Bernie Sanders Backs Trump's Plan for Government Equity in Tech Giants
In an unexpected alignment, Bernie Sanders has expressed his support for a Trump administration proposal. The plan involves converting federal grants awarded to tech giants like Intel and TSMC into equity stakes, granting the government ownership in these companies.
Sanders, a Vermont senator, articulated his belief that if profitable tech companies receive substantial federal funding, taxpayers should see a reasonable return. This view was shared in an interview with Reuters, highlighting the rare agreement between Sanders and Trump on this issue.
The CHIPS Act aims to foster US-based chip manufacturing and includes federal grants. Commerce Secretary Howard Lutnick stated that the US government seeks a 10% equity stake in Intel in exchange for these grants. Despite already being in the public eye, Lutnick's discussion on CNBC gave the plan greater exposure. Lutnick criticized the CHIPS Act as a windfall for affluent companies like TSMC, questioning the logic behind subsidizing already wealthy enterprises.
While the intent of federal grants is to spur investment and job creation, the notion of the government acquiring an equity stake introduces potential influence over company decisions. Lutnick assured CNBC that the government would not play a role in Intel's governance despite aiming for a substantial stake. Notably, the acquisition of a "golden share" in U.S. Steel earlier illustrates the government's potential influence through board appointments.
The two chipmaking giants, Intel and TSMC, received substantial grants under the CHIPS Act. Intel has slowed its expansion plans, leaving unused grant funds available. Converted, these grants could become the largest federal industry intervention since the auto industry bailout during the Great Recession.
The Trump administration has underscored national security concerns, especially with Intel, highlighting CEO Lip-Bu Tan's alleged ties to China. Although Trump initially advocated for Tan's dismissal, a recent meeting appeared to alter his stance.
Regardless, Wall Street remains apprehensive about government involvement, hinting at potential ways the administration could wield influence in practice. Sanders, therefore, supports the equity idea with caution, underscoring the need for similar measures to include stringent conditions when associated with Trump's administration.
