President Trump announcing Intel has agreed to give the US government a 10% stake in the company. Joining us right now, talk about that and so much more. We're going to talk about Jay Powell and everything else. White House National Economic Council Director Kevin Hassett. Kevin, it is great to see you this morning. Thanks for coming on.
Yeah, it's great to be here.
So, here's the question. Ronald Reagan famously said the nine most terrifying words in the English language are, 'I'm from the government and I'm here to help.' You remember that line, and it's a line that I think has been used by Republicans for the last several decades until maybe Friday. Can you explain the rationale behind taking this 10% stake?
Right. Well, it's not really a taking, right? The bottom line is that because of the CHIPS Act, the US government had decided to give a whole bunch of money to Intel, and President Trump and Howard Lutnick, Secretary Lutnick, talked to Intel about the progress they were making and the hurdles that they had to hop over in order to get the money. And I don't think they're particularly happy with that progress. So, in the end they worked out a deal where Intel is going to get the CHIPS money, but in exchange we're going to get some equity. And equity is not voting. So, there's not going to be government intrusion into the business of Intel. It's more like a down payment on a sovereign wealth fund, which many many countries have.
Kevin, though, is this the beginning of a larger effort by the US government to take equity stakes in other industries that we subsidize or other companies in the AI and chip space that we subsidize? So, one good example is AMD. Another example might be Taiwan Semiconductor.
Right. Well, I think this is a very special circumstance because of the massive amount of CHIPS Act spending that was coming in anyway. But the president has made it clear all the way back to the campaign that he thinks that in the end it would be great if the US could start to build up a sovereign wealth fund. And so I'm sure that at some point there'll be more transactions if not in this industry, in other industries.
Okay. So we should expect the US government to be taking more equity stakes in businesses around the country. That is something that if you're a CEO this morning watching us, you should say, 'Okay, the sovereign wealth fund may be coming and trying to effectively buy in some kind of equity stake.'
It's possible. Yeah, that's absolutely right. In the past, the federal government has been giving money away lickety split to companies and the taxpayers have received nothing in return. And so now what's happening with the Intel deal is the CHIPS Act money is going out as planned, but instead of it just going out and disappearing into the ether, the US taxpayers are getting a little bit of equity. I can really not see how anyone would think that's a bad thing. Unless you thought that the government was then going to go in and run the company, but these are going to be shares that don't have voting rights. The government's going to stay out of it.
Well, it goes back a little bit to the Ronald Reagan quote that I started with. For many years, you and I used to have conversations about Solyndra and how I think you thought that that was a terrible mistake for the US government to be getting involved. And we have been exporting the idea of a free market around the world for as long as I can remember, and this is a major shift. Do you not agree?
No, I think this is a very special case. Biden committed the money. President Trump and Howard Lutnick weren't very clear that they wanted to continue to let the money go out because the paths weren't being crossed, the hurdles weren't being crossed. And so, I think it's a very special case, but again, the general principle that if the US government is able to create a situation that benefits everybody, then it should benefit the taxpayers too.
But if you're saying that this is really just the beginning of more as it relates to a sovereign wealth fund or something else, it would be suggestive of something very different. And I wonder how we in the United States and maybe even around the world should think about the idea of national champions, which is something that the Republican party in particular has been quite critical of for years.
No, I mean, we're absolutely not in the business of picking winners and losers, but this is not something that is unprecedented. If you look at it right now, the US government owns most of Fannie Mae and Freddie Mac, and the president, led by Bill Pulte and Howard Lutnick and Scott Bessent, are studying what we should do with that equity in Fannie and Freddie right now. They've been bringing in Wall Street leaders to discuss it as well. And so it's not unprecedented for us to have a little bit of equity in something. And again, what President Trump wants to do at all points in time is maximize the value of taxpayer dollars.
Let me ask you this then. In terms of improving the future of Intel, one of the things that it needs more than anything else is demand. Demand for its chips, which it does not have at the moment. And so there's two ways to get there. One is just make better chips, which they need to do. But the other is they're going to have to find customers. And the question is whether you believe that this administration is going to use its influence with other companies that would otherwise be the buyers of these chips to buy said chips. We had a period of time, you remember, where Gina Raimondo in the Biden administration was trying to persuade Amazon and so many other companies to buy these chips, unsuccessfully at the time, but criticized, if I remember, by Republicans for doing such a thing. So, do you believe that someone from the administration is going to call up any of the tech companies and say, 'You're building a data center, we'd love for you to use Intel chips'?
No, I don't expect that's what's going to happen. I think what is going to happen is with the cash inflow that they've gotten in addition to some money from outside private funders, Intel is going to get its act together and once again become the leader in chip space.
Can I ask one related question because I wonder if you think there's a historical sort of rewriting of history. Some people have suggested that the Biden administration should have taken equity the first time around when the CHIPS Act was first put in place. And the reason I'm curious about that is because I think at the time it was clearly to incentivize chip companies to come to the United States, do business, build fabs, and those fabs at the time were considered uneconomical, meaning companies didn't want to do this unless they could be subsidized. Now, maybe you could argue that given the tariff regime that's been put in place, it's changed the economics of what the playing field looks like today. But at the time, I think it would have been very difficult to go to these companies and say, 'I'm going to give you cash. You're going to give me equity.' Because I think they would have said to you, 'Then please don't give me the cash.' Am I wrong?
Well, again, if you're a company that's losing money, the equity doesn't have much if any value. And the bottom line is that President Trump is building an America First agenda that includes, as you say, tariffs, which will make it so that people are much more incentivized to bring their production on shore. And so 100%, we expect that companies like Intel that are onshoring production are going to become increasingly profitable because of the president's trade policy.
