When Washington Buys Intel, It Owns You Too

The past week has seen many decrying the folly of government picking winners in business. But the Trump administration’s announcement of an 8.9 percent equity stake in chipmaker Intel is a reminder that government mostly picks losers.

Government money in tech doesn’t buy progress, global leadership, or even the fallback claim of defense capability and readiness – if it did, Intel would already be flying high.

Intel has been riding the America COMPETES Act subsidy train since George W. Bush signed the original bill in 2007, through Obama’s 2010 reauthorization (against which I testified in the House), to Biden’s CHIPS and Science Act incarnation in 2022. Donald Trump’s decision to twirl the CHIPS law from subsidy vehicle into an outright ownership stake marks nearly two decades of this government/business entanglement.

Semiconductor supply chain stability, reducing reliance on foreign foundries and economic competitiveness are the rationales for converting $5.7 billion in unpaid CHIPS Act grants into equity. An additional $3.2 billion from the Pentagon’s Secure Enclave program heralds more weaponized and militarized AI. Meanwhile, export controls are the “reward” for the actual AI chip success story—NVIDIA—which is not to blame for Intel’s domestic foundry foundering.

Trump’s partial nationalization of Intel (433 million shares of common stock) escalates an already troubling trend: that of moving away from competitive enterprise and toward public-private partnerships and subsidies for far too many large-scale undetakings. The Intel stake joins the Pentagon’s preferred equity in rare-earth miner MP Materials (making it the company’s largest shareholder), and the “golden share” arrangement that gives Washington a management role in Nippon Steel’s acquisition of U.S. Steel.

Subsidies from the America COMPETES Act and CHIPS Act arguably let Intel coast on legacy strengths. Now the U.S. government’s equity deepens the entanglement. If government money doesn’t buy progress, what does it do? At taxpayer expense, it derails entrepreneurship and innovation, distorts markets, fuels artificial booms, misallocates talent, blurs ownership status of discoveries, politicizes science, and adds regulatory layers while undermining risk management. Intel’s press release insists Washington will have only “passive ownership, with no Board representation or other governance or information rights.” But the federal state now has a financial stake in Intel’s success over rivals—including upstart innovators—who sit outside the glow of shared policy aims, financial support and preferential treatment. Strategic decisions about semiconductors—already warped by lobbying and subsidy—are now further separated from objectively valid resolutions. Whose interests will dominate when regulators write rules affecting Intel’s competitors or review new semiconductor mergers?

By undermining the American bedrocks of private property and competitive enterprise in so extraordinary a way, these new fusions of economy and state—of production and government—cast a long shadow over Trump’s deregulatory legacy. Observers like me can still tally and celebrate his one-in, ten-out rule and other administrative state rollbacks as the most significant of their kind, but the broader swamp agenda now threatens to eclipse them. In this setting it is striking to see the leaders of Microsoft, Dell, HP, and AWS line up in support of the Intel acquisition. Next could be an Amazon, a Tesla—or even NVIDIA. How much longer can the boundary between public and private withstand the pressure of Washington’s expanding portfolio?

Infuriatingly, a GOP leading this fusion of business and government fulfills the wildest dreams of the progressive left’s coercive utopians, who have long sought to control business and allocate resources. With the hundreds of billions dispensed by the Inflation Reduction Act and the IIJA, projects from local tap water to outer space commercialization are already public-private “partnerships.” That entanglement allowed Biden to traverse the country haranguing business on equity, climate, daycare, union labor, and other whole-of-government crusades—while taunting Republicans who relented for the sake of home-district dollars. Hardcore progressives have never accepted the legitimacy of cost-benefit analysis in the regulatory state, since in their worldview every incremental step toward centralized control is not a “cost” but a down payment on paradise. So there will be theatrical opposition, but count on progressives to embrace Trump’s executive overreach over business when it advances their aims, as Vermont Senator Bernie Sanders just did. Similarly, during COVID, the left remained largely quiet over “unconstitutional slop” like Trump’s unilateral extension of eviction moratoria. Over time, the more fusion between business and government, the less need there is to write new laws and regulations at all to advance economic and social engineering. That is not a state of affairs to which Trump should contribute.

