Hi friends,
The United States has a real problem: we depend on foreign countries, especially China, for some materials, technologies, and manufacturing capabilities that are important to our military and economy.
Few people would argue that America should ignore those vulnerabilities.
The harder question is:
How should government help fix them without becoming too involved in private business?
That question matters more now because the federal government is using several different tools—from ordinary purchases and loans to actual ownership in private companies.
A good place to start is simply:
What is government providing, and what do taxpayers get in return?
Six Ways Government Can Help
The federal government has several ways to help private companies build capabilities considered important to national security. Those methods differ in what taxpayers provide, what taxpayers get back, how much risk taxpayers assume, and how much influence government gains.
1. Purchases — taxpayers get a product or service.
Government buys something it needs, such as aircraft, ammunition, computer systems, or research. This is the familiar customer relationship: government pays, and taxpayers receive the product or service.
2. Grants — taxpayers get the promised public benefit.
Government gives money for a specific purpose, usually without repayment. Taxpayers may get a new factory, more domestic production, or another strategic benefit—but if the project fails, the grant generally is not repaid.
3. Loans — taxpayers should get principal and interest back.
Government lends money to help build something considered strategically important. Taxpayers assume the risk that the borrower may fail, and the financing may be cheaper than the private market would offer.
This is the main role of the Pentagon’s relatively new Office of Strategic Capital, or OSC. OSC made its first direct loan only in 2025, so it does not yet have a meaningful repayment record.
4. Loan guarantees — taxpayers stand behind someone else’s loan.
A private lender supplies the money, but government agrees to cover some or all of the loss if the borrower defaults. Taxpayers may get the strategic benefit without providing the original loan, but they may still be on the hook if things go badly.
5. Equity investments — taxpayers own something.
Government receives stock or another ownership interest in exchange for its support. Taxpayers can benefit if the company rises in value, but they can also lose money. More importantly, government is now a shareholder in private enterprise.
6. Special ownership or control rights — government gains leverage.
Government may receive warrants, special voting rights, veto powers, or a “golden share.” These may protect a national-security interest, but they move government farther from simply buying from private industry and closer to influencing business decisions.
The progression looks something like this:
Buying → Financing → Risking → Owning → Influencing
What Does This Look Like in Real Life?
Intel: Roughly $8.9 billion in previously authorized federal funding was converted into Intel stock, initially giving the federal government about a 9.9% stake. The arrangement was designed mainly as passive ownership rather than day-to-day federal management.
MP Materials: The government combined several tools at once—a $150 million OSC loan, a $400 million equity investment, warrants, price support, and long-term purchase commitments—to expand domestic rare-earth production.
U.S. Steel: The federal government received a special “Golden Share” giving it rights involving certain major corporate decisions. That goes beyond passive investment.
Why Might This Be Necessary?
The national-security concern is real.
America cannot wait until a war or major crisis to discover that it cannot produce critical magnets, chips, batteries, defense components, or other essential products.
Private investors also make decisions based on financial return. A factory may be very important to national security but not attractive enough to private capital—or may take too long to build without help.
Government assistance can sometimes speed up production the country genuinely needs.
There is also a reasonable taxpayer argument for equity:
If taxpayers are putting billions of dollars at risk to help a company succeed, why should private shareholders receive all the upside?
So What Is the Concern?
The concern is not simply that government is involved. The concern is how involved it becomes and what precedent is created.
If Washington owns part of Company A while Company A competes with Company B, government may simultaneously be shareholder, regulator, customer, tax collector, grant maker, and trade-policy maker.
Government can become both referee and player.
That raises the risk of favoritism, political pressure, conflicts of interest, and crony capitalism—even if today’s officials are acting with good intentions.
And there is a longer-term question:
What could a future administration do with the same authority?
What Guardrails Should Taxpayers Expect?
At minimum: clear congressional authority, a genuine national-security need, evidence that ordinary private financing is inadequate, transparent company selection, strong conflict-of-interest rules, public disclosure of government ownership, limits on voting and management control, GAO and Inspector General oversight, reporting of gains and losses, and a clear exit strategy.
The guiding principle should be:
Use the least intrusive government tool that will accomplish the legitimate national-security objective.
If buying the product solves the problem, buy it. If a loan solves it, there may be no reason to own the company.
Bottom Line
America should not depend on foreign adversaries for products critical to our national security.
But national security should not become a blank check for government ownership, favoritism, or increasing control over private enterprise.
National security may justify government help. It does not automatically justify government control.
Sources:
Office of Strategic Capital — first direct loan, $150 million to MP Materials (DoD, Aug. 10, 2025): OSC states this was its first direct loan.
DoD: OSC Announces First Loan to MP MaterialsMP Materials — $400 million equity investment, $150 million loan, warrant, 10-year price floor, and 10-year offtake agreement: These terms are laid out in MP Materials’ SEC filings.
SEC: MP Materials 8-K
SEC: MP Materials Transaction AgreementIntel — $8.9 billion federal investment for roughly a 9.9% stake: Intel’s SEC filing says the government agreed to provide about $8.87 billion and receive up to 433.3 million shares; Intel’s announcement describes it as approximately a 9.9% stake.
SEC: Intel Government Equity Agreement
SEC Exhibit: Intel and Trump Administration AgreementIntel — passive ownership/no board seat: Intel states that the government’s interest is passive, with no board representation or ordinary governance or information rights, and that it generally agrees to vote with Intel’s board.
SEC Exhibit: Intel Terms of Federal InvestmentIntel — prior milestone requirements modified/removed: Intel disclosed that the amended agreement removed previous project milestones and certain other conditions after Intel certified eligible spending.
SEC: Intel Aug. 27, 2025 FilingU.S. Steel — Golden Share: U.S. Steel’s SEC filings state that the federal government received a Class G preferred “Golden Share” with rights concerning governance, domestic production, and trade matters.
SEC: U.S. Steel National Security Agreement
SEC: U.S. Steel Golden Share RightsCBO — taxpayer risk in federal loans and loan guarantees: CBO estimates 2026 federal credit programs would show $12.5 billion in lifetime savings under standard federal accounting, but a $52.6 billion lifetime cost using fair-value accounting that incorporates market risk. This is useful support for our point that “repaid” does not necessarily mean “costless to taxpayers.”
CBO: Estimates of the Cost of Federal Credit Programs in 2026
As always, do your own research and make up your own mind.
White paper on land and water rights: Property Rights and Freedom: A White Paper on America’s Disappearing Land (8/13/2025)
United we stand. Divided we fall. We must not let America fall.
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Disclaimer:
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