One of President Donald Trump’s attacks on then-senator Marco Rubio during the 2016 Republican primary involved Rubio awkwardly drinking water during a national television address. The water bottle had a label on it, Trump kept pointing out. Trump’s objection was that Rubio was giving Poland Spring advertising without taking a cut.

It was an afterthought for Trump, but it was a telling one — and something we should remember as Trump turns the U.S. Treasury into a venture capitalist fund. Trump is the quid pro quo president. He doesn’t give anything without demanding something in return.

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The 9.9% stake Uncle Sam has taken in Intel will, in the long run, come with plenty of strings attached for Intel. There will also be downstream effects for Intel executives, shareholders, employees, competitors, and customers.

The logic behind Trump’s Intel investment is not clear. It seems like a bailout of a struggling company, but Trump officials have also justified federal investments in U.S. companies as a way to enrich the federal treasury — or prevent foreign ownership.

The one thing that seems certain is that federal investment in private companies will increase the control that politicians — mostly Trump — have over U.S. companies.

What will Trump do with this power? We can only guess, based on his past actions and the actions of his predecessors.

Sovereign Wealth Fund

The first thing to understand about Trump’s investment in Intel is that it is part of a broader vision he and his administration has, where the U.S. government becomes a major investor in private companies.

Trump economic adviser Kevin Hassett said the intel investment was “like a down payment on a sovereign wealth fund, which many countries have…. So I’m sure that at some point there’ll be more transactions, if not in this industry, in other industries.”

This is not meant as a one-off bailout, in other words. The Intel stake is meant as the first of many federal investments in private U.S. companies, turning the federal government into a major investor.

Trump, in his first weeks in office, issued an executive order calling for a U.S. “Sovereign Wealth Fund.” Many countries have such funds. Typically these are petrostates where the government owns the oil and invests its surpluses in private companies, foreign or domestic.

Saudi Arabia and Norway have two of the largest such funds. Norway’s fund invests only in foreign companies. The Saudi fund — controlled by the royal family — invests in Boeing and Uber.

Part of the purpose of these funds is to enrich the country by making profitable investments. For Norway, part of the purpose is to dampen inflation by getting the oil revenues out of the domestic economy. For all of them, though, the sovereign wealth fund is about advancing the politics of the ruling class.

The Trump administration’s talk about a U.S. sovereign wealth fund and the Intel investment has pointed in all sorts of directions.

Commerce Secretary Howard Lutnick, when pitching the idea of a sovereign wealth fund in February, made it sound like a very Trumpian effort to take a cut whenever the U.S. is investing in something.

“If we are going to buy two billion COVID vaccines,” Lutnick said, “maybe we should have some warrants and some equity in these companies.”

Trump sees it basically as a way to earn back some of the subsidies and contracts the federal government doles out. “The extraordinary size and scale of the US government and the business it does with companies should create value for the American people.”

This is part of the rationale for the Intel investment. Intel is receiving billions of dollars from the CHIPS Act and other federal programs. The Trump administration is speeding up the payment of that cash already earmarked for Intel, and in exchange, the U.S. government is taking ownership of 9.9% of Intel.

In short, the Trump administration is saying, If we’re going to subsidize you, we’re going to get some control over you, and we are going to take some of your profits.

Because these are new shares of stock, and because this is already-obligated federal money, the ones really paying for this are the investors already holding Intel stock at the time of the deal — their stock is now diluted.

Then again, a federal stake arguably makes Intel too big to fail. Would Trump and Lutnick really let Intel collapse, losing the U.S. billions in share value? In that way, the investment could enrich Intel shareholders and creditors.

Risks

And here we begin to see the problems and risks with the U.S. government as a major investor. Every investment picks winners and losers — domestically, not merely internationally. Every federal investment creates an opportunity for insider enrichment. Every federal investments gives the politicians and bureaucrats the opportunity to reward friends and punish enemies.

Don’t like Nike’s politics? Invest in New Balance. Need to boost the incumbent governor of some state right before the election? Pledge a federal investment to a large employer if he announces a new plant there. Want to harm the incumbent? Use a federal investment to lure an employer out of the state.

There are other potential problems, and Intel spelled them out in a recent filing with the Securities and Exchange Commission.

“The US Government’s ownership of significant equity interests in the Company may subject the Company and it stockholders to a number of additional risks and uncertainties, any of which could have a material adverse effect on” Intel’s business and shareholders, the company wrote in a filing.

First, none of the Trump administration’s promises to Intel are guaranteed. And politics being politics, nothing is to stop the administration, Congress, or a subsequent administration or Congress from altering the terms of the deal.

Second, being the property of Uncle Sam might make Intel less attractive to its foreign customers. “Having the US Government as a significant stockholder of the Company could subject the Company to additional regulations, obligations or restrictions, such as foreign subsidy laws or otherwise, in other countries,” Intel noted.

Uncertain future

To actually create a sovereign wealth fund would require an act of Congress. Trump took ownership of Intel stock not through a cash purchase (which would have required an appropriation or other congressional authorization) but through a one-on-one negotiation with Intel and by offering quicker disbursal of payments already approved by Congress.

Will Trump spend political capital trying to create an official sovereign wealth fund? Could he pass one through Congress?

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Maybe. Republicans in Congress tend to give Trump what he asks for, and Democrats would love to massively increase the federal government’s control over the private sector.

If no official sovereign wealth fund is created, expect Trump to continue to negotiate one-on-one deals to gain stock in more companies. Because big business in the U.S. is so heavily subsidized, taxed, and regulated, he has plenty of levers to pull to get more of a slice of corporate America, and thus more power to tell business what to do.