“I don’t care if it’s a dollar or a billion-dollar stake,” Republican Senator Thom Tillis protested. “That starts feeling like a semi state-owned enterprise à la CCCP,” he added, referring to the old acronym for the USSR. “I don’t believe the U.S. government should be picking winners and losers.”
President Donald Trump’s almost unprecedented decision for the government to purchase a 10% stake in Intel after providing $8.9 billion in additional funding as part of an overall plan to make semiconductor supply chains more resilient has prompted claims from some conservatives that he has abandoned the free market and is pursuing downright socialistic policies. As Intel itself described the deal, “Intel Corporation today announced an agreement with the Trump Administration to support the continued expansion of American technology and manufacturing leadership. Under terms of the agreement, the United States government will make an $8.9 billion investment in Intel common stock, reflecting the confidence the Administration has in Intel to advance key national priorities and the critically important role the company plays in expanding the domestic semiconductor industry. The government’s equity stake will be funded by the remaining $5.7 billion in grants previously awarded, but not yet paid, to Intel under the U.S. CHIPS and Science Act and $3.2 billion awarded to the company as part of the Secure Enclave program. Intel will continue to deliver on its Secure Enclave obligations and reaffirmed its commitment to delivering trusted and secure semiconductors to the U.S. Department of Defense. The $8.9 billion investment is in addition to the $2.2 billion in CHIPS grants Intel has received to date, making for a total investment of $11.1 billion.” “As the only semiconductor company that does leading-edge logic R&D and manufacturing in the U.S., Intel is deeply committed to ensuring the world’s most advanced technologies are American made,” said Lip-Bu Tan, CEO of Intel. “President Trump’s focus on U.S. chip manufacturing is driving historic investments in a vital industry that is integral to the country’s economic and national security. We are grateful for the confidence the President and the Administration have placed in Intel, and we look forward to working to advance U.S. technology and manufacturing leadership,” he added. “Intel is excited to welcome the United States of America as a shareholder, helping to create the most advanced chips in the world,” explained Howard Lutnick, United States Secretary of Commerce. “As more companies look to invest in America, this administration remains committed to reinforcing our country’s dominance in artificial intelligence while strengthening our national security.” For his part, President Trump claimed that more deals like this could be forthcoming in the near future. “I will make deals like that for our Country all day long,” he posted on Truth Social, adding that “stupid people” are upset even though it will bring more money and jobs to the US. “I will also help those companies that make such lucrative deals with the United States…I love seeing their stock price go up, making the USA RICHER, AND RICHER,” he said. “More jobs for America!!! Who would not want to make deals like that?”
Critics, including some on the right, immediately cried foul, claiming the move was yet another violation of supposedly sacred conservative principles (such as tariffs and the raid on John Bolton). “I don’t care if it’s a dollar or a billion-dollar stake,” Republican Senator Thom Tillis told journalist Major Garrett. “That starts feeling like a semi state-owned enterprise à la CCCP,” he added, referring to the old acronym for the USSR. “I don’t believe the U.S. government should be picking winners and losers.” Likewise, Senator Rand Paul called it a terrible idea, claiming “If socialism is government owning the means of production, wouldn’t the government owning part of Intel be [a] step toward socialism?” on social media. “If there is anyone who was a halfway prominent mainstream conservative … 10 years ago who now tells me they wouldn’t have screamed about incipient ‘socialism!’ or ‘fascism!’ about Trump’s Intel ‘investment’,” Never Trumper Jonah Goldberg wrote on X, “I presumptively assume they are lying …” David M. Drucker, writing for Bloomberg, broadened the issue by tying it to recent deals with AMD and Nvidia for fees on chips sold to China, claiming “Trump Seems Pretty Socialist These Days,” and insisting “If a Democrat were demanding a stake in Intel or special fees from Nvidia, the GOP would be screaming.” David A. Graham, writing for The Atlantic, took a similar tack, broadening the perspective beyond mere economics, claiming that President Trump is pursuing a new kind of “right wing socialism.” “For decades, the American right and the Republican Party held themselves up as the defenders of individual citizens, corporations, and state and local governments against intrusive control from Washington. But where Ronald Reagan joked that the nine most terrifying words in the English language were I’m from the government, and I’m here to help, Trump’s credo is ‘I’m from the government, and I’m here to take over.’ The debate in America is no longer about whether socialism can gain a foothold. It’s whether the socialism that dominates will be progressive or right-wing.” He continued, “Conservative pundits and trolls have long used socialist as a ready-made epithet for any left-of-center policy ideas. Trump himself even called Kamala Harris a ‘communist’ during the 2024 campaign. But Trump is offering proof that a government can be both socialist and reactionary. As recently as 2016, the right-wing writer Michael Anton argued in favor of a Trump presidency by warning of ‘the soul-sapping effects of paternalistic Big Government and its cannibalization of civil society and religious institutions.’ Today, that’s a pretty good description of Trump’s approach to power. (Anton now serves in Trump’s State Department.)” Ironically, there is at least some support for this position when one of the few politicians who spoke in favor of the 10% take in Intel was Democratic Socialist Senator Bernie Sanders. “If microchip companies make a profit from the generous grants they receive from the federal government, the taxpayers of America have a right to a reasonable return on that investment” he explained to NatSecDaily. As Barron’s reported, a similar idea was once proposed by Senator Sanders and fellow progressive Senator Elizabeth Warren, noting, “the idea isn’t a new one. It was first heard in the most left-leaning parts of the U.S. Senate.”
