Democrats have suddenly discovered the virtues of the free market.
Earlier this week, House Democrats led by Reps. Greg Casar (D-TX) and Maxine Waters (D-CA), working through the Congressional Progressive Caucus, of all places, introduced a non-binding resolution opposing taxpayer-funded bailouts for AI companies facing bankruptcy. Their position was that of true champions of free enterprise, whether they realize it or not, that taxpayers should not be forced to rescue private companies from the consequences of their business decisions.
🇺🇸 LATEST: House Democrats introduce resolution to BLOCK taxpayer bailouts for AI firms in the event of a financial crisis. Democrats want AI companies to go through ordinary bankruptcy proceedings, as concerns grow over debt financing the AI buildout. If the boom turns into a financial crisis the resolution calls for protecting workers, consumers and retirement savings rather than rescuing failed firms.
— Coin Bureau (@coinbureau) October 29, 2026
Concerns about an AI bubble have grown as major tech companies pour money into one another, raising questions about whether the industry’s enormous valuations rest on solid foundations. Anthropic’s IPO filing added to that debate as it reported $16.3 billion in revenue and an $80.7 billion net loss for the first half of 2026. But most of that loss reflected non-cash accounting charges tied to investors who had been promised shares of the company, not money spent running the business. Its operating loss was far smaller, at $693 million. If the company’s reported $2 trillion IPO valuation holds up, that $80.7 billion accounting loss looks far less dramatic.
Still, those concerns have fueled fears that AI companies could face massive losses if their inflated valuations come crashing down, and that the government will step in to rescue them, leaving taxpayers to foot the bill.
But the move by House Democrats is still a good one. Making clear that taxpayers will not cover the industry’s losses reinforces a basic rule of the free market: companies are responsible for their failures as well as their successes. Without the expectation of a bailout, investors have more reason to scrutinize valuations, and executives have more reason to make sound business decisions. That is how to build a competitive American AI industry.
But that discipline starts to slip when the government signals it could be willing to bail out the companies' bad decision making. OpenAI’s CEO, for example, has offered the United States government a five-percent stake in the company. The administration considered the offer, and it's easy to see why as it has already built up quite a portfolio of stock in private companies. But that gives those companies a reason to believe that the federal government will save them from their own bad decisions. After all, if the government owns part of the business, would it really let it fail?
Government stake, and government bailouts are a recipe for an uncompetitive industry, poor quality, and higher prices. Look at the American auto manufacturers. The government bailed out General Motors and Chrysler in 2008, protecting them from the full consequences of their business decisions. The financial crisis of 2008 sent a similar message when the government rescued major financial institutions rather than allowing them to collapse. And Democrats managed to pin at least the latter on capitalism.
But now they seem to have stumbled into defending capitalism, even if it took their fear of AI to get them there. Whatever their motives, insisting that taxpayers should not subsidize private companies’ failures is the right position. Republicans should seize the opening and insist that the same rule apply to AI and beyond.
With the Democratic Socialists of America gaining ground across the country, Republicans cannot afford to let Democrats reap the benefits of a free-market policy, rebrand its success as progressivism, and then use it to justify their continued siege on the very system that made it work.