When the AI bubble bursts, guess who pays?

For months, Silicon Valley insisted the artificial-intelligence boom wasn’t another government-fueled bubble. Now the same companies are begging Washington for “help” while pretending it isn’t a bailout.

Any technology that truly meets consumer demand doesn’t need taxpayer favors to survive and thrive — least of all trillion-dollar corporations. Yet the entire AI buildout depends on subsidies, tax breaks, and cheap credit. The push to cover America’s landscape with power-hungry data centers has never been viable in a free market. And the industry knows it.

The AI bubble isn’t about innovation — it’s about insulation. The same elites who inflated the market with easy money are now preparing to dump the risk on taxpayers.

Last week, OpenAI chief financial officer Sarah Friar let the truth slip. In a CNBC interview, she admitted the company needs a “backstop” — a government-supported guarantee — to secure the massive loans propping up its data-center empire.

“We’re looking for an ecosystem of banks, private equity, maybe even governmental … the ways governments can come to bear,” Friar said. When asked whether that meant a federal subsidy, she added, “The guarantee that allows the financing to happen … that can drop the cost of financing, increase the loan-to-value … an equity portion for some federal backstop. Exactly, and I think we’re seeing that. I think the U.S. government in particular has been incredibly forward-leaning.”

Translation: OpenAI’s debt-to-revenue ratio looks like a Ponzi scheme, and the government is already “forward-leaning” in keeping it afloat. Oracle — one of OpenAI’s key partners — carries a debt-to-equity ratio of 453%. Both companies want to privatize profits and socialize losses.

After public backlash, Friar tried to walk it back, claiming “backstop” was the wrong word. Then on LinkedIn, she used different words to describe the same thing: “American strength in technology will come from building real industrial capacity, which requires the private sector and government playing their part.”

When government “plays its part,” taxpayers pay the bill. Yet no one remembers the federal government “doing its part” for Apple or Motorola when the smartphone revolution took off — because those products sold just fine without subsidies.

The denials keep coming

OpenAI CEO Sam Altman quickly followed with a 1,500-word denial: “We do not have or want government guarantees for OpenAI datacenters.” Then he conceded they’re seeking loan guarantees for infrastructure — just not for software.

That distinction exposes the scam. Software revolutions scale cheaply. Data-center revolutions depend on state-sponsored power, water, and land. If this industry were self-sustaining, Trump wouldn’t need to tout Stargate — his administration’s marquee AI-infrastructure initiative — as a national project. Federal involvement is baked in, from subsidized energy to public land giveaways.

Altman’s own words confirm it. In an October interview with podcaster Tyler Cowen, released a day before his denial, Altman said, “When something gets sufficiently huge … the federal government is kind of the insurer of last resort.” He wasn’t talking about nuclear policy — he meant the financial side.

The coming crash

Anyone paying attention can see the rot. Nvidia, OpenAI, Oracle, and Meta are all entangled in a debt-driven accounting loop that would make Enron blush. This speculative bubble is inflating not because AI is transforming productivity, but because Wall Street and Washington are colluding to prop up stock prices and GDP growth.

When the crash comes — and it will — Washington will step in, exactly as it did with the banks in 2008 and the automakers in 2009. The “insurer of last resort” is already on standby.

The smoking gun

A leaked 11-page letter from OpenAI to the White House makes the scheme explicit. In the October 27 document addressed to the Office of Science and Technology Policy, Christopher Lehane, OpenAI’s chief global affairs officer, urged the government to provide “grants, cost-sharing agreements, loans, or loan guarantees” to help build America’s AI industrial base — all “to compete with China.”

Altman can tweet denials all he wants — his own company’s correspondence tells a different story. The pitch mirrors China’s state-capitalist model, except Beijing at least owns its industrial output. In America’s version, taxpayers absorb the risk while private firms pocket the reward.

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Credit: Photo by Mario Tama/Getty Images

Meanwhile, the data-center race is driving up electricity and water costs nationwide. The United States is building roughly 10 times as many hyper-scale data centers as China — and footing the bill through inflated utility rates and public subsidies.

Privatized profits, socialized losses

When investor Brad Gerstner recently asked Altman how a company with $13 billion in revenue could possibly afford $1.4 trillion in commitments, Altman sneered, “Happy to find a buyer for your shares.” He can afford that arrogance because he knows who the buyer of last resort will be: the federal government.

The AI bubble isn’t about innovation — it’s about insulation. The same elites who inflated the market with easy money are now preparing to dump the risk on taxpayers.

And when the collapse comes, they’ll call it “national security.”