Bipartisanship in the United States is rare, especially during election season.
That’s why it’s significant that both Democratic and Republican leaders seem to agree on creating a sovereign wealth fund to help the United States finance key projects.
According to Bloomberg, top aides to President Joe Biden, including National Security Advisor Jake Sullivan and his deputy, Daleep Singh, have been working quietly for months on plans for such a fund. The specifics—such as its structure, funding sources, and investment strategy—remain under wraps, but internal documents have been circulating at the White House, with Biden aiming to make progress before his term ends.
The news of Biden’s initiative closely follows former president Donald Trump's recent proposal for a similar state-owned fund during a speech at the Economic Club of New York. Trump described his vision as financing "great national endeavors."
The concept of sovereign wealth funds isn’t new. Many countries—especially those rich in natural resources like Saudi Arabia or Norway—have long used them to finance large-scale projects. These funds serve as vehicles to grow a country’s reserves.
For example, Norway’s Government Pension Fund Global, the world’s largest sovereign wealth fund with $1.6 trillion in assets, made a $213 billion profit last year, driven by investments in tech stocks, according to Reuters. The Norges Bank Investment Management, which oversees the fund, notes that its returns are bolstered by equities, fixed income, real estate, renewable energy infrastructure, and oil and gas revenue.
Saudi Arabia’s Public Investment Fund (PIF), managing approximately $925 billion in assets, reported a $36.8 billion profit for 2023. Funded through a combination of government capital injections, asset transfers, loans, and retained earnings from investments, the PIF has poured money into companies like Uber, Blackstone, and major projects like LIV Golf. It is also the primary financial engine behind Vision 2030, Saudi Arabia’s effort to diversify its economy beyond oil.
How an American sovereign wealth fund would be financed or managed is still unclear. However, sources close to the Biden administration told Bloomberg that if such a fund were launched, its investments might focus on national security priorities such as technology, energy, and supply chain initiatives.
This is not the first time a sovereign wealth fund has been discussed in Washington. In March, a bipartisan group of lawmakers, led by Senators Angus King and Bill Cassidy, began exploring the idea as a way to support Social Security. Senator Mitt Romney, who joined those discussions, suggested the fund could help the U.S. borrow at low rates while investing in economic growth domestically and internationally.
The possibilities for such a fund are extensive, and lawmakers are excited about its potential—if, of course, it ever gets funded. The Biden administration’s interest is partly driven by competition with China, which operates multiple state-owned funds. White House aides have suggested that a U.S. fund could offer "bridge financing" for companies competing with Chinese enterprises, according to Bloomberg.
Other potential uses include supporting high-barrier technologies like geothermal energy, nuclear fusion, or quantum cryptography. The fund could also be used to create synthetic reserves of critical minerals by purchasing futures contracts.
Some have even floated the idea of using it to reduce the national debt.
"It would be great to see America join this party and instead of having debt, have savings," billionaire John Paulson said in a recent Bloomberg Television interview. "Over time, it would be larger than any of the existing funds."
The concept is appealing, but its success hinges on sufficient government funding and smart investments.
Former Treasury Secretary Larry Summers voiced skepticism in an interview with Bloomberg Television, saying it was "hard to believe that setting aside lots of funds for unspecified investments made in unspecified ways, where you don’t even know what it’s going to be called, is a particularly responsible, kind of proposal."
