STEPHEN MOORE: Feds Often Pick The Wrong Horse. Intel Is Just The Latest Example

One recurring theme that no one in Washington seems capable of learning is that the best way to destroy an industry is to have the government subsidize it.

That lesson came shining through in recent days when Intel acknowledged that it suffered a $16.6 billion quarterly loss. That is more than the entire annual budget of some states.

Wait. Isn’t this the same Intel that is in line to be the biggest corporate welfare recipient of federal aid under the CHIPS Act — the Biden bill designed to make sure that microchips are made in the United States, not China? Intel is first in the soup line to receive $8.5 billion in grants and $11 billion in subsidized loans. The checks haven’t been written yet, but this will be one of the biggest welfare checks ever written to an American company.

Maybe President Joe Biden, who had a joyous photo op with Intel officials when the bill was passed, should have second thoughts. Intel’s near broke. They were just replaced by their rival chipmaker Nvidia in the Dow Jones composite. Nvidia gets none of the stash from the CHIPS Act, yet its stock price has soared more than five-fold. It has been on a hiring spree and has made hundreds of billions of dollars for American investors — including pension and 401k plans.

Talk about politicians betting on the wrong horse.

It gets worse. Semafor Technology reports that instead of pulling the plug on this near $20 billion aid package, Biden officials and Sen. Mark Warner of Virginia — one of the lead sponsors of the CHIPS Act — “have discussed whether the company needs more help.” More?

This despite that Bloomberg reported that Intel has failed to provide federal officials with a viable plan to turn its financial woes around. Why do that when you have an umbilical cord to the federal Treasury?

Ironically, Intel made more than $20 billion in profits before the CHIPS Act welfare bill was passed. So far this year it has lost nearly $20 billion.

What is next?  A federal takeover of Intel as happened with failing automakers and banks in 2008?

There is an important lesson here. Many Democrats and Republicans have become enamored with the idea of America adopting a Japanese-style “National Industrial Policy” that would direct hundreds of billions of tax dollars to nurture “strategically important industries” — such as manufacturing, tech products and “clean energy.”

The politicians think they can pick winners and losers better than private investors who allocate funds in our highly efficient multi-trillion dollar capital markets. Democratic Massachusetts Sen. Elizabeth Warren has effectively declared war on the half-trillion-dollar booming private equity industry, which she calls “vampires,” because sometimes they make bad bets.

But maybe it’s Uncle Sam that sucks the blood out of viable businesses. Look no further than Biden’s EV handouts, which have only corresponded with a massive consumer rejection of an industry that was flourishing before Uncle Sam started passing out tens of billions of dollars to the car manufacturers and strong-armed the U.S. auto industry to produce them. Over the past four years the federal government has authorized more than $300 billion in green energy subsidies including wind and solar power grants and yet the amount of power they produce has barely budged — thanks to low-priced natural gas.

If we want American industries to be number one, the government should stop giving them money and the CEOs should stop taking it.

Stephen Moore is a senior fellow at the Heritage Foundation and co-founder of Unleash Prosperity. His latest book is The Trump Economic Miracle, co-authored with Arthur Laffer.

The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller News Foundation.

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