Critics are assailing deals to give the government stakes in major companies—but they’re overlooking their civic dividends.
Senator Bernie Sanders (I-VT) discusses his proposal for an AI sovereign wealth fund during a June appearance at Washington’s National Press Club. (Jacquelyn Martin / AP)
Economic policy has lately been convulsed by a proposition unthinkable under past Republican administrations: increased public ownership of major stakes in private companies. Under a growing array of public-equity deals engineered by the Trump White House, US government agencies are going well beyond their former arm’s-length initiatives to influence corporate decision-making to become shareholders in the companies themselves.
This move is stoking ideological blowback. The laissez-faire right sees it undermining the traditional divide between the market (good) and the state (bad). Adam Kinzinger and Joe Scarborough— Republicans of the Never Trump persuasion—have derided the policy as “ACTUAL communism/socialism” and called for privatizing the Trump equity stakes. Even left economist Robert Reich, whom the Cato Institute once attacked for advocating industrial policy, has now outflanked Cato by likening Trump’s taking of equity stakes to Nazism.
All this inflammatory rhetoric serves mostly to distract attention from the real policy questions at the heart of the public-equity debate, which are at their core about democracy. As technologies like AI boom, will the public get any meaningful say in how a handful of companies remake the American workplace, public discourse, and much of our common world?
Part of the problem with the Trump administration’s abrupt lurch into equity ownership last year is that public debate has played little or no role. As Trump regulators in the Commerce Department retired a Biden-era grant to semiconductor maker Intel, they demanded a 10 percent equity stake in the company itself—a position that is now worth five times more than the government paid for it. Commerce Secretary Howard Lutnick did not make much attempt to justify the move, other than to issue decidedly nonideological and pragmatic comments about national security, and a better return for the American taxpayer than what was realized under the Biden approach of “just giving grants away.”
It turns out that was just the beginning of the Trump public-equity binge. Despite having almost no support from more traditional Republicans, the administration kept plowing ahead, announcing shareholding deals with more than two dozen companies worth billions of dollars, in sectors ranging from rare earths to energy.
Despite the unease from some quarters here at home, other major economies around the world have not been shy in pursuing their national interest by holding public-equity stakes in private companies and maintaining sovereign wealth funds to manage them. China is the extreme example of a state capitalism that involves government closely in the means of production—but virtually every other country in Europe and Asia has adopted a “lite” version of the same practice. Iconic firms from Volkswagen to Renault to British Steel are owned in part or fully by public agencies, limiting the offshoring of jobs and better aligning corporate practices with the national interest.
Equity stakes can also potentially solve a problem that bedeviled economic officials in the Biden administration: speed. Traditional government tools such grants, loans, and antitrust legal actions can take years to negotiate or litigate, while markets move in hours and days. Look at the experience of the Greenhouse Gas Reduction Fund under Biden, intended to further solar and other projects. It took two years after the Inflation Reduction Act authorized the office for the grants to be obligated—and even then, the recipients did not have the funds on hand when Trump came back into office. He quickly killed the program. In contrast, equity deals can be inked at the speed of corporate transactions. Within months of acquiring partial control over US Steel, the Trump administration forced the company to reopen a Granite City, Illinois, facility staffed by unionized steelworkers.
That example highlights how the conversation about equity stakes has moved beyond a technical solution to narrow market failures (though it’s important there too, as even Biden alumni that didn’t use the tool now acknowledge). Rather, it’s about building a more small-d democratic political economy.
That’s the thinking behind Bernie Sanders’s proposal for an American AI Sovereign Wealth Fund. While Sanders’s fund bears a superficial resemblance to the earlier Trump public-equity deals, it’s much more ambitious and far-reaching than they are. Sanders proposes to mandate that any AI company earning more than $200 million make a one-time deposit of 50 percent of its shares in a publicly owned sovereign wealth fund. California Governor Gavin Newsom embraced a version of the idea, as did Sam Altman of OpenAI and Michigan Democratic Senate hopeful Abdul el-Sayed.
Sanders’s plan, and the follow-up proposals it sparked, reverses the traditional model of equity partnerships: The dominant capital flow here comes not from government to a corporation in the first instance but from a corporation to government, via a gift of shares to the Treasury. It would thus substantially lower tech billionaires’ net worth.
These ideas could have significant revenue implications. Sanders estimates that the transfer could represent $7 trillion in value to the federal government. That’s a number almost equivalent to the entire federal US budget in 2025, and more than three times the size of Norway’s sovereign wealth fund (currently the world’s largest). This could go a long way toward helping any workers displaced by AI to get back on their feet, oraddressing the climate crisis, which could be set back by the runaway erection of gas-fueled AI data centers.
