Asking ChatGPT About the President Starting a Sovereign Wealth Fund

Prompt: Does the US president have the authority to start a sovereign wealth fund

ChatGPT

No, the U.S. President does not have the sole authority to create a sovereign wealth fund (SWF). Establishing such a fund would require congressional approval because it involves the management and allocation of federal funds, which are governed by laws related to taxation, spending, and investments.

Why the President Can’t Do It Alone:

  1. Power of the Purse (Constitutional Basis):

    • The U.S. Constitution (Article I, Section 9, Clause 7) gives Congress the power to control federal spending:

    “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.”

    • This means any fund that uses federal money, especially for investments, must be authorized by legislation.

  2. Legal Framework for Federal Investments:

    • Existing laws, like the Budget and Accounting Act of 1921 and the Federal Credit Reform Act of 1990, set strict rules for how federal funds can be allocated or invested.
    • Unlike countries with SWFs (like Norway or Saudi Arabia), the U.S. has no legal structure for the federal government to invest public money in equities, real estate, or foreign assets without congressional legislation.

  3. Precedent – Federal Investment Practices:

    • The closest thing the U.S. has to an SWF is the Social Security Trust Fund and the Federal Reserve’s investment activities, but even these are highly regulated and limited to specific asset classes (mostly U.S. government securities).
    • Any attempt to create a fund with broader investment powers would require new laws passed by Congress.

What the President Can Do:

  • Propose the Idea: The President can propose the creation of an SWF as part of a budget or economic policy plan.
  • Issue Executive Orders (Limited Scope): The President could issue orders to manage existing government investments more efficiently, but this wouldn’t create an SWF in the traditional sense.
  • Work Through Federal Agencies: The President can direct agencies to study the feasibility or manage existing financial programs creatively within legal limits.

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