The Wisdom of Private Enterprise - Part 3

See Part 1 and 2 of this Series on the Wisdom of Private Enterprise on Cogport.com for background on this report.

Why the Government should not be involved in Private Investment.

Previously, Cogport covered the SolarTechnology policy that caused massive losses to taxpayers under the Obama administration.

Computer Chip Factories

The Biden Administration had a policy to build Chip Manufacturing in the U.S.

The policy had good intention as the U.S. has become dangerously dependent on foreign sources of Chips, especially from Taiwan which China desires to take.

However, the execution involved Direct Grants of Taxpayer Dollars to private companies.  This goes directly to the subject of this Series – the Government has no place subsidizing or investing in Private Companies.

The amount authorized was $ 75 Billion.  This is not chump change. 

Who Received Grants:

Some of the biggest corporations in the world took these Free Grants.

1.     Intel …………………………………………...   $ 7.9 Billion

2.     Taiwan Semiconductor ……………………..   $ 6.6 Billion

3.     Applied Materials …………………………….  $ 4.0 Billion

4.     Corning ……………………………………….   $ 300 Million

5.     Bosch ………………………………………….  $ 1.9 Billion

6.     EMP Shield ……………………………………  $ 1.9 Billion

7.     Entegris ………………………………………..  $ 722 Million

8.     Global Foundries ……………………………..  $ 5.1 Billion

9.     Global Wafers ………………………………...  $ 8.3 Billion

10.  Hemlock ………………………………………  $ 850 Million

11.  MACOM ………………………………………  $ 345 Million

12.  Micron …………………………………………  $ 6.2 Billion

13.  NY CREATES …………………………………  $ 850 Million

14.  onsemi ……………………………………….  $ 1.4 Billion

15.  Mitsubishi ……………………………………..  $ 372 Million

16.  Polar …………………………………………...  $ 525 Million

Total of the above Grants …………………………  $ 47.3 Billion

Grants to 23 Other Private Companies …………  $  3.9 Billion

Total Grants To 39 Private Companies …………  $ 51.2 Billion

No payback on Grants is required with a few exceptions.  The exceptions provide that if the new investment is shown to have a Rate of Return, a small percentage will be paid to the Government.

Did the Government adequately vet these companies based on financial stability and viability of the planned research purposes and investments ?

This government largesse was bestowed upon private companies at taxpayer expense.

Who made these Grant decisions ?  Were they qualified to evaluate the risk of these investments ?

The CHIPS Program Office was assigned as part of the National Institute of Science and Technology (NIST) in the Department of Commerce. 

It is valid to ask what NIST has to do with a policy to encourage investment in new chip plants and expansions in private enterprises.  This is an anomaly of the current system in which Congress directs where appropriations are managed.  There is no organizational plan for the Executive Branch that makes comprehensive sense.  That is another subject to be addressed by Cogport to “Streamline the Executive Branch” in another Series coming soon.

The Director of the CHIPS Office was Michael R. Schmidt appointed in September 2022 and ending in January 2025.

Previous Experience:

Holds a J.D. degree from Yale University.

A trial lawyer representing employers in various legal matters—federal and state courts, arbitration, and government agencies. His specialties include employment law issues such as discrimination, wage and hour claims, whistleblowing, restrictive covenants, and others

Roles at the U.S. Treasury’s Office of Domestic Finance

Commissioner of the NY State Department of Taxation and Finance, New York State Government

U.S. Department of the Treasury: Managed rollout of the expanded Child Tax Credit

It appears he had no significant experience in business or investment.

It begs the question whether he had the experience and qualifications to decide on grants of taxpayer money to private companies for investment.

The CHIPS policy and program management supports the Cogport assertion that the Government has no place making private investment decisions on behalf of taxpayers.

Now under Trump, CHIPS funding is used to obtain equity interests in stock. Starting with Intel, the Government taking a 10 % share in the company.  The Administration says it wants to do more of that. 

This amplifies the potential for “Conflict of Interest” as the Government can influence policy and actions in favor of companies that it “owns.”

There is no reason to think that the Trump Administration will be any better at this than in the cases of Solar Technology, CHIPS, and other boondoggles.

It confirms our view that the Federal Government has no place spending the public’s money on private investments.  Investment Money should be left to “The Wisdom of Private Enterprise.”

POLICY ALTERNATIVES

The Government can influence investment direction to policy needs in the interests of national security and economic growth:

1.    Fast Track approval of new plants, products, and equipment with fewer Rules and Regulations.

2.    Provide Tax Incentives for investment, such as the new 2025 Tax Law that allows companies to take immediate deductions for capital investment instead of long-term depreciation over time.

3.    The States and Localities have a good history of providing incentives for new investment that matches their needs.  They are better positioned to know the local situation.

4.    Use of Tariffs to discourage imports of strategically important products and encourage domestic investment in domestic production capacity.

5.    A build/lease plan in which the Government owns the property and plants which are leased to a company for expansion for strategic reasons.  This is much lower risk to taxpayer dollars.  The Government receives lease payments and if the company fails, the Government still owns the property.

The own/lease for a fee program proposed in No. 5 is already a common practice for energy and cattle grazing on public land. 

Precedent exists for a model created during WW II called Government-Owned, Contractor-Operated (GOCO) for industrial plants.  It became a standard model: the government would finance, build, and own the facility, while private companies operated them.  After the war, these plants were leased or sold.  An example was the Wright Aircraft plant in Evendale, OH. 

This model could be used again for strategic or defense purposes with lower risk than direct private company ownership by the Government.

Summary

The are other major examples of the excessive spending of taxpayer dollars.

We will address the massive spending done through the Small Business Administration (SBA) under Trump and Biden in future posts.

For now, you have the message from Cogport that Government Investment in Private Companies prone to failure is a bad risk for Taxpayers and a Conflict of Interest.

David Hollaender                                                 September 15, 2025

Cogport.com                                                        Copyright