The effort appears mostly driven by national security concerns, particularly a desire for the government to prop up strategic industries and lessen America’s reliance on foreign countries like China for key resources. Some officials are hopeful the equity stakes will generate a windfall for taxpayers, but the likelihood of that is unclear. Many of the companies are facing financial headwinds, and some could take years to become profitable.
The unusual government intervention into the private market is fueling some concerns, including the opacity of the process, the potential for favoritism, corruption and market distortions, along with the possible loss of taxpayer funds should the investments fail.
Aaron Bartnick, a fellow at Columbia University and a former Biden White House official, said there were serious questions about whether the government role in private industry would address national security vulnerabilities and deliver a return on taxpayer dollars.
“In the absence of a clearly articulated strategy,” he said, the concern was that “this could just devolve to arbitrary deals that favor friends or disfavor foes.”