(Bloomberg) -- Hedge fund billionaire John Paulson said the US should build a sovereign wealth fund that surpasses Norway’s $1.7 trillion money pool, an ambitious if unlikely goal for a country that has struggled to rein in trillion-dollar deficits.
Former President Donald Trump vowed to start such a fund with proceeds from trade tariffs in a speech on Thursday in New York. Paulson has been advising Trump on the idea, but said in a Bloomberg Television interview after the speech that the two men haven’t yet discussed details of the plan.
“It would great to see America join this party and instead of having debt, have savings,” Paulson said in the interview. “It would be, over time, larger than any of the existing funds.”
Sovereign wealth funds have typically been used by countries with significant commodity exports and budget surpluses. The funds — such as Saudi Arabia’s $760 billion Public Investment Fund and Singapore’s GIC, with an estimated $847 billion — have become influential players on the world stage, particularly in private markets, where their long time horizons and ability to quickly write large checks have made them sought-after clients for private equity, venture capital and infrastructure firms.
“Why don’t we have a wealth fund? Other countries have wealth funds. We have nothing,” Trump said at the Economic Club of New York. “We’re going to have a sovereign wealth fund, or we can name it something different.”
Trump would face major questions over how to fund such an effort, with his tax cut proposals already estimated to cost as much as $10.5 trillion over a decade. The US has been running budget shortfalls for years and financed government spending by issuing debt, stoking growing concern among policymakers, investors and ratings agencies.
Paulson said Trump could close some gaps through tariffs and cutting unnecessary spending. National savings are a sign of strength and a wealth fund could encourage that, Paulson said.
“You have to start somewhere,” he said. “That’s a good model to follow.”
©2024 Bloomberg L.P.
