The White House is developing plans to set up a US sovereign wealth fund able to make big investments in strategic sectors, in a break from Washington’s economic orthodoxy as it tries to compete with deep-pocketed geopolitical rivals.
A White House official said on Friday that senior members of the Biden administration, including Jake Sullivan, the national security adviser, and Daleep Singh, the top aide on international economics, had been working on the plans “quietly” in recent months.
The White House official said “the fund’s structure, funding model and investment strategy are still under active discussion”. However, the push was “serious enough” that other government agencies were involved and they planned to “engage Congress and key stakeholders in the private sector on next steps”.
The Treasury department, which would likely have a voice in the talks, declined to comment.
For years, Washington has looked warily at sovereign wealth funds — pools of money held and invested by the government — being set up in countries around the world, arguing that they distort global trade and investment and represent unfair economic competition.
But the plans under way under Joe Biden’s presidency are the latest sign of the way America’s approach to the global economy has changed as competition escalates with China and Russia, and tensions rise in the Middle East.
The White House official said the “premise” of the effort was the US “lacks a pool of patient and flexible capital that could be deployed at home and abroad to advance strategic interests . . . at the pace and scale needed for the US to prevail in a contested geopolitical environment”.
The official said the investments could be deployed to shore up the resilience of supply chains and finance “illiquid but solvent companies that need greater scale to compete against [People’s Republic of China] rivals”.
In addition, a US wealth fund could inject equity into sectors where there are high barriers to entry, such as specialised shipbuilding and nuclear fusion. Another use could involve funding the creation of “synthetic reserves of critical minerals”, the official said.
The White House talks, which were first reported by Bloomberg News, have been going on internally for months. But the idea of creating a US sovereign wealth fund burst on to the political stage this week when former president Donald Trump, who is running for a second term, backed it during a speech at the Economic Club of New York.
“We’ll be able to invest in state-of-the-art manufacturing hubs, advanced defence capabilities, cutting-edge medical research and help save billions of dollars in preventing disease in the first place,” Trump told the audience.
The idea was supported by John Paulson, the hedge fund manager and one of Trump’s biggest allies on Wall Street.
“It would be great to see America join this party and instead of having debt, have savings,” he said.
The campaign of Kamala Harris, the US vice-president who is running against Trump for the presidency, did not immediately respond to a request for comment on the creation of a US sovereign wealth fund.