The U.S. government’s increasingly becoming an equity investor. That can be defensible. The way it’s happening is not.
The Council on Foreign Relations recently published a tracker of U.S. government equity deals reporting sixteen transactions totaling $20.9 billion since January 2025. Those investments span critical minerals, semiconductors, nuclear power, steel, and now a bankrupt discount airline. It is a useful compilation. It is also yet another sign of an increasingly bypassed federal budget process.
Read it and ask yourself: Where did the money come from, and who authorized it?
The honest answer, in most cases, is that we do not fully know. And at least in some instances, Congress never explicitly authorized the investment.
Strategic Investment Is Defensible. Unaccountable Process Is Not.
The strategic case for some of these investments is real. China’s export controls on rare earths exposed genuine supply chain vulnerabilities. The semiconductor industry’s concentration in Taiwan is a legitimate national security concern. There are categories of critical infrastructure where the private market will underinvest and where government capital, deployed carefully and transparently, may be appropriate.
The problem is not that the government is investing. The problem is how.
To be clear: the goal is not process for its own sake. Red tape serves no one, least of all industries where speed and scale matter. What is needed is accountability without bureaucratic gridlock. We need an investment framework that ensures taxpayers know what is being committed in their name, and that Congress has authorized it, without turning every funding decision into a multi-year obstacle course.
The government’s traditional financial assistance tools like grants, loan guarantees, direct loans, and tax breaks all run through the budget in some way. Grants require appropriations. Loans and guarantees are subject to the Federal Credit Reform Act of 1990, which requires agencies to estimate the subsidy inherent in such lending and obtain an appropriation to cover that cost before loans are made. Tax breaks are codified. Each form of assistance is made possible by laws passed by Congress in the exercise of its power-of-the-purse responsibilities under the Constitution.
Equity investment is evolving in a different direction. There is no FCRA equivalent for equity stakes, no standard scoring methodology, no appropriation line for government venture capital. And yet the Department of Defense has executed seven equity deals, Commerce six, and the Development Finance Corporation three more. Consider what that means in practice. When Defense acquires a ten-year option to purchase shares in a mining company for a nominal price, the U.S. government has made a very real financial commitment. But that commitment is not clearly reflected in the budget, is not scored for its long-term budgetary impact, and was not necessarily authorized by Congress for that precise purpose. Is it a liability? A contingent obligation? Will it result in costs or savings to taxpayers? Hard to say.
Some deals have statutory authority. Those include expanded investment capacity for DFC, gained in the 2026 National Defense Authorization Act, and CHIPS Act funding for semiconductor investments. But some of the structures in the CFR tracker (like warrants, golden shares, offtake agreements bundled with equity options) appear to stretch well beyond the frameworks that nominally govern them.
We Have All Been Here Before
History offers a study in contrasts.
In 1979, Congress passed the Chrysler Corporation Loan Guarantee Act, providing explicit authority for $1.5 billion in loan guarantees with warrants attached. Chrysler repaid early, Treasury sold the warrants at a profit, and the intervention is remembered as a success. It worked in part because it was governed properly: Congress voted, the terms were public, and there was a defined exit.
Three decades later, Chrysler needed rescuing again, and the second time looked nothing like the first. The Bush administration extended emergency loans using TARP funds, legislation passed to stabilize financial institutions, not automakers. The Obama administration then used additional TARP funds to shepherd Chrysler through bankruptcy, taking an equity stake in the reorganized company. All in, U.S. financial assistance to Chrysler totaled $12.5 billion. The Special Inspector General for TARP later questioned whether the auto rescue fell within TARP’s intended scope. The exit was protracted, the accounting murky, and taxpayers ultimately suffered a roughly $1.3 billion loss.
The housing GSE intervention followed a similar pattern. Treasury injected about $190 billion into Fannie Mae and Freddie Mac during the 2008 financial crisis, acquiring warrants for nearly 80% of each company’s stock under authority explicitly provided by the Housing and Economic Recovery Act. The authorization was real, but HERA was designed as an emergency stabilization tool, not a restructuring blueprint. It gave FHFA authority to preserve and conserve the GSEs as going concerns but said nothing about how or when the conservatorship should end.
Nearly 18 years later, the warrants have never been exercised, the status of the companies has not been resolved, and the government’s ownership stake is not carried on the federal balance sheet in a way that reflects economic reality. What began as an emergency intervention has become, by default, a long-lasting arrangement with no end in sight.
