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us treasury department
Despite Trump's Demand for AI Investment, Treasury Report Warns Industry Poses 'Significant Risk' to US Economy
"There isn’t an AI company with a sustainable business model right now," said a tech insider. "It’s not a healthy industry."
Jul 06, 2026
While President Donald Trump's administration has regularly hyped up the development of artificial intelligence, a draft US Treasury Department report warns that the AI industry could be a financial bubble that will ultimately damage the American economy.
NOTUS, which obtained a copy of the Treasury Department analysis, reported on Monday that it "is a significant departure from the Trump administration’s public tone, which has focused on encouraging unrelenting investment to unlock exponential growth."
Career analysts at the department find that, while many AI firms are on firmer financial footing than the dotcom companies in the late 1990s, they are also much more deeply integrated with the US economy.
Because of this integration, these firms "pose significant risk to the entire system if financial conditions change, productivity goals are missed, or various chokepoints stymie growth," wrote NOTUS.
The report also says that the investments being made into AI infrastructure are so big that they risk damaging the entire financial system if they do not meet certain metrics for productivity growth and profitability.
"Fears of an AI bubble have grown over the last year, including on Capitol Hill, among some Wall Street observers and executives, inside think tanks and even within the ranks of top AI principals," the NOTUS report added. "Prominent economists and institutions... have also raised concerns about overvaluation of AI firms and the risks they pose to the broader economic system."
Dean Baker, co-founder and senior economist of the Center for Economic and Policy Research (CEPR), noted in an analysis published Friday that AI's long-promised boost to productivity isn't yet showing up in data.
Citing the most recent jobs report from the US Bureau of Labor Statistics (BLS), Baker found that AI's impact on productivity growth at the moment is "invisible."
"The index of aggregate hours grew at a 1.3% rate in the quarter. With [gross domestic product] growth likely coming in close to 2%, we are looking at productivity growth around 1%," Baker explained. "That follows growth of 0.3% in the first quarter and 1.6% in the fourth quarter of 2025. There is zero evidence of any sort of productivity uptick in these data."
Baker argued that this was a contrast with the dotcom era, when productivity growth averaged roughly 2.8% over a four-year period in the late 1990s before the bubble burst.
"We would need rates of productivity growth in the neighborhood of 4% to generate the sort of profits needed to make sense of current market levels," Baker wrote. "It is surprising that the continuing weakness of productivity doesn’t bother stock investors more."
There are also questions about AI's ability to turn a profit.
A Monday report in The New York Times highlighted the predicament of Chinese tech company Alibaba, whose open-source AI model has become extremely popular while at the same time being unprofitable.
"In the first three months of this year, Alibaba reported $1.3 billion in revenue from AI-related products—less than 4% of its total revenue," reported the Times. "That pales in comparison with the company’s plan to spend more than $55 billion by the end of next year to build out its AI infrastructure."
Richard Lin, a vice president at the Silicon Valley firm Datastrato, told the Times that concerns about AI profitability extend beyond Alibaba and to the industry as a whole.
"There isn’t an AI company with a sustainable business model right now," said Lin. "It’s not a healthy industry."
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'Disgusting Act of Corruption': Trump Sues IRS, Treasury for $10 Billion Over Tax Return Leak
"While Trump is weaponizing taxpayer privacy laws for his own benefit, his Treasury Department is flouting those exact same laws to send tens of thousands of individual tax records to his anti-immigrant henchmen at ICE."
Jan 30, 2026
President Donald Trump has sued the US Treasury Department and Internal Revenue Service for $10 billion over the leak of his tax returns during his first term in the White House, when the president broke with decades of tradition by refusing to voluntarily divulge the records.
The lawsuit—joined by Trump's two eldest sons and his family business, the Trump Organization—was revealed Thursday in a filing with the Miami division of the US District Court for the Southern District of Florida. The suit alleges that the IRS and Treasury Department "caused Plaintiffs reputational and financial harm, public embarrassment, unfairly tarnished their business reputations, portrayed them in a false light, and negatively affected President Donald Trump and the other Plaintiffs' public standing."
Charles Littlejohn, a former IRS contractor who was employed by Booz Allen Hamilton, pleaded guilty in late 2023 to one count of unauthorized disclosure of tax return information and was later sentenced to up to five years in prison.
The US Treasury Department, led by Scott Bessent, announced earlier this week that it was canceling all of its contracts with Booz Allen Hamilton, accusing the company of failing to "implement adequate safeguards to protect sensitive data, including the confidential taxpayer information it had access to through its contracts with the Internal Revenue Service."