The federal government clearly has an appetite for grabbing private assets in times of crisis. What makes the Trump-Intel stake different is that this time there is no crisis. In World War I, before anyone had really heard of the “administrative state,” Woodrow Wilson nationalized the railroads under a Director General to coordinate wartime transport; they remained under federal control until 1920. Telegraph and telephone systems, along with wireless and radio stations, were also nationalized. During the Korean War, President Harry Truman attempted to seize steel mills (Executive Order 10340) to avert a labor strike, while the government temporarily took control of coal mines and later railroads (Executive Order 10155) during strikes. The Supreme Court’s Youngstown Sheet & Tube Co. v. Sawyer (1952) famously struck down Truman’s unilateral seizure of private steel mill property as unconstitutional. Decades later, during the 2008 financial crisis, Washington took equity stakes in banks through the Troubled Asset Relief Program and bailed out GM and Chrysler, while Fannie Mae and Freddie Mac were placed into conservatorship. Most recently, during COVID-19, Washington rushed to engineer bipartisan bailouts for airlines, hotels, and restaurants, priming the pump for the next multi-trillion-dollar spending surge when another economic shock hits.

There is something to be said for aggressive but appropriate executive action to reduce the scope of government – within reason and within the lanes of separation of powers. Certain Trump-era downsizing campaigns to protect taxpayers are being upheld by courts. But such action to expand government is particularly problematic. The Intel stake might face scrutiny as an abuse of executive authority like some of these early nationalizations did, but the deeper problem is Congress’s disregard of enumerated powers, which invites overreach instead of restraining it. That is, Trump didn’t invent the America COMPETES Act—but he’s certainly taking it to its next “logical” step.

The perversity of government stakes in private companies is made even clearer by other Washington antics. A district court ruling is expected soon in the Justice Department’s antitrust case against Google—a suit built on the claim that the state must police private firms for having “too much power” in open and diverse search and advertising markets. Yet that case, viewed alongside the Intel stake and the U.S. Steel and MP Materials ventures, makes plain where the real power resides—and it isn’t in markets.

Plenty, like Kentucky Senator Sen. Rand Paul, have called the Intel state a “step toward socialism”; and sure, it is. The free market movement—academics, policymakers, pundits—must and will articulate the conventional cautions. You’ve heard our drill so much you’re probably numb to it: Government’s proper role is not to join the fray as investor, shareholder, and overlord by writing checks or acquiring stakes in favored companies. The proper role instead is to avoid entanglements and let companies rise or fall on their own merits under neutral ground rules ensuring that contracts are enforced, and that property is secure and protected. Tax burdens should be lowered and regulatory underbrush cleared to benefit all—not some, and certainly not one.

But restraint isn’t sexy, and Washington is easily led into temptation. If policymakers were serious, they would change course. There’s a lot of talk these days about building infrastructure. Well, we require a newly reinforced wall of separation between business and state because what we are getting is not the claimed protection of critical technologies, but the prevention of their emergence. That’s the lesson of a generation of Intel subsidies. A U.S. that enshrines the wealth and resource creation of capitalism should not emulate rival nations’ technology spending, but encourage them to keep wasting treasure in that fashion.

Fixing these deeply embedded problems requires ending direct subsidies like those in the CHIPS Act, curbing public-private partnerships, and halting this radical new game of non-crisis partial nationalizations. Trump’s otherwise laudable regulatory streamlining campaign cannot succeed unless these fusions and the bipartisan cronyism they enable become unthinkable, illegal and disciplined.

The realization of an actual separation of economy and state likely requires a constitutional amendment prohibiting private aid altogether. But there’s no discernable path from here to there. That gaping hole in public policy leadership is the competition and national security crisis, not the failures to carry out nationalizations.

Build the wall!