Brandon Bell/Pool via AP
Donald Trump and pal Elon Musk were in Boca Chica, Texas, last November to watch SpaceX’s mega rocket Starship lift off for a test flight.
There have been so many lunatic forays in the past two weeks that the idea of creating a U.S. sovereign wealth fund went by with too little understanding or comment. Trump issued an executive order February 3 directing the departments of Treasury and Commerce to study the idea and report back in 90 days.
The order asking for a report is a lot of hot air. It’s just Trump’s way of marking the territory and buying some time. But Trump and Musk seem all too serious about the idea.
Several nations have such funds. They run the gamut from well operated and clean (Norway) to personalized and corrupt (Malaysia, Saudi Arabia), where the fund is used to enrich the supreme leader and his cronies.
Trump views the asset side of the federal ledger as something to be monetized. The assets include $1.6 trillion in student debt, as well as federal holdings of land and intellectual property. Scott Bessent, the Treasury secretary, supports the idea and says federal assets, including financial assets, are worth $5.7 trillion. The money could go into the sovereign wealth fund, sometimes by securitizing the assets.
A sovereign wealth fund capitalized in the trillions, and subject to political control, could buy up everything from Trump crypto coins to stock in Tesla and SpaceX. It could bail out real estate investments from Trump and his cronies and underwrite the redevelopment of Gaza. It would be a multitrillion-dollar personal slush fund.
Like so many of Trump’s schemes, Trump cannot legally create such a fund by executive order. If he tries, this also will have to be resolved by the courts.
WHAT’S INTERESTING IS THAT A PROPERLY governed sovereign wealth fund, insulated from conflicts of interest, is far from a crazy idea. Alaska has had a Permanent Fund since 1972, funded by royalties from North Slope oil. Each year, dividends, well into the thousands of dollars, go to every Alaskan man, woman, and child.
Peter Barnes has proposed a federal permanent wealth fund, capitalized by a share of all innovations funded by the federal government, such as breakthroughs underwritten by NIH, NSF, and DARPA. This would give every American a second stream of capital income to complement wage and salary income.
A more corrupt and politicized version of a state sovereign wealth fund is the Texas Permanent School Fund, financed by oil and gas royalties. Republican state officials have used the fund to punish investments in solar and wind energy and to punish mutual funds that invest in them.
In the context of Trump’s sovereign wealth fund proposal, Howard Lutnick, Trump’s nominee to be commerce secretary, has suggested that the government should get a share of government-funded inventions that produced windfall profits for private grantees, such as COVID vaccines. In a different context, that’s a lefty idea that could help underwrite a shared wealth fund of the sort proposed by Peter Barnes.
There’s a larger lesson here. Trump has proposed totally out-of-the-box ideas, many of them illegal. Democratic presidents have been far more reticent about breaking the mold. If a Democratic president embraced the idea of a wealth fund for citizens, the idea would suddenly become mainstream, and public debate would start asking questions about why nearly all federally funded innovation is captured for private windfall profit.
There’s another lesson. Most fascist dictators have been more about ideology and absolute power than about personal wealth. Hitler was not interested in getting filthy rich, nor was Mussolini, nor Franco. Trump and his crony Musk are at least as interested in the corrupt use of power for personal enrichment as they are in destroying the deep state or the rule of law.
That ought to be a source of political vulnerability. It remains to be seen whether any other Republicans care.
*Readers under, say, age 50 may not get the pun. It’s a play on “two drifters, off to see the world,” from “Moon River,” which was the theme song to the great 1961 Audrey Hepburn movie Breakfast at Tiffany’s.