The leak included the tax records of Trump and other mega-rich Americans, including Amazon founder Jeff Bezos and Tesla CEO Elon Musk. The New York Times, which obtained the records along with ProPublica, reported in 2018 that the returns showed Trump engaged in "outright fraud" and other "dubious" schemes to avoid taxation.
Trump, according to the Times investigation, "paid $750 in federal income taxes in 2016, the year he was elected president, and... he had not paid any income taxes in 10 of the previous 15 years."
US Sen. Ron Wyden (D-Ore.), the top Democrat on the Senate Finance Committee, said in response to the president's lawsuit that “Donald Trump is a cheat and a grifter to his core, and for him to abuse his office in an attempt to steal $10 billion from the American taxpayer is a shameless, disgusting act of corruption."
"While Trump is weaponizing taxpayer privacy laws for his own benefit, his Treasury Department is flouting those exact same laws to send tens of thousands of individual tax records to his anti-immigrant henchmen at ICE," Wyden continued. "It is the height of hypocrisy for Trump to pretend he cares one bit about taxpayer privacy."
Journalist Tim O'Brien, who has covered Trump for decades, called the lawsuit "a flagrant and obvious conflict of interest."
"Trump oversees the IRS. He wants the IRS to pay him a big chunk of change," O'Brien wrote on social media. "He is, and always has been, in it for the money."
The lawsuit isn't the first time Trump has sought a large sum of taxpayer money from a federal agency during his second term in office. Last year, Trump demanded via an administrative claims process that the US Justice Department pay him roughly $230 million in compensation for federal investigations he has faced.
Trump launched his attempt to wring $10 billion in taxpayer money out of the Treasury Department and IRS as he and his allies worked to gut the tax agency, leaving it with inadequate staff and resources to audit wealthy individuals and large corporations. The IRS is currently headed by Frank Bisignano, who was named "chief executive officer" of the agency late last year.
In a letter to Bessent and Bisignano earlier this week, Wyden and a group of fellow Senate Democrats warned that "the administration’s plans for the IRS"—including painful budget cuts—"will shift the burden of audits more heavily onto working Americans while giving rich scofflaws and big businesses a green light to cheat on their taxes."
"The administration has failed to detail any serious plan to avoid that unfair outcome," the senators warned.
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Trump Admin Sued for Withholding Documents in President's Scheme to 'Pocket Taxpayer Money'
"If senior officials are processing this grift behind closed doors... that is not just bad optics, it is a direct threat to government integrity."
Dec 15, 2025
A democracy advocacy organization is stepping up pressure on the federal government to release more information on President Donald Trump's scheme to receive a $230 million payout from the US Department of Justice.
Democracy Forward on Monday filed a Freedom of Information Act (FOIA) complaint against the DOJ and the US Department of Treasury, alleging that both agencies have so far refused to turn over any records related to what the group describes as Trump's "stunning effort to obtain a $230 million taxpayer-funded payout for investigations into his own misconduct."
The group notes that it has already filed multiple FOIA requests over the last several weeks, and in response neither DOJ or Treasury has "produced a single substantial record or issued a legally required determination."
The complaint asks courts to compel DOJ and Treasury "to conduct searches for any and all responsive records" related to Democracy Forward's past FOIA requests, and also to force the government "to produce, by a date certain, any and all non-exempt responsive records," and to create an index "of any responsive records withheld under a claim of exemption."
Skye Perryman, president and CEO of Democracy Forward, said her organization's lawsuit was a simple demand for government transparency.
"People in America deserve to know whether the Department of Justice is entertaining the president’s request to cut himself a taxpayer-funded $230 million check," Perryman said. "If senior officials are processing this grift behind closed doors—including officials who used to represent him—that is not just bad optics, it is a direct threat to government integrity."
Democracy Forward's complaint stems from an October New York Times report that Trump was lobbying DOJ to fork over hundreds of millions of dollars to him as compensation for the purported hardships he endured throughout the multiple criminal investigations and indictments leveled against him.
Trump was indicted in 2023 on federal charges related to his mishandling of top-secret government documents that he'd stashed in his Mar-a-Lago resort, as well as his efforts to illegally remain in power after losing the 2020 presidential election. Both cases were dropped after Trump won the 2024 presidential election.
When asked about the DOJ payout scheme in the wake of the Times report, Trump insisted he would give any money paid out by the department to charity and asserted that he had been "damaged very greatly" by past criminal probes.
Perryman, however, insisted that Trump was not entitled to enrich himself off taxpayer funds.
"President Trump may think he can invoice people for the consequences of his own actions," she said, "but this country still has laws, and we demand they be enforced.”
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