national security in the age of artificial intelligence. The markets cheered; Intel stock rose more than 5% on the news, creating a paper gain of nearly $1.9 billion for taxpayers in a single day.
The Intel stake is noteworthy. The government previously incentivized semiconductor manufacturing with the CHIPS and Science Act, which authorized grants, loans and profit-sharing agreements. However, equity ownership transforms Washington from a referee into a shareholder, with all the subtle pressures and conflicts that follow. Even nonvoting shares raise questions: Will Intel receive implicit advantages in licensing, procurement or regulatory treatment? Will competitors see the playing field as level? Perhaps most important, does the executive branch even have the authority to convert appropriated funds into stock without explicit congressional approval?
The markets applaud, and the public seems similarly inclined to support this kind of government involvement. A recent Plymouth Union Public Research survey found that 62% of Americans back the idea of Washington taking equity stakes in companies tied to national security, with Republican support even higher, at 83%. However, this surge of approval should give us pause. Popular enthusiasm for quick fixes doesn’t erase the long-term risks of blurring the line between government as regulator and government as owner. History shows that policies embraced in the moment can become entrenched, reshaping the very structure of our economy in ways that are difficult, if not impossible, to unwind.
This moment should invite serious reflection for those who value market discipline and limited government. The U.S. government is now one of the largest shareholders in a publicly traded company. That is more than a tactical adjustment; it represents a major departure from the economic model of government setting market rules to support free enterprise, to active government participation in the market.
Here is where the comparison to the Inflation Reduction Act becomes relevant. Many Republicans spent years warning that the IRA represented government picking winners, distorting markets and entrenching corporate welfare. In many ways, President Trump’s election was a referendum on that very model of industrial policy. Voters were skeptical of Washington deciding which firms or industries should benefit from taxpayer largesse. The Intel stake, though well-intentioned, risks looking like a mirror image of the IRA’s excesses. It blurs the line between limited, temporary incentives and permanent government entanglement in the private sector.
The Constitution gives Congress, not the executive, the power of the purse. The Miscellaneous Receipts Act (1849) and long-standing fiscal law typically prevent agencies from creating or holding financial assets without statutory authorization. In 2008, when the government took equity stakes in banks and automakers, it did so under the Emergency Economic Stabilization Act, passed by Congress with oversight provisions and a clear exit strategy. The debate over our federal government’s involvement in the private markets during this period continues today, even with the ongoing participation and oversight of Congress.
The Intel arrangement lacks that kind of framework. Shouldn’t Congress, at a minimum, be the one to debate and authorize such a significant expansion of federal involvement in the private sector?
This is not to question the importance of semiconductors or the administration’s intent to protect national interests, which is worthy. The concern is the method. Equity ownership of a significant public company edges closer to the principles of corporatism, where the government owns and directs the means of production. It does not reflect the free market system that has made America the world’s most innovative and prosperous economy.
No one claims that a single equity stake suddenly makes America a corporatist economy, but Republicans would be wise to weigh the precedent. Once Washington owns shares in one company, others will demand the same.
There are better ways to achieve the same ends. Congress designed the CHIPS program to allow for clawbacks, profit-sharing and performance-based milestones that protect taxpayers without turning the government into an equity stakeholder. Targeted tax incentives and competitive procurement can strengthen domestic production while keeping capital allocation in private hands. These are the kinds of tools consistent with a market-oriented approach.
Mr. Trump’s record proves that limited government and free enterprise can deliver extraordinary results. Strong market gains, record profits and historic private investment have all flowed from policies that trusted markets rather than directing them. From 2017 to 2021, the S&P 500 gained 83%, the Dow rose 73% and the Nasdaq more than 150%. The 2017 Tax Cuts and Jobs Act reduced the corporate tax rate from 35% to 21%, unleashing record after-tax profits and fueling investment gains of 8% to 14% in equipment and structures. By September 2019, unemployment had fallen to 3.5%, the lowest since 1969. In the current term, trillions of dollars in new private investment commitments — including Micron’s $200 billion, IBM’s $150 billion and TSMC’s $100 billion — have poured into America’s industrial base.
When the government sets clear rules and steps back, markets deliver.
The Intel stake, by contrast, blurs the line. It is worth asking: Is this the free market way to strengthen America’s economy, or is it an experiment that, if repeated, could lead us away from the very principles that made us strong?
• Jason E. Thompson is an entrepreneur and public servant in the Utah House of Representatives. He is a member of the Utah Federalism Commission.
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