The Retired Investor: U.S. Sovereign Wealth Fund a Good Idea?

What do Bernie Sanders and Donald Trump have in common? Yes, they are both octogenarians, but even more important, they want to establish a sovereign wealth fund in the U.S. They may differ in their approach, but it is an idea whose day has come.

 

The number of sovereign wealth funds worldwide now exceeds 100. These state-owned investment funds are professionally managed and intended to provide their countries and citizens with an investment pool that delivers long-term financial returns, enhances national wealth, and fosters fiscal stability.

 

The largest such fund in the world is the Norwegian Government Pension Fund with assets of over $2.11 trillion. The Chinese rank second and third, with the SAFE Investment Company ($1.95 trillion) and the China Investment Corp ($1.56 trillion). The Arab nations make up most of the remaining entries on the top ten list.

 

It may surprise readers that, while there is no Federal fund, Alaska, New Mexico, North Dakota, Texas, and Wyoming do have state-sponsored investment funds. Several Native American and Alaskan Native tribes also manage similar funds.

 

In February 2025, the president issued an executive order directing the Treasury and Commerce departments to develop a plan for creating a U.S. sovereign wealth fund. They did, but the White House didn't like some of the particulars. In addition, like so many of the administration's initiatives, Congress must also approve such a plan. It has also established a commission to study the matter.

 

In the meantime, Trump has taken 10 percent stakes in a variety of companies, including Intel and IBM. OpenAI's Sam Altman, the CEO of the AI startup that is planning to go public this year, has been talking to the administration about a government stake in his company. Altman suggested he could donate equity in his company to seed a potential wealth fund.

 

On June 1, Sanders announced he planned to introduce legislation establishing the American AI Sovereign Wealth Fund Act. The act would impose a 50 percent tax on OpenAI, Anthropic, and other AI giants, payable in stock. In this way, the public would be given a direct stake in AI and its leading companies. This is not too far from the thoughts and discussions Trump has been having with AI sector managements for more than a year.

 

In this era of populism, where demonstrations against the threat of job loss due to AI are becoming more frequent, a government-owned wealth fund would give the people a direct role not only in determining the future of this technology but also in giving more than the very rich an opportunity to benefit from the trillions of dollars being spent on developing AI.

 

The key reasons cited for why the U.S. has yet to establish such a fund center revolve around the country's current poor fiscal health. The government has been running huge budget deficits that are increasing every year. In comparison, most sovereign wealth funds are typically established by countries that generate budget surpluses from natural resources or other revenue streams.

 

In the U.S., with a national debt of more than $37 trillion, where would the money come from to establish such a fund? Critics argue that instead of a fund, the government should focus on managing its existing debt and reducing budget deficits. In addition, the prospect of cronyism and mismanagement is a great concern.

 

In my opinion, the critics have it wrong. Next week, I will argue why a federal sovereign wealth fund could be essential especially in a time of financial crisis if it should occur.