Fed takes 10% stake in Oregon’s largest employer (dangerous move)

By Taxpayers Association of Oregon
OregonWatchdog.com

The federal government is set to invest $8.9 billion in Intel common stock which will give itself a 10% ownership in the company.  This investment will be financed by the remaining $5.7 billion in CHIPS Act grants that had been previously awarded but not yet disbursed. Intel is Oregon’s largest for-profit employer.

As a Taxpayer/Free Market organization we do not favor government involvement in owning parts of private companies. This is dangerous. In context, however, there is a greater danger brewing. Taiwan makes over 60% of the world’s total semiconductors and over 90% of the world’s most advanced chips. Every year that goes by, China has been exercising its warships and fighter jets closer and closer into Taiwan’s territory. China has been confronting international vessels in the area with the assumption that it owns the Taiwan straight. The threat has only been moving in one direction — more precarious every year.  A hostile takeover of Taiwan would be a shock to the entire world economy.

As a result of these conditions, Congress has been awarding grants and passing bills to bolster more microchip capacity here in America so we can reduce our vulnerabilities.  Microchips play a key role in our military.

But the situation gets even more complex. Intel made major investments and market moves to compete with Taiwan and was awarded $8 billion in the CHIPS act. Intel has stumbled out of the gate. They have suffered quality issues. They also have suffered from a lack of customer demand for their product. As a result, Intel has lost billions and is in the process of shedding an extraordinary 24,000 jobs. They cut employee perks/paid-sabbaticals that were among the more generous in the industry. The infusion of government money does not mean Intel will magically find customers or improve its quality. Having a government role inside your company may drive your company further into problems —  as government is clueless about how to run a business. In 2011, the U.S. Department of Energy issued a $535 million loan guarantee to the solar panel manufacturer Solyndra. However, just two years later, the company declared bankruptcy, igniting significant political debate. Trump rallied financial support for Foxconn which soon found itself in further financial trouble.

Trump has said he is now looking for other companies to help in the same way.  Socialist, Senator Bernie Sanders has come forward saying he supports the move.

As said, this is dangerous.  The Commerce Secretary says that taxpayers are just getting something back for their grants to private businesses.  Maybe, the United States should be awarding less taxpayer funded grants to private businesses as this also works against free market principles and invites more government involvement.  We understand that Trump is a very instinctual politician — he tries ideas that no one else would consider — and yes, as he tries these ideas and is smart enough to see if they are working or not and will adjust himself as he goes.   This is why it is important for free enterprise groups to issue caution lights and red flags on bad ideas.  Whatever, we allow Trump to do, we also allow future presidents to do (President Gavin Newsom in 2028? JD Vance? AOC?  Rubio?).

Days before the Intel controversy, a bank invested $2 billion in Intel, a telling sign that private investors are willing to the risk and see value in Intel’s recovery.  This is how it is supposed to work.  We caution against Federal government intervening, and if they are then they need to get and get-out like they did the during the federal bailout of the auto industry after the 2008 crash — which was extremely unpopular with the public.  Feds owning private companies is dangerous.

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