For a country that is rolling in debt, this seems like an odd time to be planning a sovereign wealth fund. Yet President Trump has ordered one up for America, with specifications due within three months and operations that could be in place at this time next year. 

Mr. Trump does not seem to know yet exactly how it would work, but he is sure he wants one. “Other countries have sovereign wealth funds and they’re much smaller countries and they’re not the United States,” he said on February 3, when he announced the idea in the White House.

Many of the largest such funds around the world were created with government surpluses arising from crude oil profits as a means of providing financial stability once their wells were depleted. America, however, has not had a surplus since 2001 and has run deficits for 46 of the past 50 years.

The country is by no means poor, thanks to a large economy with persistent growth, but it is like a millionaire with hundreds of thousands of dollars of debt that would be hard to pay off all at once. A prolonged economic downturn or a lack of interest from creditors in rolling over obligations could create considerable disruption.

The Treasury’s report for the 2024 fiscal year, which ended on September 30, showed an annual deficit of $1.8 trillion and assets of $5.7 trillion against obligations of $45.5 trillion. The liabilities are not all due right away, but that $39 trillion difference is an deep financial hole out of which to dig. 

The sole focus was on those assets in a February 3 fact sheet from the White House that said the president had directed federal agencies to devise a plan for a wealth fund within 90 days. Besides the $5.7 trillion — only $1.2 trillion of which is cash — the fact sheet said the government indirectly owns “a far larger sum” of assets including  “natural resource reserves,” but the Treasury report did not put a value on those. 

President Trump’s idea is to take America’s “highly valued assets” and invest them “through a sovereign wealth fund for greater long-term wealth generation,” according to the fact sheet, which so far is the only official document connected with the fund. It said wealth funds around the world  “amplify the financial return to a nation’s assets and leverage those returns for strategic benefit and goals.” 

It was not explained what strategies would be used to make that happen, though the executive order itself  has not yet been posted to the Federal Register and might contain more detail. So far, several different visions for the fund have come from the administration. Some may give the impression that the president and financial professionals in his cabinet and advising him think they can generate better-than-average returns.

With portfolios reaching into the trillions of dollars, wealth fund gains tend to be modest. The Norwegian Government Pension Plan, the world’s biggest sovereign wealth fund at $1.7 trillion of assets, claims a 7.99 percent annual return over the last five years. The Alaska Permanent Fund, the largest of  two dozen U.S. state vehicles at $79.6 billion, is up 7.88 percent for the same period. Data from Statista showed 10-year returns in 2023 ranging from 1.3 percent to 10.8 percent.

Sovereign wealth funds in other countries are usually meant to provide long-term financial stability, said Dr. Peter C. Earle, senior economist at the American Institute for Economic Research, a Great Barrington, Massachusetts-based research organization that advocates for sound-money policies. 

“With $36.4 trillion in national debt and $1.03 trillion in annual interest payments, there is no surplus revenue to allocate and there hasn’t been in decades,” he said. “Unlike Norway or Middle Eastern nations, which built their SWFs from energy surpluses, the U.S. would have to either divert existing tax revenues, cut spending somewhere, or impose new taxes or tariffs — all of which are wasteful, divisive, and disruptive. Decisions on investment allocations — who makes them, under what constraints, and with what oversight — would inevitably lead to political gridlock, making such a fund only the newest political football.”

He said of the $5.7 trillion of assets, only the $1.2 trillion in cash and marketable securities and $1.8 trillion in loans to borrowers such as students and small businesses  could be easily contributed to a sovereign wealth vehicle. Other holdings, including tactical missiles and office buildings, “cannot easily be sold or repurposed to generate investable funds.”

At the White House event announcing the president’s plan, Secretary Bessent, a former hedge-fund manager, said: “We’re going to monetize the asset side of the U.S. balance sheet for the American people. We’re going to put the assets to work, and I think it’s going to be very exciting,” according to a video and transcript provided by Roll Call. Added he: “It’ll be a combination of liquid assets, assets that we have in this country as we work to bring them out for the American people.”

He did not provide details of the mechanics of the fund, such as what investments it would hold and how it would increase returns on the contributed assets and at what level of risk, but he did indicate the operations would begin within a year. “We’re going to stand this thing up within the next 12 months.”

Mr. Bessent will lead the planning of the project along with the commerce secretary, presumably nominee Howard Lutnick, who suggested that the government could begin to amass stock in companies with which it does business to add to the fund.

“If we are going to buy 2 billion Covid vaccines, maybe we should have some warrants and some equity in these companies and have that grow for the help of the American people,” said Mr. Lutnick, who has led the Cantor Fitzgerald financial-services business for more than three decades.

Mr. Trump, in a speech to the New York Economic Club during his 2024 campaign, offered an outline of such a fund, though it remains to be seen whether the officials tasked with planning it will adopt these ideas. To create the vehicle, Mr. Trump said,  “We’ll put tremendous amounts of money, through all this money that will be taken in through tariffs and other intelligent things.” He did not specifically mention contributing existing assets. 

The planned use of proceeds: “We will build extraordinary national development projects in everything from highways to airports and to transportation infrastructure, all of the future. We’ll be able to invest in state-of-the-art manufacturing hubs, advanced defense capabilities, cutting edge medical research, and help save billions of dollars in preventing disease in the first place.”

Tariffs levied so far would not make for a a fund among the world leaders anytime soon. There  were just $77 billion collected in fiscal 2024, according to the Congressional Research Service, accounting for 1.57 percent of federal revenue. President Trump threatened tariffs of 25 percent on most imports from Canada and Mexico this year but quickly backed off, at least temporarily. He has instituted a 10 percent levy on goods from China, meant as a punishment for facilitating fentanyl distribution in America.

Even that is just a drop in the bucket. American imports from China in 2024 were $439.9 billion, according  to the U.S. Census Bureau, so a 10 percent levy that sticks for a whole year would produce about $45 billion if you ignore the possibility that tariffs would deter imports. 

One way an American sovereign wealth fund might work is if the federal government were to contribute revenue-generating operations it owns, along the lines of the U.S. Postal Service, Amtrak, and the Federal Aviation Administration. Diego Lopez, founder of the Global SWF website — which tracks sovereign funds — said this approach would be designed to generate new wealth rather than managing funds gleaned from budget surpluses or asset sales.

The idea of sovereign wealth funds is arguably home grown, Mr Lopez added. Ohio, Mississippi, Alabama, and Texas started land trusts to help finance education in the 1800s, he said, and 24 states now have sovereign funds, mostly based on wealth initially generated by commodities or real estate. 

At the federal level, however, even if a wealth fund seems more appealing than paying down the country’s $36.4 trillion of borrowing (most of the rest of the $45.5 trillion in obligations consists of benefits due to federal employees and veterans) there is a legal speed bump: deciding how the America’s money should be spent is the preserve of Congress, not the president.

It is unclear if even a Republican-dominated legislature could or would want to cede that power or whether it would even allow a wealth fund to be created. The Constitution says that no money shall be drawn from the Treasury but in consequence of appropriations made by law.