No, the federal government should not be subsidizing companies (as opposed to buying things from them), bailing out companies, or obtaining huge stakes in companies in order to either keep them afloat or secure for “the taxpayer” a “return” on his “investment.”
Step one. During the Biden administration, the U.S. Congress passes a massive subsidy for microchip companies called the CHIPS and Science Act.
This, as it turns out, was the first step in bringing us to what is currently happening with Intel (“Trump says US will take 10% stake in Intel because CEO wants to ‘keep his job,’ ” Ars Technica, August 22, 2025).
Intel has agreed to sell the US a 10 percent stake in the company, Donald Trump announced at a news conference Friday.
The US stake is worth $10 billion, Trump said, confirming that the deal was inked following his talks with Intel CEO Lip-Bu Tan [shown above, left].
Trump had previously called for Tan to resign, accusing the CEO of having “concerning” ties to the Chinese Communist Party. During their meeting, the president claimed that Tan “walked in wanting to keep his job and he ended up giving us $10 billion for the United States.”
“I said, ‘I think it would be good having the United States as your partner.’ He agreed, and they’ve agreed to do it,” Trump said. “And I think it’s a great deal for them.”
Sources have suggested that Commerce Secretary Howard Lutnick pushed the idea of the US buying large stakes in various chipmakers like Intel in exchange for access to CHIPS Act funding that had already been approved. Earlier this week, Senator Bernie Sanders (I-Vt.) got behind the plan, noting that “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.”
Well, as long as the top commie in Congress is on board….
What should be done for giant companies—or what should giant companies do for themselves—when they are hitting shoals?
If we exclude government intervention, the company must make its own decisions in light of the situation. Maybe downsizing will improve things, maybe splitting into two companies or ten, maybe selling the company to another company, maybe hiring a better CEO, maybe restructuring management, maybe dropping one product line and introducing another—maybe a hundred different things that require only the perceptiveness, initiative, intelligence, experience, nerve, resources, and determination of the persons leading the company.
Information and incentives
Bailouts corrupt information. Losses tell a firm that it’s doing something wrong. If these losses are erased by a governmental infusion of “taxpayer investment,” the information being conveyed is that the something that the company did wrong wasn’t so very wrong. After all, it led to a bailout that made the losses disappear.
Bailouts also corrupt incentives. The incentives required to entrepreneurially recover from losses and rectify the misjudgments that led to the losses have thus been reduced or eliminated. It is unnecessary to overhaul the company in such a way as to recover from losses if the losses have now been made good by government bailouts. The people at the company may in good faith do their best to still act on a profit-and-loss, risk-taking, entrepreneurial basis anyway, remembering what this is like. But instead of knowing and facing the actual reality of earning profits for success and suffering losses for failure, to some extent they can now only imagine that they are facing this alternative—only pretend. The people running the company will be able to stop pretending as soon as the government stops hovering and preparing to dispense more bailouts as soon the firm hits another snag. Can that ever be the case while the federal government has 10 percent or 9.9 percent of Intel?
The CHIPS Act to hand out unearned money to microchip companies has already been passed. Congress can rescind it. Congress can decide not to give out the CHIP monies that haven’t been given out yet. But it doesn’t look as if Congress is willing to do this. Nor is the president demanding it.
Step two. President Trump calls for the resignation of the Intel CEO Lip-Bu Tan because of his history of working for and investing in companies with ties to the Chinese Communist Party and the People’s Liberation Army. In this, the president is apparently inspired by a letter penned by U.S. Senator Tom Cotton to the chairman of Intel’s board of directors laying out disturbing facts and asking pointed questions.
Step three. President Trump meets with Intel CEO Lip-Bu Tan at the White House, where Tan tries to “keep his job.” Trump offers to give Intel its share of Biden-era welfare subsidies for microchip companies—already enacted, already “due” Intel—in exchange for a large amount of stock to be held by the U.S. government. The U.S. would get a 10 percent stake in the company. Tan agrees, but it’s not a done deal.
Even so, we’re now at this stage:
Under the agreement, the US government will receive 433.3 million shares of common stock, representing a 9.9 percent stake in the company, Intel said in a statement.
This amounts to an $8.9 billion investment, funded partially by $5.7 billion in grants awarded but not yet paid under the CHIPS and Science Act—a major law passed during Biden’s term that Trump has criticized.
The other $3.2 billion comes from an award to the company as part of the Secure Enclave program, Intel said.
The $8.9 billion investment would be in addition to $2.2 billion in CHIPS grants Intel has already received, taking the full amount to $11.1 billion, the company added.
Ars Technica says: “Critics have suggested the plan could possibly hurt the economy or US tech leadership in the long run if the US meddles too much in private tech companies.”
How much bailout is “too much”? Every little bit hurts if it has any effect at all. The government can only interfere with market processes, not improve upon them. Sometimes the interference may be warranted, for example, to foil the Chinese Communist Party. Nobody has a right to arm enemies of the United States. But destroying freedom and competition in the American chip industry does not do anything to stop the CCP.
Step four. Announce that the taxpayer will thus a “reasonable return on investment.” (I never made this investment in Intel via the CHIPS Act. Did you?)
What happened to the concerns expressed in Senator Cotton’s letter?
Doing a socialist deal that brings the United States a step closer to how the very most interventionist governments operate—like, say, the government of the People’s Republic of China—will not cause the history and associations of the current CEO of Intel to evaporate. Tan’s background either is or is not a legitimate concern, regardless of whether he “wants to keep his job.”
