Trump's corporate equity stakes risk empowering future Democratic presidents to aggressively regulate key private industries.
The Trump administration has now announced or completed deals to take ownership stakes in 40 private companies. Just this week, the Commerce Department added four more proposed stakes to the running count we maintain at the Cato Institute’s Restoring Free Enterprise initiative. Those inclined to applaud the president’s dealmaking should consider what a Democratic president might do with those stakes after Trump is no longer in office.
Democrats are certainly thinking about it. Semafor reports that former Biden officials are licking their chops at the prospect of using government ownership to pressure gun and oil companies. Doug Farrar, who worked for then-Federal Trade Commission Chair Lina Khan during the Biden administration, sees a future president leveraging government ownership to turn the screws on AI companies, "especially a Democrat who wants to seriously regulate this industry." Remember when the Biden administration bullied social media platforms to remove content it didn’t like during the COVID pandemic? That was done without government ownership.
I warned about this two weeks into Trump’s second term after he signed an executive order seeking to create a sovereign wealth fund, noting that a government investment fund would eventually become a vehicle for Democratic administrations to pursue policies Republicans oppose. The White House ditched the idea for a formal fund and proceeded to cobble together an ad hoc presidential portfolio despite having no clear legal authority to do so.