It is also worth asking whether something has changed structurally. The 1979 Chrysler intervention required a stand-alone act of Congress. The 2008-2009 interventions repurposed existing legislation under crisis conditions. Today’s equity deals are being assembled from a patchwork of peacetime authorities with minimal congressional involvement. That progression reflects a broader pattern of legislative delegation – Congress ceding emergency and economic authority to the executive over decades – that now makes it possible to act without explicit authorization. The equity investment portfolio is, in part, a symptom of that deeper institutional shift.
The lesson across all of these episodes: when statutory authority is purpose-built and the exit designed in advance, government equity investment can work. When authority is improvised and the exit uncertain, the government can get stuck.
The Spirit Problem
The Spirit Airlines situation shows how quickly that lesson can be forgotten. Bloomberg reported this week that the Trump administration is nearing a $500 million loan to Spirit, with warrants giving the government up to 90% of the carrier post-bankruptcy.
The superficial resemblance to 1979 Chrysler is there: a distressed company, a loan with warrants attached. But the one thing that made Chrysler defensible is precisely what is missing here – an act of Congress. Unlike critical minerals or semiconductors, there is no obvious supply chain rationale for rescuing a twice-bankrupt discount airline. Using authorities in the Defense Production Act or the Exchange Stabilization Fund would be a stretch. The 9/11 and CARES Act airline interventions both had explicit congressional authorization. There is no equivalent here.
If this deal closes, the government will be taking on both credit and equity risk in a single company without a statutory mandate, without FCRA scoring, and without an appropriation. Spirit is the 2008 Chrysler problem in miniature: authority borrowed from a statute designed for something else, with even fewer safeguards around it.
The Broader Pattern
The CFR tracker is documenting something larger than any individual deal. What it illustrates is a piecemeal sovereign wealth fund, assembled from a patchwork of existing authorities designed for other purposes.
Norway’s Government Pension Fund offers an instructive counterpoint. Built on explicit statutory authority, with governance rules, transparency requirements, and annual parliamentary review, it now manages over $1.7 trillion in assets and has consistently outperformed its benchmark. The lesson is straightforward: accountability and strong returns are not in conflict. Transparency enables performance; it does not handicap it.
The U.S. government’s growing equity portfolio has only a CFR tracker.
This matters for three reasons. First, the financial risk is real: equity positions in volatile industries can lose value, and taxpayers bear the cost. And if those investments gain value, there should be a mechanism to recognize and perhaps even allow for the reinvestment of proceeds. Second, the conflicts are real: the government’s role as simultaneous regulator and investor makes it difficult to act objectively. That includes the need to make one of the hardest calls in finance: cutting losses on a failing investment before they compound. Third, the precedent is real: once equity investment without congressional authorization becomes routine, the threshold for the next deal drops, and the one after that drops further still.
What Good Budgetary Hygiene Would Look Like
A proper framework would require, at a minimum: explicit statutory authority for each transaction; a cost-recognition methodology for equity and warrant positions at the time of commitment (just as FCRA forced discipline on credit programs by requiring upfront recognition of expected costs, a comparable framework for equity would force discipline before capital is committed); a consolidated portfolio exhibit in the President’s Budget with fair-value estimates updated annually; and an exit framework defining the conditions and authority required to divest.
None of this would foreclose strategic investment. Critical minerals, advanced semiconductors, and defense-critical manufacturing may well be appropriate targets for government capital. But the legitimacy of those investments depends on their being made transparently, accounted for honestly, and authorized properly.
Two potential objections deserve direct answers. Would proper budgetary process slow things down unacceptably? Not if designed well. Standing authority with pre-approved investment criteria, like the DFC model, allows transactions to move at commercial speed without sacrificing accountability.
The second objection is durability. Here the FCRA experience is encouraging. Enacted 36 years ago, credit reform requirements have proven remarkably durable – not simply because they are ensconced in law, but because they became embedded in the institutional fabric of federal budgeting: agency procedures, OMB review, and congressional scoring. A framework for equity investment, built in a similar way, could achieve the same staying power.
Pieces of the framework already exist in statutes such as FCRA and DFC’s authorizing law. What is missing is an effort to bring it all together and apply it consistently. The CFR tracker is a useful start, but the accounting, oversight, and exit planning that should accompany this portfolio belong in the budget process, not in a think-tank database.
None of this is beyond reach. The government’s equity portfolio is real, it is growing, and it deserves the same budgetary discipline we apply to other categories of federal financial commitment. Done right, a proper framework could itself be a catalyst – unlocking more capital for critical industries, building the confidence of private co-investors, and demonstrating that the United States can compete strategically in the global economy without abandoning fiscal transparency and accountability.