EO 14196: A Plan for Establishing a United States Sovereign Wealth Fund
ANALYSIS: Executive Order 14196, signed by President Donald J. Trump on February 3, 2025, directs the Secretary of the Treasury and the Secretary of Commerce to develop a plan for establishing a United States Sovereign Wealth Fund (SWF). The primary goal of this fund is to promote the long-term financial health and international leadership of the United States. The plan is to include recommendations on funding mechanisms, investment strategies, fund structure, and a governance model, with a joint submission to the President required within 90 days of the order.
The concept of a U.S. Sovereign Wealth Fund aligns with the broader objectives of Project 2025. By creating a SWF, the administration seeks to manage national assets more effectively, potentially reducing reliance on foreign investments and enhancing economic autonomy. This move is seen as a strategic effort to assert greater control over the nation's financial resources, consistent with the goals of Project 2025.
Direct negative impacts:
Fiscal Sustainability: Critics argue that a sovereign wealth fund may not promote fiscal sustainability for the government. In countries where banks and large financial groups generate money that the government then taxes to fund itself, wealth funds can be useful. However, since the U.S. government generates its own money, some believe there is no need for a wealth fund.
Economic Security for Future Generations: There is skepticism about whether a sovereign wealth fund would establish economic security for future generations. Some argue that the ultimate security lies in the government's ability to generate its own money, and that wealth funds primarily serve to establish security for large financial groups and their managers.
Impact on Federal Reserve and Monetary System: Some critics view the establishment of a sovereign wealth fund as a step toward dismantling the Federal Reserve and using the monetary system to create an unchallengeable caste system. This perspective suggests that such a fund could fundamentally alter the existing financial and monetary framework of the United States, leading to increased inequality and reduced economic mobility.
Governance and Transparency: Establishing a sovereign wealth fund requires careful consideration of its governance structure to prevent mismanagement and ensure transparency. Without robust oversight mechanisms, there is a risk that the fund could be influenced by political interests, leading to suboptimal investment decisions and potential misuse of public resources.
Market Distortions: The introduction of a large government-controlled investment entity could lead to market distortions. The fund's investment choices might crowd out private investors or lead to preferential treatment of certain industries, disrupting competitive market dynamics.
CONCLUSION: Executive Order 14196 aims to bolster the United States' financial standing through the creation of a sovereign wealth fund, but it raises significant concerns. These include potential challenges to fiscal sustainability, economic security, the existing monetary system, governance standards, and market stability. Careful consideration and transparent planning are essential to mitigate these risks and ensure that the fund serves the nation's long-term interests without unintended adverse consequences.
No direct reference. (Project 2025 does not propose creating a sovereign wealth fund. This appears to be an outside idea, possibly from campaign advisors, rather than the Heritage plan.)
By the authority vested in me as President by the Constitution and the laws of the United States of America, and in order to promote the long-term financial health and international leadership of the United States, it is hereby ordered:
Section 1 . Policy and Purpose. It is the policy of the United States to maximize the stewardship of our national wealth for the sole benefit of American citizens. To this end, it is in the interest of the American people that the Federal Government establish a sovereign wealth fund to promote fiscal sustainability, lessen the burden of taxes on American families and small businesses, establish economic security for future generations, and promote United States economic and strategic leadership internationally.
Sec. 2 . Sovereign Wealth Fund. The Secretary of the Treasury and the Secretary of Commerce, in close coordination with the Assistant to the President for Economic Policy, shall develop a plan for the establishment of a sovereign wealth fund consistent with section 1 of this order. The Secretary of the Treasury and the Secretary of Commerce shall jointly submit this plan to the President within 90 days of the date of this order. Such plan shall include recommendations for funding mechanisms, investment strategies, fund structure, and a governance model. The plan shall also include an evaluation of the legal considerations for establishing and managing such a fund, including any need for legislation.
Sec. 3 . General Provisions. (a) Nothing in this order shall be construed to impair or otherwise affect:
(i) the authority granted by law to an executive department or agency, or the head thereof; or
(ii) the functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals.
(b) This order shall be implemented consistent with applicable law and subject to the availability of appropriations.
(c) This order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.
