Cozen Currents: Let’s Make a Deal

“A key aspect of the ‘America First’ agenda is to make US industry more competitive globally, and President Donald Trump is bringing his penchant for private sector dealmaking to this cause.” — Howard Schweitzer, CEO, Cozen O’Connor Public Strategies

The Cozen Lens

• President Trump has taken a more direct interest in influencing the private sector in his second term, as his administration opportunistically pursues deals aimed primarily in industries deemed strategic to competing with China.
• The Trump administration and Congress are both searching for ways to lower the cost of housing at a time when mortgage rates and the cost of living are near the top of voters’ list of concerns.
• While AI is all the rage now, quantum technology is thought to be the next frontier and the federal government is looking to promote US competitiveness in this domain.

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Trump as Dealmaker-in-Chief

Industrial Policy on Steroids. President Trump’s push to expand public-private dealmaking has been a hallmark of his second administration so far.

• Trump’s efforts have roots in the industrial policy expansion that accelerated under the Biden administration with the Inflation Reduction Act and CHIPS and Science Act. However, the key difference between the two approaches is Trump’s increased emphasis on direct benefits for the federal government in these deals.
• White House spokesman Kush Desai has framed the Trump administration’s strategy as a “whole-of-government approach” to securing these deals. Still, even with a wide range of government agencies involved in this process, the focus remains on industries considered to have strategic value, broadly defined, in competing with China.

Striking While the Iron Is Hot. One of the key features of these deals brokered by the White House is their opportunistic nature, as officials rely on creative interpretations of existing legal authorities which were not designed to facilitate Trump’s industrial policy objectives.

• The opportunistic nature of these deals has meant their structures have varied as well. In some cases, the government has received equity stakes in companies; in others, revenue-sharing agreements; and still others reportedly include provisions requiring the business to go public. This variation will likely remain the norm due to the different authorities used to secure the deals.
• Commerce Secretary Howard Lutnick is a central figure in arranging these agreements, having been credited with securing the transactions involving MP Materials and Nippon Steel, among others. However, Lutnick is far from alone, with several other senior Trump administration officials playing key roles across the government, many of whom have investment backgrounds.
• While Trump once suggested the US should create a sovereign wealth fund to manage these deals, that now appears to be on the back burner. Instead, the primary vehicle for future investments is likely to be the Commerce Department’s Investment Accelerator, which will be seeded by investment funds from trade deals. Additionally, the White House is pushing for an expanded role for the International Development Finance Corporation, which could further expand the Trump administration’s dealmaking tool chest.

A Cut for the People. Trump’s emphasis on industrial policy in response to competition with China has bipartisan support, but what is seen as an additional driving factor in these investment deals is the business mindset shared by many senior Trump administration officials.

• While the government has typically approached transactions like these with a focus on public policy, non-economic interests, the Trump administration’s top officials are bringing a more commercial perspective to these deals. Now, there is a regular sense of wanting to ensure that the taxpayer gets direct economic benefits as the federal government takes its cut.
• In some cases, there are questions about the legality of, or provisions in, the agreements reached between the White House and these private companies. However, it is not always obvious who would step in to sue the government, or whether they would be willing to do so, because the risk of becoming a target of Trump’s ire may not be worth the potential benefits of a court win.

The Affordable Housing Dilemma

A National Housing Emergency. Treasury Secretary Scott Bessent told the Washington Examiner in September that housing will be a central tenet of the Trump administration’s focus on affordability in its 2026 midterm platform.

• According to Bessent, when it comes to the tools the administration could use to lower the cost of housing, “everything is on the table,” including declaring a national emergency. Such an action would be politically potent, but as administrations before this one have found, the White House’s housing toolset is largely limited to regulatory moves at the margins. Interest rates and local zoning regulations have a far greater impact on housing costs than much of the regulatory red tape that falls within the federal government’s purview.
• Even so, there are policy moves the administration is mulling in the housing finance space that could at least marginally lower mortgage rates. Federal Housing Finance Agency (FHFA) Director Bill Pulte said last month that the agency is considering lowering the upfront fees on mortgage loans known as loan level pricing adjustments. Inside Mortgage Finance reports that the agency is specifically looking into ways to reduce the fees “for mortgages on second homes and cash-out refinances.” A group of lenders is separately lobbying the administration to enact a longer shot proposal to reduce rates by having Fannie Mae and Freddie Mac resume (and subsequently increase) their purchasing of mortgage-backed securities (MBS). Such a move is entirely within the control of the administration, making it simpler to enact than it would be to get the Federal Reserve to resume its own MBS purchasing, but it would be complicated by the need to reopen the legal documents related to Treasury’s holdings in Fannie and Freddie, a move that would be sure to inspire a much larger debate around the long-term outlook for the two government-sponsored enterprises (GSEs).
• Homebuilding is also an issue on the White House’s radar, something President Trump made clear in an October Truth Social post. While Pulte has signaled that he’s working on the issue, FHFA has limited tools to inspire additional homebuilding on its own. Still, industry players are bringing their own ideas to Pulte. Politico reports that some homebuilders are encouraging FHFA to have Fannie and Freddie establish a secondary market for acquisition, development, and construction loans, something that they believe could “add liquidity to the construction finance market and make lenders comfortable offering more and larger construction loans.”

