The Trump administration is trading over $10 billion dollars of taxpayer money for ownership stakes in companies in what Ana Swanson in The New York Times calls an "unusual strategy."
A New York Times analysis has found that "the government’s growing portfolio of corporate ownership involves minority stakes, or the option to take them in the future, in at least nine companies involved in steel, minerals, nuclear energy and semiconductors."
These deals, Swanson writes, were all made in the past six months, with the "bulk" being done in October and November.
"The effort appears mostly driven by national security concerns, particularly a desire for the government to prop up strategic industries and lessen America’s reliance on foreign countries like China for key resources," she writes.
And while some officials hope it will be a "windfall for taxpayers," Swanson says, "the likelihood of that is unclear."
What is clear, however, are concerns being raised by what Swanson calls "the unusual government intervention into the private market."
Those concerns include "the opacity of the process, the potential for favoritism, corruption and market distortions, along with the possible loss of taxpayer funds should the investments fail," she writes.
Aaron Bartnick, a fellow at Columbia University and a former Biden White House official, says these deals provoke serious questions.
“In the absence of a clearly articulated strategy,” he says, “this could just devolve to arbitrary deals that favor friends or disfavor foes.”
Swanson notes that while previous administrations "have tried to speed the development of sectors like semiconductors and clean energy with grants, loans, tariffs and other policies ... taking equity stakes in companies is incredibly rare."
"The Trump administration has taken a more aggressive and opportunistic tack," Swanson writes, adding that it "contradicts traditional Republican thinking about the power of the free market to identify winners and losers."
And while previous administrations have taken stakes in companies "through the U.S. International Development Finance Corporation, which finances private sector projects around the world ... the Trump administration has begun using other agencies to take equity stakes as well."
Mineral investments, for instance, are being done through the Defense Department, Swanson notes, while "the Commerce Department became the largest shareholder of Intel, the beleaguered U.S. chip giant."
"A public filing from the Office of Government Ethics shows that, shortly after that agreement was made, President Trump personally purchased between $1 million and $5 million of Intel’s corporate debt," Swanson notes.
But, she writes, "not all companies have welcomed government investment," with some firms staying away from Trump "out of fear the government would pressure them to hand over parts of their company."
William A. Reinsch, a senior adviser at the Center for Strategic and International Studies, a Washington think tank, says that while Biden officials had been “slow and meticulous” in selecting investment targets, Trump seemed to be investing “by whim.”
“You know, he meets with somebody, he likes them and so, well, let’s do a deal,” Reinsch, a former Commerce Department official, says.“You don’t get the sense with Trump that there’s a strategy to it. You get a sense that it’s a series of tactics.”
Darrell M. West, a senior fellow at the Brookings Institution, a Washington think tank, agrees, saying, "They don’t seem well thought out. There’s no guarantee the government’s going to make money, so they’re really putting taxpayer money at risk.”