Commerce Department adds four new corporate stakes to Trump portfolio
The Commerce Department added four proposed ownership stakes to the Trump administration's portfolio of 40 private companies. The Cato Institute's Restoring Free Enterprise initiative maintains this count. Cato Institute researchers argue that these stakes create a mechanism for future Democratic administrations to exert regulatory pressure on industries. Semafor reported that former Biden officials are considering how to leverage government ownership to influence gun and oil companies. Doug Farrar, who served under Federal Trade Commission Chair Lina Khan during the Biden administration, stated that a future Democratic president could use these stakes to regulate AI companies, particularly one with a strong regulatory agenda. The Cato Institute noted that the White House abandoned plans for a formal sovereign wealth fund after an executive order signed early in the second term, instead assembling an ad hoc portfolio without clear legal authority. Congressional Republicans have not acted to stop the acquisitions, despite historical opposition to government ownership. In fact, lawmakers are working to grant the executive branch legal authority to continue these investments. Administration supporters argue that equity stakes are preferable to direct subsidies and necessary for national security supply chains. Cato Institute analysts countered that government ownership distorts markets by giving favored companies advantages over competitors. They also argued that it raises barriers for new entrants, potentially stifling innovation. The value of government-held shares does not equate to revenue; realizing gains requires selling the assets and accounting for initial taxpayer costs. Scott Lincicome of Cato explained that Intel's stock gains partly reflect expectations of government favoritism, suggesting a diversion of private investment from other firms. Even if the administration sold its entire Intel stake immediately, the net proceeds would be approximately $28 billion. This amount is less than 1.5% of the $2 trillion deficit recorded in the fiscal year just ended under President Trump and a Republican-controlled Congress. The Cato Institute recommended divesting all acquired stakes and suggested alternative revenue sources, such as selling excess federal buildings and privatizing entities like Amtrak. Regarding national security concerns, Cato stated that the government can support critical supply chains through purchase contracts or material stockpiles without taking equity positions. They also proposed easing permitting requirements and removing tariffs on production inputs to encourage private investment. The administration previously sought a bailout that would have given it a 90% stake in Spirit Airlines, a plan abandoned after bondholders objected to the terms. Last week, Politico reported that the Federal Aviation Administration is exploring an ownership stake in an air traffic control software company. Cato Institute researchers argued that having the government invest in companies it is tasked with evaluating objectively creates a conflict of interest. They dismissed assurances of passive ownership as unrealistic, citing current administration use of contracts and regulatory authority to favor its portfolio companies.
The Commerce Department added four proposed ownership stakes to the Trump administration's portfolio of 40 private companies. The Cato Institute's Restoring Free Enterprise initiative maintains this count. Cato Institute researchers argue that these stakes create a mechanism for future Democratic administrations to exert regulatory pressure on industries. Semafor reported that former Biden officials are considering how to leverage government ownership to influence gun and oil companies. Doug Farrar, who served under Federal Trade Commission Chair Lina Khan during the Biden administration, stated that a future Democratic president could use these stakes to regulate AI companies, particularly one with a strong regulatory agenda. The Cato Institute noted that the White House abandoned plans for a formal sovereign wealth fund after an executive order signed early in the second term, instead assembling an ad hoc portfolio without clear legal authority. Congressional Republicans have not acted to stop the acquisitions, despite historical opposition to government ownership. In fact, lawmakers are working to grant the executive branch legal authority to continue these investments. Administration supporters argue that equity stakes are preferable to direct subsidies and necessary for national security supply chains. Cato Institute analysts countered that government ownership distorts markets by giving favored companies advantages over competitors. They also argued that it raises barriers for new entrants, potentially stifling innovation. The value of government-held shares does not equate to revenue; realizing gains requires selling the assets and accounting for initial taxpayer costs. Scott Lincicome of Cato explained that Intel's stock gains partly reflect expectations of government favoritism, suggesting a diversion of private investment from other firms. Even if the administration sold its entire Intel stake immediately, the net proceeds would be approximately $28 billion. This amount is less than 1.5% of the $2 trillion deficit recorded in the fiscal year just ended under President Trump and a Republican-controlled Congress. The Cato Institute recommended divesting all acquired stakes and suggested alternative revenue sources, such as selling excess federal buildings and privatizing entities like Amtrak. Regarding national security concerns, Cato stated that the government can support critical supply chains through purchase contracts or material stockpiles without taking equity positions. They also proposed easing permitting requirements and removing tariffs on production inputs to encourage private investment. The administration previously sought a bailout that would have given it a 90% stake in Spirit Airlines, a plan abandoned after bondholders objected to the terms. Last week, Politico reported that the Federal Aviation Administration is exploring an ownership stake in an air traffic control software company. Cato Institute researchers argued that having the government invest in companies it is tasked with evaluating objectively creates a conflict of interest. They dismissed assurances of passive ownership as unrealistic, citing current administration use of contracts and regulatory authority to favor its portfolio companies.