The case for a U.S. sovereign wealth fund

Sovereign wealth funds are usually the strategic resources of petrostates with budget surpluses, not diverse, debt-heavy economies like the United States. That should change. Instead of managing our nation’s balance sheet with a spendthrift's short-term outlook, the U.S. should think like an investor and put its assets to work deliberately.

President Donald Trump's directive to establish a sovereign wealth fund could add immense firepower to our economic arsenal, converting national wealth into strategic and financial advantages for all Americans. And right now, we don’t have the luxury of holding our fire. 

America is at risk of losing the technological race—and going broke in the process. In quantum computing, China outspends us four to one. Japan has emerged as a global leader in robotics. Germany is now ground-zero for advanced manufacturing. And as our competitive edge erodes, our debt mounts. The U.S. paid $882 billion in net interest in FY 2024—more than we spent to fund the entire Department of Defense. The real risk isn't creating a sovereign wealth fund—it's pretending we don't need one.

Capitalism has long been America’s greatest asset. It’s time to wield it patriotically.

A U.S. sovereign wealth fund’s success would come down to four crucial questions: Where does the money come from? How is it invested? Where do the returns go? How is it managed?

Funding wisely

First, the funding. Critics say we can't have a sovereign wealth fund without a budget surplus. But America already owns substantial assets: land, mineral rights, spectrum licenses, and intellectual property. We just don’t normally monetize our ownership in them for the direct benefit of our citizens. Instead, we treat our assets and their revenues as disposable income, while countries like Norway prudently invest their oil wealth.

Take federal lands: The oil royalties charged by the Department of the Interior are at below-market rates. By charging what Texas charges for the same activities, we could generate an incremental $8.5 billion. Add expanded renewable energy leasing, and we could boost that to $10.1 billion. 

But the key isn’t spending that extra money—it’s borrowing against it. With congressional approval, current AAA municipal bond rates of 2.9% and $10.1 billion in annual revenue would allow the U.S. to support up to $225 billion in initial funding. Bondholders get paid from resource revenues, not investment returns. By separating funding risk from investment risk, the fund could make bold bets on America's future, without risking its present.

Investing strategically

Second, the investment strategy. The government is excellent at identifying strategic threats. For example, the National Security Commission on AI has spelled out how our adversaries might overtake us within a decade. But these reports end up unread with the same toothless conclusions like, "Congress needs to appropriate billions." 

While we wait for our government to act, other governments, like Saudi Arabia and Qatar, are deploying trillions into the technologies and markets our future depends on. A U.S. fund would let us turn government threat assessments into investment theses, allowing us to shape these critical technologies to our national advantage.

Sharing the returns

Third, the returns. The success of this fund should be shared with its citizen shareholders through investment accounts for every newborn American. 

Start with our $225 billion fund, assume an 8% annual return (matching Alaska's Permanent Fund) and let it grow for a decade to $485 billion. Then, by paying out half the returns and reinvesting the rest, we could give each American child at birth a $5,400 investment account by the mid-2030s. Someday, our kids won’t just get a tax return—they’ll get a return on their taxes.

We've created a system where public investment creates private fortunes. The U.S. military and intelligence agencies routinely fund cutting-edge R&D but give away the equity. Venture capitalists reap the returns from government-funded innovations—the internet, GPS, mRNA vaccines—while taxpayers who funded these breakthroughs get nothing. For example, Moderna’s stock price nearly quintupled in the nine months after announcing its COVID vaccine. That breakthrough was built on taxpayer-funded research from the NIH. By investing rather than spending, America’s future generations wouldn’t just be funders of this success; they’d be owners of it.

Assembling a board 

Finally, management. A U.S. sovereign wealth fund, like the Federal Reserve, can operate independently with a clear mandate: maximize returns while advancing strategic interests.

We could start by creating a board of America’s best talent. Think: Mitt Romney and Bill Gurley working alongside Condoleezza Rice and Eric Schmidt. Meanwhile, the fund's day-to-day operations would be managed by world-class investment professionals who are paid competitive salaries and evaluated against clear benchmarks.

Critics will argue the government can't or shouldn’t manage capital, that markets do this better and don’t violate free-market principles. These are fair concerns—but they are also outdated. A sovereign wealth fund is not a step toward socialism; it is a step toward sovereignty. It would put America's markets to work, creating common wealth for the common good. It would help us stay technologically competitive with our rivals without raising taxes. And instead of passing debt to future generations, we’d be giving them assets. That way, they'll have a real stake in America's success.

In 1776, just months after Adam Smith published The Wealth of Nations, Thomas Jefferson wrote the Declaration of Independence. These twin revolutions—American democracy and modern capitalism—were born together. Now it's time to reunite them.

Our rivals are wielding their wealth to shape tomorrow without American leadership. We can no longer watch from the sidelines. Let's build a sovereign wealth fund—and build it so we can win.

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