Warning Against Taxpayer Bailout for Big Tech, Critics Fume Over OpenAI Execs' Talk of Government Loans

Tech giant OpenAI generated significant backlash this week after one of its top executives floated potential loan guarantees from the US government to help fund its massive infrastructure buildout.

In a Wednesday interview with The Wall Street Journal, OpenAI chief financial officer Sarah Friar suggested that the federal government could get involved in infrastructure development for artificial intelligence by offering a "guarantee," which she said could "drop the cost of the financing" and increase the amount of debt her firm could take on.

When asked if she was specifically talking about a "federal backstop for chip investment," she replied, "Exactly."

Hours after the interview, Friar walked back her remarks and insisted that "OpenAI is not seeking a government backstop for our infrastructure commitments," while adding that she was "making the point that American strength in technology will come from building real industrial capacity, which requires the private sector and government playing their part."

Despite Friar's walk-back, OpenAI CEO Sam Altman said during a podcast interview with economist Tyler Cowen that released on Thursday that he believed the government ultimately could be a backstop to the artificial intelligence industry.

"When something gets sufficiently huge... the federal government is kind of the insurer of last resort, as we've seen in various financial crises," he said. "Given the magnitude of what I expect AI's economic impact to look like, I do think the government ends up as the insurer of last resort."

Friar and Altman's remarks about government backstops for OpenAI loans drew the immediate ire of Robert Weissman, co-president of consumer advocacy organization Public Citizen, who expressed concerns that the tech industry may have already opened up talks about loan guarantees with President Donald Trump's administration.

"Given the Trump regime’s eagerness to shower taxpayer subsidies and benefits on favored corporations, it is entirely possible that OpenAI and the White House are concocting a scheme to siphon taxpayer money into OpenAI’s coffers, perhaps with some tribute paid to Trump and his family." Weissman said. "Perhaps not so coincidentally, OpenAI President Greg Brockman was among the attendees at a dinner for donors to Trump’s White House ballroom, though neither he nor OpenAI have been reported to be actual donors."

JB Branch, Public Citizen’s Big Tech accountability advocate, said even suggesting government backstops for OpenAI showed that the company and its executives were "completely out of touch with reality," and he argued it was no coincidence that Friar floated the possibility of federal loan guarantees at a time when many analysts have been questioning whether the AI industry is an unsustainable financial bubble.

"The truth is simple: the AI bubble is swelling, and OpenAI knows it," he said. "Big Tech is building a mountain of speculative infrastructure without real-world demands or proven productivity-enhancing use cases to justify it. Now it wants the US government to prop up the bubble before it bursts. This is an escape plan for an industry that has overpromised and underdelivered."

An MIT Media Lab report found in September that while AI use has doubled in workplaces since 2023, 95% of organizations that have invested in the technology have seen "no measurable return on their investment."

Concerns about an AI bubble intensified earlier this week when investor Michael Burry, who famously made a fortune by short-selling the US housing market ahead of the 2008 financial crisis, revealed that his firm was making bets against Nvidia and Palantir, two of the biggest players in the AI industry.

This has led to some AI industry players to complain that markets and governments are undervaluing their products.

During her Wednesday WSJ interview, for instance, Friar complained that "I don’t think there’s enough exuberance about AI, when I think about the actual practical implications and what it can do for individual."

Nvidia CEO Jensen Huang, meanwhile, told the Financial Times that China was going to beat the US in the race to develop high-powered artificial intelligence because the Chinese government offers more energy subsidies to AI and doesn't put as much regulation on AI development.

Huang also complained that "we need more optimism" about the AI industry in the US.

Investment researcher Ross Hendricks, however, dismissed Huang's warning about China winning the AI battle, and he accused the Nvidia CEO of seeking special government favors.

"This is nothing more than Jensen Huang foaming the runway for a federal AI bailout in coordination with OpenAI's latest plea in the WSJ," he commented in a post on X. "These grifters simply can't be happy making billions from one of the greatest investment manias of all time. They'll do everything possible to loot taxpayers to prevent it from popping."