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As President Donald Trump continues buying government stakes in private companies, the rest of Washington is starting to appreciate the power of his new tool.
The Trump administration has so far announced 43 equity stakes in firms producing everything from minerals to semiconductors, 36 of which were negotiated without explicit legal authority — and more are yet to come. The administration may be negotiating even more stakes under the radar, since SEC filings for unrelated deals mention the possibility of warrants.
Unwinding the administration’s investments would prove legally and politically difficult — but Democrats likely won’t want to, at least not right away. They’re already weighing how to use equity stakes for their own ends, signaling that Trump’s government intervention in the private sector may be the start of a permanent trend.
“The Trump administration’s approach to government equity stakes has completely lacked transparency and accountability,” Sen. Chris Van Hollen, D-Md., told Semafor. “While this is something future administrations may want to consider, it’s clear that to actually serve Americans, it would require a totally different approach.”
Thanks to the precedent Trump has set, a future Democratic president could reap multiple benefits from equity stakes in private companies. Among them, as former Biden administration officials suggested: reining in the AI industry, shrinking defense spending, boxing China out of critical sectors, and pressuring gun and oil companies.
Even demanding an equity stake as a condition for government assistance — whether it’s a loan, grant, or other federal permit — is a powerful tool that’s now more readily at the White House’s disposal, no matter which party controls it.
“We’re through the looking glass,” said Democratic strategist and former Biden administration official Doug Farrar.
Van Hollen isn’t the only 2028 Democratic contender who’s focusing on overseeing Trump’s deals rather than discontinuing them.
In a statement to Semafor, California Gov. Gavin Newsom trolled Trump as “THE LEADING SOCIALIST OF OUR TIME,” crediting him with unlocking “A BOLD NEW ERA OF GOVERNMENT-RUN BUSINESS … WITH HIS GLORIOUS GOVERNMENT TAKEOVERS.”
The next president may well also have more power to purchase equity stakes; legislation moving through the Senate would give the Pentagon explicit legal authority to do so.
“The sky’s the limit, because the pattern’s been set,” said Tad DeHaven, who helps track the equity stakes at the Cato Institute.
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Some Republicans don’t want any administration making forays into the private sector with public money. Sen. Jon Husted, R-Ohio, recently introduced legislation that would require the government to dissolve any equity stakes after eight years.
“Whether it’s President Trump or somebody else like Bernie Sanders who might be president someday, I don’t trust the federal government being a long-term investor in American companies,” Husted told Bloomberg TV.
But no one else has signed on to his bill. And some progressives are already embracing taking stakes.
New York City Mayor Zohran Mamdani announced this month that his Economic Development Corporation, helmed by Biden’s former FTC chair, Lina Khan, would invest $30 million in a quantum technology lab in exchange for 15% of its profits.
Already, “the [Trump] administration keeps gaining footholds in the industries that make up the supply chain for the AI buildout,” said Farrar, who worked for Khan at the FTC. “That could be an important point of leverage for a future president of either party — but especially a Democrat who wants to seriously regulate this industry.”
Sanders, one of the left’s leading critics of the AI industry, went a step beyond profit-sharing by suggesting this summer that its companies surrender half of their stock to the government.
“The Trump administration has opened up Pandora’s box with this approach to state capitalism,” said Bloomberg economist Chris Kennedy, who served on the National Security Council during the Biden and Trump administrations.
Some Democrats fear Trump could sell off his equity stakes following the next presidential election. Others pray their party, as it prepares to take back at least some power in Washington, can dig into Trump’s equity stakes without creating too much pressure for a selloff after he leaves office.
Any future Democratic president would seek to “figure out a way of imposing some sort of governance scheme over all of these equity interests that strikes the right balance,” said Bharat Ramamurti, the former deputy director of the Biden White House’s National Economic Council.
“I hope there is not an overreaction to one of [Trump’s equity stakes] not panning out, especially because many of the other ones may end up being quite successful for taxpayers,” Ramamurti added. “And you’ll be making a losing financial decision if you decide to cut all of that off.”
Room for Disagreement
Given that Trump has built three campaigns around his skills as a dealmaker, the White House has plenty of reason to argue that his opponents won’t use his playbook. In a statement to Semafor, White House spokesperson Matthew Middleton appeared skeptical that a Democrat would hang onto Trump’s existing stakes.
“Through voluntary equity investments in willing companies, the Trump administration has partnered with the private sector to rebuild America’s industrial base,” Middleton said, adding that “it’s justifiable to doubt that Democrats will want to build on President Trump’s legacy to revitalize American industry and strengthen our economic independence.”
Eleanor’s view
It’s easy to envision a future Democratic president using Trump’s model to advance a more progressive agenda, as Mamdani already has in New York.
But one Republican asset that Democrats will have trouble replicating is the man who’s largely responsible for the Pentagon’s investments: Deputy Defense Secretary Steve Feinberg.
The Cerberus cofounder has faced remarkably few obstacles in Trump’s Washington, where the GOP-controlled House, Senate, and White House have stayed mostly out of his way.
As one former Pentagon official who worked on its equity stakes put it to me: “It is extraordinarily unlikely that [a Feinberg analog] exists in Democratic politics and that they will have that level of political capital.”
Notable
- Senate Armed Services Chair Roger Wicker, R-Miss., recently told Semafor that the Pentagon “must regularize” its equity stake purchases “to render this approach sustainable over the long term.”