By taking equity stakes in more than a dozen private businesses, the Trump administration has stretched executive power to new heights—and now Congress is working to ensure that future presidents get the same opportunity.
The Senate’s version of the 2027 National Defense Authorization Act includes a provision to create a new slush fund within the U.S. Treasury for the purpose of buying stakes in more private businesses. The Pentagon would be able to tap the proposed Defense Equity Investment Account to make investments of up to $500 million in private companies involved in the production of “critical minerals, materials, and chemicals” or batteries.
The provision, which is buried within the 1,500-word bill drafted this week by the Senate Armed Services Committee, would allow the “direct or indirect purchase, acquisition, or commitment of funds by the Department of Defense in exchange for an ownership interest, convertible interest, warrant, revenue-sharing instrument, or other similar financial instrument in a non-Federal entity.”
Besides the $500 million cap on those investments, the government is also forbidden from taking more than a 50 percent ownership stake in any private business. Other than that, however, there seem to be few limitations or guardrails on how the new equity account could be used.
During a closed-door session last week, the Senate Armed Services Committee reportedly voted down an amendment that would have prohibited the Trump administration from taking equity stakes in businesses with ties to the president, his family members, and members of his cabinet.
Some of the Trump administration’s investment decisions have seemingly benefited those close to Trump. Vulcan Elements, which makes magnets out of rare earth elements, got a $620 million loan from the Pentagon’s Office of Strategic Capital. Donald Trump Jr. is a partner at the company.
Sen. Elissa Slotkin (D–Mich.) told NOTUS that Republicans rejected that proposal after expressing worries about how Trump would react. “Over and over we heard in the NDAA markup a number of my Republican colleagues express concern that they didn’t want to insult the president, they didn’t want to send a negative message to the president, they didn’t want to offend the president, or they were scared of his reaction,” Slotkin said.
It would be a good idea for lawmakers to prevent the president from using a new Pentagon slush fund to enrich his relatives and allies. But it would be better to avoid creating this account in the first place. Congress should not be codifying Trump’s socialist behavior and should not be making it easier (and legal) for future presidents to follow suit.
“If Washington wants more domestic or allied production of minerals, magnets, chemicals, or batteries, it has tools that do not require making taxpayers shareholders,” like removing permitting and regulatory hurdles or following the regular government procurement process, writes Tad DeHaven, a policy analyst at the Cato Institute. “What it shouldn’t do is pick favored companies and make the federal government an investor, customer, regulator, and political patron.”