The ROAD to Housing (and GSE) Reform. Independent of the administration, lawmakers are latching on to rare bipartisan momentum to move a major housing reform package through Congress.

• Last month, the Senate passed the Senate Banking Committee’s ROAD to Housing Act as part of the chamber’s version of the annual National Defense Authorization Act. The bill aims to cut the regulatory red tape that inhibits housing development with reforms to federal guidelines and programs aimed at localities with restrictive zoning codes, among other things. The legislation includes measures that would adjust certain federal grant programs to reward communities with pro-housing zoning reforms, streamline certain environmental reviews for housing projects, and relax requirements around the development of manufactured homes. The legislation also aims to address housing finance issues by improving lender compensation for small dollar loans and eliminating the cap on the Rental Assistance Demonstration program.
• Some GOP members of Congress have also expressed an interest in working with the administration on an eventual release of Fannie and Freddie from their government conservatorship, but so far, the White House appears interested in going it alone. The Wall Street Journal reported in August that administration officials had discussed the possibility of selling between five and fifteen percent of the two companies’ stock at a valuation of around $500 billion, numbers Pulte later confirmed in an interview with Fox News. Pulte has more recently suggested that an offering could occur between the end of this year and early next year. Still, developing an exit plan from the conservatorship is expected to occur over a longer time horizon, giving administration officials and Congress more time to chew on it, although the latter has historically had trouble finding any sort of consensus on the contentious topic.

DC’s Quantum Leap

Quantum Under Trump. The Trump White House is supportive of developing quantum computing.

• During his first term, President Trump was a quantum ally. He signed into law the $1.2 billion National Quantum Initiative Act (NQIA), which established quantum research centers and created a National Quantum Coordination Office within the White House Office of Science and Technology Policy (OSTP).
• This March, early in his second term, Trump sent OSTP Director Michael Kratsios an open letter in which he emphasized ensuring the US position as “the unrivaled world leader in critical and emerging technologies — such as artificial intelligence, quantum information science, and nuclear technology” for “maintaining our advantage over potential adversaries.”
• Bloomberg reported last month that the Trump administration is holding “early-stage conversations” with quantum companies about “potential financial support” with something for the federal government in exchange. The Wall Street Journal reported that the federal government was discussing offering funding to quantum companies in exchange for equity stakes, a move that would follow a precedent of the Trump administration taking stakes in companies significant for emerging technologies.
• While Trump’s FY26 budget request to Congress would cut non-defense discretionary spending by 22.6 percent, the proposal would spare quantum spending from cuts. Trump’s One Big Beautiful Bill Act provided $250 million in new spending for the Quantum Benchmark Initiative, a Defense Advanced Research Projects Agency (DARPA) program. DARPA announced nearly 20 companies selected for the QBI earlier this year.

Congress’ Role in Quantum. Lawmakers have proposed measures to support quantum technology.

• Late last year, Senators Maria Cantwell (D-WA), Todd Young (R-IN), Dick Durbin (D-IL), and Steve Daines (R-MN) introduced a National Quantum Initiative reauthorization bill that would authorize $2.7 billion for federal quantum programs from FY25-FY29. It would extend the National Quantum Initiative’s (NQI) sunset from 2029 to 2034 and evolve the NQI to focus on practical applications rather than basic research. The bill hasn’t been reintroduced in the 119th Congress but the fact that they introduced it so close to the end of the previous session suggests they plan to continue pushing for quantum.
• This Congress, lawmakers have introduced two notable proposals to expand federal support for quantum computing. Rep. Jay Obernolte (R-CA) and bipartisan cosponsors introduced a bill to establish a “sandbox” for testing real-world applications of quantum technologies. Durbin and Daines have also introduced a bill to authorize $2.5 billion for quantum R&D at the Department of Energy over five years, a major increase over the $625 million afforded to the agency by the NQIA in 2018.

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