The behind-the-scenes work by National Security Advisor Jake Sullivan and his deputy, Daleep Singh, mirrors — at least in spirit — a proposal floated Thursday by Republican presidential candidate Donald Trump, who called for a government-owned investment fund to finance “great national endeavors” during a speech to the Economic Club of New York.

Sullivan and Singh have been working on the project for months across a series of weekly brainstorming efforts, and have met with economic experts on the National Security Council to debate the size, structure, funding, leadership, and potential guardrails for a proposed fund. 

The work has progressed to the point where planning documents have been circulated among White House staffers and key agencies, according to the people familiar, who requested anonymity to discuss internal deliberations. But even as the work has progressed, key details — including, critically, the fund’s structure, funding model, and investment strategy — remain unclear.

Still, Trump’s public endorsement of the idea could provide bipartisan momentum for the initiative, which would be relatively novel outside of countries with significant commodity exports and budget surpluses, like oil-rich nations in the Middle East. 

Countering US adversaries’ grip on critical materials and emerging technology is a key motivator of the project, and aides are particularly concerned about being able to tap capital at the pace and scale of other countries. The China Investment Corporation, for example, has made substantial investments in natural resources, leveraging the country’s foreign exchange reserves.

Those working on the effort are eager to formalize the proposal during the remaining months of Biden’s presidential term. Aides believe such a fund could help bolster US interests by providing first loss equity capital, guarantees, or bridge financing to illiquid but solvent companies competing with Chinese firms. 

Proponents of the idea believe the fund could be tapped to support emerging technologies where there are high barriers of entry — including shipbuilding, emerging geothermal and nuclear fusion projects, and quantum cryptography. Biden aides similarly think the fund could be used to create synthetic reserves of critical minerals by purchasing futures contracts. Singh, one of the project’s architects, recently returned to the administration after a stint working for PGIM Fixed Income.

The approach is not dissimilar from the aggressive investment in technology firms by some Asian nations, like Singaporean state-owned firm Temasek Holding’s backing of Microsoft Corp. and NVIDIA Corp. But Temasek’s investment in now-bankrupt crypto firm FTX shows some of the risks of such an endeavor. 

Most other sovereign wealth funds — including investment authorities in Kuwait, Norway, and Abu Dhabi created in the mid-20th century — were seeded with surplus oil revenue. Still, some US states, including Alaska, New Mexico, and Texas, have seen success setting up their own government-run investment ships financed by energy and mineral resources. And other nations, like Canada and Australia, have independently managed sovereign wealth funds.

Congressional Outreach

The creation of any fund would require an act of Congress, where a battle over a potential funding source is likely to prove contentious. The White House has not yet begun engaging lawmakers on the idea — though they plan to discuss the proposal with both Capitol Hill and the private sector in the near future. 

Last year, a bipartisan group of senators led by Louisiana Republican Bill Cassidy and Angus King, a Maine independent who caucuses with Democrats, suggested creating an investment fund with profits helping bolster Social Security benefits.

The idea of a US sovereign wealth fund has at least some outside support. Hedge fund billionaire John Paulson said Thursday that he supported the US building a pool that would surpass the $1.7 trillion Norway uses for investments.

“It would great to see America join this party and instead of having debt, have savings,” Paulson said in an interview with Bloomberg Television. “It would be, over time, larger than any of the existing funds.”

Former Treasury Secretary Lawrence Summers, responding to Trump’s proposal, though, called the idea “incomplete.”

“It’s one thing if you’re Norway or the Emirates — that has this huge natural resource that’s going to run out that you’re exporting — to accumulate a big wealth fund. But we’ve got a big trade deficit. We’ve got a big, budget deficit,” Summers said on Bloomberg Television’s Wall Street Week with David Westin Friday. 

Summers said 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.”

Mixed Support

Critics argue that the fund could be exploited for political projects of sitting presidents, and prove difficult to fund — particularly as the nation continues to run sizable deficits contributing to a national debt that tops $35 trillion. 

Jared Bernstein, chairman of the White House’s Council of Economic Advisers, told Bloomberg Television he would be “very wary of getting involved in any kid of wealth fund.”

“It’s certainly something I haven’t talked about in meetings I’ve been in,” he said 

Conservative economist Douglas Holtz-Eakin questioned the need for a fund.

“What problem would this solve? To my mind, none. There’s no merit to it regardless of who proposes it,” Holtz-Eakin said Friday. “All this would do is insulate that process from political scrutiny and oversight, and that’s the last thing we need.”

Trump, speaking to economic leaders on Thursday, said he envisioned the fund as a way to address persistent debt issues and said it would be funded through his plan to impose tariffs on all imports. 

“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,” Trump said. “And it is many of the people in this room who will be helping to advise and recommend investments for this fund.”