Trump Has Used Taxpayer Money To Purchase Stakes in Dozens of Companies. Congress Is About to Make It Easier.
The Trump administration bought shares of more than a dozen private businesses, took executive power to new heights—and now Congress is working to ensure future presidents have the same opportunity.
Senate’s version National Defense Authorization Act of 2027 It includes a provision to create a new secret fund within the U.S. Treasury to buy more private sector shares. The Pentagon will be able to tap into the proposed Defense Capital Investment Account to invest up to $500 million in private companies involved in the production of “critical minerals, materials, and chemicals,” or batteries.
The provision, included in the 1,500-word bill prepared this week by the Senate Armed Services Committee, would allow “the direct or indirect purchase, acquisition or commitment of funds by the Department of Defense in exchange for an ownership interest, convertible interest, guarantee, revenue sharing vehicle or other similar financial instrument in a non-Federal entity.”
In addition to the $500 million cap on these investments, the government is also prohibited from taking more than a 50 percent stake in any private sector. But other than that, there appear to be few limitations or guardrails on how the new equity account can be used.
The Senate Armed Services Committee at a closed-door hearing last week reportedly rejected A change that would ban the Trump administration from taking stock in businesses with ties to the president, his family members and cabinet members.
Some of the Trump administration’s investment decisions have seemingly benefited those close to Trump. Vulcan Elements, which produces magnets from rare earth elements, received a $620 million loan from the Pentagon’s Strategic Capital Office. Donald Trump Jr. a partner in the company.
Sen. Elissa Slotkin (D-Mich.) said NOTES Republicans rejected that proposal after expressing concerns about how Trump would respond. “We heard over and over again at the NDAA markup that some of my Republican colleagues expressed concerns that they didn’t want to insult the president, they didn’t want to send a negative message to the president, they didn’t want to offend the president or they were afraid of backlash,” Slotkin said.
It would be a good idea for lawmakers to prevent the president from using the Pentagon’s new slush fund to enrich his relatives and allies. However, it would be better to avoid creating this account in the first place. Congress should not codify Trump’s socialist behavior and make it easier (and legal) for future presidents to follow suit.
“If Washington wants more domestic or allied production of minerals, magnets, chemicals or batteries, it has tools that don’t require taxpayers to become shareholders, such as removing permitting and regulatory hurdles or following the orderly government purchasing process.” writes Tad DeHaven is a policy analyst at the Cato Institute. “What it shouldn’t do is pick favored companies and turn the federal government into an investor, customer, regulator and political patron.”
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