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But money is only part of the reason to take equity stakes—and a fairly small part at that. After all, it is entirely possible that AI is a bubble that will pop, rendering a massive tranche of government-held shares comparatively worthless. Even without a full-on meltdown in the AI sector, the actual cash flow value to the US government isn’t rooted in the paper value of the shares it might sell but the annual dividends they bring while the government holds onto them. Even at current valuations, that’s only likely to be in the tens of billions—not that much in the grand scheme of federal budgeting.
The bigger reason to seriously consider some version of Sanders’s sovereign wealth fund is to shore up our beleaguered democracy. Equity stakes empower the government to use shareholder votes and even occupy board seats. That, in turn, allows public officials to help steer corporate policy from the inside, or as the writer Matt Bruenig puts it, to exert “more fine-tuned control” over consequential economic decisions.
In our current political economy, voters do not get to elect OpenAI’s board. They aren’t able to weigh in on a ballot measure determining whether Anthropic’s or Google’s models are programmed to privilege user engagement over accuracy, or whether the next generation of data centers runs on gas or wind.
Markets aggregate consumer preferences through purchases, but with equity stakes and sovereign wealth funds, we can aggregate citizen preferences about how a general-purpose technology should be governed. A public equity stake, if designed with real anti-corruption guardrails, is one of the few tools that can help achieve these critical aims.
Public ownership can also help meet the challenges already emerging in the AI sector: If management is pushing coders to pump out exploitative and misleading AI slop in the name of short-term profits, a public voice on a corporate board can rescind that policy directive on pain of dismissal. If data centers rely on emissions-intensive natural gas rather than renewable energy sources, a vote from a company board can set them straight.
These are not hypothetical thought experiments. Norway’s sovereign wealth fund uses its shares to limit executive compensation, have employees represented on boards, and promote the hiring of women. France’s fund votes its shares to push for greater climate disclosure; Singapore’s fund promotes corporate alignment with ESG targets. And the Norwegian government has instructed its own fund to push all the companies in its vast 7,000-plus-company portfolio to achieve net-zero emissions by 2050—even though the initial source of this wealth is Norway’s fossil-fuel production. This offers a precedent for how government guardrails can tilt against the profit motive of a constituent industry, and how social movements can leverage these commitments to hold the fund’s feet to the fire.
None of this is to suggest that public-equity stakes are a panacea. There are plenty of reasons to believe the actually existing US government would fail to use equity stakes in the public interest. A centrist government might dogmatically refrain from going against company management; a MAGA government might push boards to help the president’s family enrich itself or oppose sustainability standards (this latter mandate is indeed now encoded in a bill before the Alaskan legislature as it seeks to direct the priorities of the state’s sovereign wealth fund). Moreover, the entanglement of private and public interest might further advance the rampant corruption we see in our political and economic life, provoking private interests to further intervene in our elections, or public officials to be still more deeply aligned with and captured by the interests of that of capital.
But these problems can be addressed. Congress has to step up and exercise oversight and control over government shareholding votes in the same way that it does over regulatory actions, to ensure that the public’s representatives at companies exercise independence from management. On the politics side, this tsunami of private electioneering is happening even without public-equity stakes—a strong indication that campaign finance and court reform are the way to tackle the problem at its source. And any pro-democracy movement worth its salt has to recognize strong public opportunities where they emerge. This year has seen an explosion of activism against data centers, and primary election upsets against candidates backed by AI donors. Public-equity stakes allow parties and movements to lay out a vision for how they would use influence over the AI industry and to specify what guardrails may be necessary to make that influence resistant to corruption of all kinds.
Some critics suggest that it’s better to wait for a more ideologically sensible government to take office before embracing a broad vision of public-equity stakes and sovereign wealth funds to advance small-d democracy in our billionaire-blighted political economy. But given the speed of technological and political development, our current democratic emergency may not afford us that luxury. What’s more, there are precedents for taking inadequate proposals by right-wing administrations and making them better in the future. America’s most ambitious program to advance public equity—the 1932–57 Reconstruction Finance Corporation (RFC)—was created in the waning days of the Hoover administration to administer a patchwork system of economic relief in the early days of the Great Depression. During the New Deal, Franklin Delano Roosevelt’s administration turbocharged the RFC to build housing, infrastructure, energy, and war-preparedness projects. Today’s conditions are similar: The companies Trump has invested in are aware that future administrations could well adopt a different agenda that they will have to adapt to, and they’ve said as much in their security filings.
In the face of the Depression, FDR and his allies recognized the need to act boldly and creatively to reassert public influence over the direction of the American political economy. The interlocking crisis of democracy, MAGA authoritarianism, and unchecked AI impunity demand that we act in the same fashion—and leaders like Sanders, Newsom, and el-Sayed are pointing to the path forward.
Elizabeth WilkinsElizabeth Wilkins is president of the Roosevelt Institute.
Todd N. TuckerTwitterTodd N. Tucker is a political scientist at the Roosevelt Institute and Roosevelt Forward. He is author of Judge Knot: Politics and Development in International Investment Law (Anthem Press).