Perhaps the only positive feedback from conservative quarters came from The New York Post’s Daniel McCarthy, who noted correctly in my view, that “Trump’s Industrial Policy Is Realism, Not Socialism.” As he sees it, the President’s recent moves are part of “a whole school of thought on the right, going back decades, [that] has championed industrial policies as bold as Trump’s, if not bolder.” At the same time, even he acknowledged that the President has a new goal in mind, something not previously done in the United States though widely used around the world. “Trump is doing with Intel is different from earlier precedents. Trump sees the Intel deal as a first step toward creating an American ‘sovereign wealth fund,’ with many more investments to follow. The president isn’t looking to the past: this is about keeping America competitive with other nations in the 21st century, including Communist China, which controls the world’s second and third largest sovereign wealth funds.” These are state-owned investment funds that hold real diverse assets including stocks, bonds, real estate, precious metals, or alternative investments such as stock, private equity, or hedge funds. Because of the diversity of investments globally, they are believed to reduce the volatility of government revenues, helping to counter the boom-bust cycles’ adverse effect on government spending and the national economy, and to help drive investment in diverse industries while building wealth for future generations. The United States currently doesn’t leverage this type of fund, but their usage has exploded in the Middle East and even Europe in recent years. For example, “Norway pays for about 20% to 25% of its national budget with the world’s largest sovereign wealth fund, the Government Pension Fund, which holds more than $1.7 trillion in assets.” As Mr. McCarthy explained they are similar to college endowments that generate effectively perpetual wealth. He went on to ask, “Is it a bad thing to pay for government with market profits rather than by raising taxes on citizens or selling debt that eventually has to be repaid with interest? A nation pays interest on its national debt but earns interest from a sovereign wealth fund.” (For that matter, can we imagine if the trillions that are supposed to be in the Social Security Trust Fund were actually in a sovereign wealth fund?) In his mind, this is analogous to former President George W. Bush’s plan to privatize part of Social Security itself, “The idea was to let Americans put their compulsory Social Security payments into government-approved funds of their own choosing, which would generate higher returns from market investments than the Social Security Trust Fund could reap from investing exclusively in U.S. Treasury securities. Conservatives embraced that as a good free-market idea. Is a sovereign wealth fund any different?”
While Mr. McCarthy is clear that government investment in a private economy is not without risk, he concluded that the “question isn’t just whether America can run a sovereign wealth fund right — it’s also what happens if we do nothing and rivals perfect the strategy.” Personally, I think the question is much broader than that, namely, do we have a free market at all at this point and if not, why should we refrain from experiment with wealth creating ideas? Whether you like it or not, the reality is that the federal government is closely involved with almost every aspect of business in America, from regulations to subsidies. Indeed, the initial impetus for President Trump to secure a 10% stake in Intel was the so-called CHIPS Act passed under President Joe Biden to re-shore semiconductor manufacturing by providing some $52.7 billion in funding, much of it directly paid to some of the most successful companies in the world. The act, which was supported by 17 Republicans, making it a rare bipartisan achievement, is part of a broader $280 billion initiative that also provides investment tax credits and research funding in both the public and the private sector. Under those conditions, how is it better simply to give the money away rather than use it to secure a stake in the outcome and potential profits as President Trump has done? President Biden also secured passage of the Infrastructure and Jobs Act which provided between $547 and $715 billion in funding for federal highway aid, transit, highway safety, motor carrier, research, hazardous materials, rural broadband, and various rail programs at the Department of Transportation. As the Federal government isn’t a construction company, carrier, or broadband company, much of this money was handed out in government contracts, essentially passed through to private corporations. Why not have a stake in the outcome of companies that rely on the government for most if not all of their revenue? This too passed 69-30 in the Senate, another bipartisan achievement. More controversially, President Biden was able to squeeze through the Inflation Reduction Act, which was in actuality a massive set of subsidies to so called green energy companies, where some $783 billion was funneled to private parties with essentially no strings attached – and no possibility of return on investment. Before President Biden, President Trump himself massively subsidized the healthcare sector, particularly pharmaceutical companies to combat the pandemic. President Barack Obama variously subsidized clean energy, shovel ready projects, and health insurance through the Obamacare exchanges. President George W. Bush proposed the privatization of Social Security as mentioned earlier, and then funneled almost a trillion to the banks as part of the TARP bail out program, which was interestingly framed as the government purchasing the delinquent assets before it became a corporate giveaway, meaning that program also sought for the government to hold investment assets. As of last year, the federal government paid 32% of all healthcare spending in the US and variously subsidizes the energy, agriculture, housing, and transportation industries, not to mention offering a dizzying variety of tax incentives and below market loans, all without receiving a single dollar back or getting any stake in the outcome. We also spend some $59.6 billion on research at universities and other bodies, mostly without earning a penny.
If you include regulatory burdens that fall harder on smaller companies as opposed to established providers and other indirect means the government interferes with the market, I could certainly go on, but clearly we are already picking winners and losers, creating moral hazards, and doing who knows what else. If you doubt this, does anyone think they can just start an airline or a pharmaceutical company even if they are flush with cash? While I might personally wish this wasn’t so, both parties have been at it for a hundred years or more, and the reality is that government intrusion in the market isn’t going away any time soon, if ever. From that perspective, we might as well make a buck or two, no, accepting this brave new world and adapting to it rather than braying about a sort of quasi socialism that already exists whatever our principles?
Confessions of a Conservative Atheist 