Donald Trump’s administration is having a “monstrous discussion” about partially nationalizing massive for-profit military contractors, similar to a deal the government made to acquire a multibillion dollar stake in chipmaker Intel.
Days after the president announced the Intel deal, Commerce Secretary Howard Lutnick said the government is considering similar arrangements with defense contractors like Lockheed Martin and Boeing.
Lutnick told CNBC’s Squawk Box on Tuesday it’s only “fair” for the government to get a stake in business if the government adds “fundamental value” to it.
Asked whether the administration was considering brokering similar deals with companies like Palantir and Boeing, Lutnick said there’s a “monstrous discussion” underway at the Department of Defense.
“I mean, Lockheed Martin makes 97 percent of their revenue from the U.S. government,” Lutnick said. “They are basically an arm of the U.S. government.”
At least 73 percent of Lockheed’s net sales in 2024 came from the government, according to government filings. Roughly 65 percent of those sales came from the Pentagon.
Defense Secretary Pete Hegseth and Deputy Defense Secretary Steve Feinberg, among others, “are on it and they’re thinking about it,” Lutnick added.
Lockheed Martin, which saw its share rise 1.6 percent following Lutnick’s remarks, said in a statement that the company is “continuing our strong working relationship with President Trump and his Administration to strengthen our national defense.”
Where free-market conservatives and “small government” Republicans have looked the other way when it comes to massive companies enriching themselves with government spending, Trump has led a recent streak of corporate interference. He has strong-armed Apple to invest in U.S. production, shaken down Nvidia and other tech firms for revenue from chip sales and arranged for Japan-based Nippon Steel to grant the U.S. government a “golden share.”
“There’s a word for the government owning the means of production, of course: socialism,” the Cato Institute noted.
Lutnick “can deny that this is a step in that direction, but whether he sees this as a way of circumventing Congress to, in effect, create a sovereign wealth fund or as a means of ‘getting taxpayers a return’ on their subsidies, the effect is the president allocating capital through partial nationalization,” the libertarian think tank wrote.
A deal with defense contractors could also “incentivize the government to put financial success for Lockheed Martin ahead of more important strategic considerations,” the Quincy Institute for Responsible Statecraft told Reuters. “We need some healthy distance between the government and the companies it is supposed to regulate.”
A recent report by the Costs of War project at the Quincy Institute and Brown University’s Watson School of International and Public Affairs discovered that private firms received $2.4 trillion in contracts from the Pentagon between 2020 and 2024 — accounting for roughly 54 percent of the department’s discretionary spending of $4.4 trillion over that period.
Last week, the president announced that the United States “fully owns and controls” 10 percent of Intel, calling the arrangement a “great deal” for the company and the country.
The government’s stake was largely made possible through money that was awarded to the company, but not yet paid out, through the CHIPS Act, which was signed into law by Joe Biden in 2022. Trump has previously called on Congress to “get rid” of the law.
“This is a very, very special circumstance because of the massive amount of CHIPS Act spending that was coming in,” National Economic Council Director Kevin Hassett said on Monday.
Asked about the Intel arrangement at the White House on Tuesday, Lutnick pushed back against right-wing critics like Sen. Rand Paul, who denounced the deal as a “step toward socialism.”
“So it’s not socialism. It is capitalism,” Lutnick said. “If you give someone $11 billion, who’s just building in America — they’re not doing something special, they’re just building in America. And their CEO told the president, he didn’t need the grant. And you said, ‘So why don’t we get something for it?’”
He later told Fox News host Laura Ingraham that Trump’s deal will “take care of the American taxpayer.”
“That is not socialism,” he said. “I will tell you what that is. That’s the best businessman in the United States of America in the Oval Office doing fair things for us.”
Trump said he’s willing to make similar deals “all day long.”
“Why are ‘stupid’ people unhappy with that?” he wrote on Truth Social. “I will also help those companies that make such lucrative deals with the United States. … I love seeing their stock prices go up, making the USA RICHER, AND RICHER.”
