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Today on TAP from the American Prospect. Ideas. Politics. Power.

APRIL 27, 2026

KUTTNER ON TAP

Spirit socialism: Trump’s vs. ours

The proposed bailout of Spirit Airlines is Trump’s worst deal yet. But in clean hands, socialized ownership sometimes makes sense.

President Trump’s statement last week that he wants the government to take a large stake in Spirit Airlines has been met with richly deserved scorn. Spirit, a so-called no-frills airline, has already gone bankrupt twice.

“Who could have imagined that the U.S. government would deem a budget airline too big to fail?” The Wall Street Journal editorialized. “Is this the revival of the Trump Shuttle, circa 1989?”

Under the proposed deal floated last Wednesday, the U.S. government would lend Spirit up to $500 million, receiving in return warrants to take an equity stake of up to 90 percent. Later in the week, the White House suggested invoking the Defense Production Act to compel the sale.

Trump’s motives are murky. He first spoke of saving the jobs of Spirit’s 14,000 employees. He also relished showing up Joe Biden, whose Justice Department blocked a proposed Spirit merger with JetBlue (which is also struggling—the two might well have crashed together).

Now, a group of other budget airlines, inspired by Trump’s interest in Spirit, has proposed a joint $2.5 billion bailout. The reason for the common distress is Trump’s Iran war, which has raised the cost of aviation fuel, increased ticket prices, and depressed bookings.

The proposed Spirit bailout is part of a pattern of Trump cutting deals with corporations in need of either cash or government regulatory approval, in exchange for a share of government ownership or even Trump personal ownership. Trump has carried over his habits of real estate wheeler-dealer into government.

In most of these deals, there is the usual whiff of Trump corruption or extortion. Either Trump is finding a way to cash in personally, or doing a favor for a crony, or punishing an enemy, or incurring an IOU that he can cash in for either political support or money.

As part of Trump’s deal to allow Japan-based Nippon Steel to buy U.S. Steel, Trump was granted a so-called golden share in U.S. Steel, allowing him to dictate board decisions and veto or approve investment plans. The government did not get the golden share. Trump did personally. The deal also blocked the proposed purchase of U.S. Steel by Cleveland-Cliffs, a steelmaker whose union workers are represented by the Steelworkers, an anti-Trump union.

Last July, Trump demanded and got a deal with Nvidia and AMD to provide the Trump administration with revenue from 15 percent of H20 and MI308 chip sales to China. Both are used in AI. In exchange, Trump authorized export licenses. This was criticized as both a shakedown and a favor, violating the general U.S. policy of restricting sale to China of advanced semiconductors.

In August, Intel agreed to let the government buy a 10 percent equity share after a rocky period in which Intel got $8.5 billion in grants and $11 billion in loans under the CHIPS and Science Act, plus tax credits, with the expectation that the company would build plants in Arizona, New Mexico, Ohio, and Oregon. But instead, Intel, facing declining demand, ordered layoffs.

The Intel deal came after Trump called for the resignation of CEO Lip-Bu Tan and then reversed course and said he could stay. Trump was responding to concerns expressed by Sen. Tom Cotton (R-AR) over Tan’s investments and ties to semiconductor firms that are reportedly linked to the Chinese Communist Party and the People’s Liberation Army.

A month after the U.S. government’s purchase of Intel stock last August, another deal was announced, in which Nvidia purchased $5 billion in Intel common stock. Intel will make custom chips that Nvidia will use in its AI infrastructure platforms. For computers, Intel will build chips that integrate Nvidia AI technology. Trump’s top science adviser Michael Kratsios is a big booster of Nvidia’s leader Jensen Huang.

But let’s not be so quick to reject the entire idea of government ownership in exchange for public investment. The trouble with the Trump version is the randomness and corrupt cronyism.

In the cases of Intel and Nvidia, the problem is not industrial policy. The problem is that Trump is making impetuous policy by the seat of his pants. In the case of tech and China policy, Trump has swung from being anti-China to cutting sweetheart deals that allow supposedly banned tech exports to China.

The U.S. has a long history of salutary public ownership, which is often superior to private. When the government Reconstruction Finance Corporation put in equity capital to rescue Depression-ravaged companies, the RFC got seats on the board and a big say over company policy. The Depression-era public power projects like the TVA were 100 percent government-owned, and delivered better value than their private competitors. Today, public power is far cheaper than private.

When the Obama administration bailed out the banks in 2009, economic policy chief Larry Summers and Treasury Secretary Tim Geithner warned against the perils of nationalization, so the government spent trillions and got nothing in return other than an even more concentrated banking sector. A publicly owned bank or two would have been a far better outcome.

Under Trump’s first administration, in “Operation Warp Speed,” the government gave vaccine companies about $18 billion in the quest for a COVID vaccine. The companies made windfall profits. Entrepreneurs became billionaires at warp speed. Government should have gotten an equity stake.

Conservative critics warn that government-owned enterprises are a recipe for corruption. But far more corruption has occurred in the context of privatization, in which outfits like private prison companies reap windfall gains by lowering standards and contracts are often awarded with kickbacks. Public ownership, done properly, is far more transparent.

In sum, Trump’s version of partial government ownership is goofy and corrupt because Trump is goofy and corrupt. But in competent and clean hands, a dose of social ownership works.

That Wall Street Journal editorial closed by declaring that “the U.S. doesn’t need an Amtrak of the airways.” Sorry, the Spirit deal stinks, like Trump’s others. But government-owned Amtrak has done well at efficiently restoring some of the passenger rail service that the privately owned railroads destroyed.

Robert Kuttner
Co-Editor, Co-Founder

Notes for Next Time:
Surviving Tyranny, Redeeming America

Robert Kuttner

Part memoir, part political history, and part urgent manifesto, Notes for Next Time draws on Bob Kuttner’s five decades at the center of progressive thought and action.

J.P. Zenger Books ⸱ Available now