Observers Broadly Pan Trump’s Idea for a U.S. Sovereign Wealth Fund

Despite facing a projected budget deficit of $1.9 trillion for the 2025 fiscal year, Republican President Donald Trump on February 3 signed an executive order instructing the federal government to establish a U.S. sovereign wealth fund to “promote fiscal sustainability.” The order includes broad strokes directing the secretaries of the Treasury and Commerce departments to develop a plan for such a fund within 90 days. It also leaves room for plenty of unanswered questions about what an SWF sponsored by the United States would look like.

SWFs are investment vehicles that put a government’s capital to work. The state-owned funds target opportunities to invest a nation’s assets to serve a variety of purposes, such as economic diversification and generating returns to help fortify a country’s financial reserves for the future. In recent decades, SWFs have amassed substantial influence over the global investment market.

More than 80 countries have SWFs. China, the United Arab Emirates, Norway, Singapore and Saudi Arabia are the only ones with holdings of at least $1 trillion, according to the Washington Post and the Global SWF tracker. These countries all have one thing in common: excess cash from selling oil or running big trade surpluses.

The U.S. enjoys neither. So, considering its 20-year history of running budget deficits, how would it fund its own SWF?

Trump’s order directs the architects of his proposed SWF to include recommendations for funding mechanisms, investment strategies, fund structure and a governance model. On the campaign trail, Trump claimed that future revenue from his proposed tariffs on imports would generate enough money for the U.S. to create “the strongest sovereign wealth fund of them all.” And Treasury Secretary Scott Bessent suggested that the U.S. could “monetize” certain federal assets, such as the national stockpile of gold. (Of course, there is no chance that assets like the U.S. gold reserves or its portfolio of student loans could fetch prices anywhere near their current book value if they were put on the market.)

Outside Trump’s orbit, you won’t find many observers who believe a country that doesn’t run budget surpluses should create a fund that is supposed to invest the proceeds of budget surpluses. The idea has drawn overwhelming criticism – even from conservatives. A Wall Street Journal editorial said it was a “very bad idea” and predicted it would “destroy more wealth than it creates.” The Washington Examiner said such a fund would “basically be a cronyism machine.” It’s not hard to imagine the managers of the U.S. SWF plowing its capital into one of Elon Musk’s ventures or cryptocurrencies sponsored by campaign donors, for instance.

In an opinion piece in The Hill, Romina Boccia called a U.S. SWF “fool’s gold” and a “shiny object looking for a useful function,” summing up the overwhelming consensus about Trump’s plan. “The idea that Washington should set up an investment fund when it can’t even manage its own budget is laughable at best and dangerous at worst,” Boccia wrote.