Bipartisanship is uncommon in the United States, especially at election time.
So it is noteworthy that both Democratic and Republican leaders want to establish that Sovereign wealth funds To help pay for materials to the United States.
President Joe Biden’s top aides, including National Security Adviser Jack Sullivan and his deputy Dalip Singh, have been quietly developing plans for a sovereign wealth fund for the past few months. Bloomberg informed.
Details, including the structure, funding and investment strategy, remain unclear, but planning documents are making the rounds through the White House and Biden hopes to have them in place before he leaves office.
News of Biden’s efforts came shortly after Former President Donald Trump called for a similar state-owned investment fund to finance “great national efforts” during a campaign stop at the Economic Club of New York last week.
Sovereign wealth funds are an old idea that many other countries — especially those that generate huge wealth from their natural resources, like Saudi Arabia or Norway — have long paid for big things. Countries park their cash reserves in state-owned funds so they can grow.
Norway’s $1.6 trillion Government Pension Fund GlobalFor example, the world’s largest sovereign wealth fund reported in January that it made $213 billion in profits last year thanks to returns on investments in tech stocks, Reuters reported. Norges Bank Investment Management, the arm of Norway’s central bank that oversees the fund, said the fund’s investments are supported by returns on equity, fixed income, real estate, renewable energy infrastructure and income from oil and gas production.
of Saudi Arabia Public Investment Fundwhich manages about $925 billion in assets, reported a profit of $36.8 billion for 2023, according to Reuters. PIF says it is Funding is provided through four channels – capital injection from the government, government assets transferred to PIF, loans and debt instruments and retained earnings from investments. That money is being used to invest in everything from Uber and Blackstone to Heathrow and LIV Golf. He also uses it Finance Vision 2030A massive initiative to transform the country’s economy and reduce its dependence on oil.
It’s not clear how the American fund will be, well, funded or how it will operate. But people familiar with the Biden administration’s plans told Bloomberg that if the United States were to launch the fund, it could invest in national security interests such as technology, energy and supply chain initiatives.
This is not the first time Washington has toyed with the idea of a sovereign wealth fund. Last March, the bipartisan group Sen. Angus King and Sen. Lawmakers led by Bill Cassidy began Debate on sovereign wealth funds from Pay for Social Security. At that time, Sen. Mitt Romney, who attended the talks, said the fund would enable the United States to “borrow at low interest rates and invest in the development of our economy and perhaps in the economies of other nations.”
The number of potential uses for the fund, if — again — it can ever be funded, is nearly limitless, which excites lawmakers.
The White House’s interest in sovereign wealth funds stems in part from its desire to compete with China, which itself has multiple state-owned funds. According to Bloomberg, White House aides have suggested that American funds could promote national interests through things like “bridge financing” for companies competing with China.
Others have suggested that the fund could support technologies with high entry barriers, such as geothermal and nuclear fusion projects or quantum cryptography. Or it can create artificial reserves of critical minerals by buying futures contracts.
Or, hey, maybe it could even be used to pay off the national debt.
“It would be great for America to join this party and save instead of go into debt,” billionaire John Paulson said in an interview with Bloomberg Television last week. “It will be bigger, over time, than any existing fund.”
It sounds great, but it all depends on government cash to fund it and the right investments to develop it.
Former Treasury Secretary Larry Summers said in an interview with Bloomberg Television last week That “it was hard to believe that setting aside lots of funds for uncertain investments made in an uncertain manner, where you don’t even know what it’s going to be called, is a particularly responsible, kind of proposition.”
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