In his recent encyclical Magnifica humanitas, Pope Leo XIV stated that humanity is at a critical turning point, facing a pivotal choice regarding Artificial Intelligence and modern digital technologies. Indeed, AI experts on both sides of the aisle have worried that accelerating advances in AI technology could cause major disruptions to our economy and workforce, including rising inequality and mass unemployment.
To address these looming challenges, the CEO of OpenAI, Sam Altman, has made a bold offer: his company will gift the US government a 5% stake. At the company’s current stock price and valuation of nearly $900 billion, a 5% holding would be worth roughly $42.6 billion. That’s a handsome sum, and Altman has also proposed that other AI companies should match his company’s offer.
If other AI-related companies, such as Google, Microsoft, Anthropic, Nvidia, and Meta/Facebook, also gift to the government 5% stakes, the total holdings would be worth around $800 billion. Under Altman’s plan, that endowment would then be used as seed money for a sovereign wealth fund (SWF).
Sovereign wealth fund: a new approach for the United States
What is a sovereign wealth fund? What are its pros and cons? In the last few weeks, why has everyone from Donald Trump to Bernie Sanders to Vice President J.D. Vance and California governor Gavin Newsom plugged their own version of an SWF?
Interest is growing because, in a time of mounting government debt and declining government funding for public goods and services, a well-designed sovereign wealth fund could do a lot to amass a huge pot of money that could then be used to pay for urgent needs such as replacement income for laid off tech workers, affordable housing, health care, basic income for the poor, Social Security retirement—all without using taxpayer dollars.
Does that sound too good to be true?
The money in a sovereign wealth fund is invested in a range of appreciating capital investments—whether stocks, bonds, real estate, energy, or technology companies—which are allowed to grow over a 5 to 15-year period. Those investments eventually turn into a much larger pool of money, which the government can then spend on various public goods and services.
SWFs are globally popular
Sovereign wealth funds are currently used by over 60 countries with over 100 SWFs (some countries, such as China, have more than one) that together manage over $10 trillion of assets. Norway, with only 2% of the US population, has the largest sovereign wealth fund in the world, with $2.1 trillion in assets, supercharged by oil revenue from state-owned energy companies, which is invested in stocks and other assets to grow the fund over time. Norway’s sovereign wealth fund has swelled its enormous investment portfolio to the point where it provides more money to Norway's public budget than its oil profits do.
China has two SWFs totaling about $3.5 trillion and is using its investment returns to try and take the global lead in AI technology and other industries. Saudi Arabia, Australia, Singapore, Abu Dhabi, Kuwait and Indonesia all have an SWF worth about a trillion dollars each. In the right hands—such as Norway’s—a sovereign wealth fund can really do a lot to generate a ton of wealth for spending on public goods and services without needing to raise taxes or incur more government debt.
In the wrong hands, such as Saudi Arabia, it has been used as a slush fund by unaccountable political leaders for their own amusement. Saudi leaders have done foolish things like starting a new professional golf league, LIV Golf, which attracted grotesquely overpaid celebrity golfers, quickly lost $6 billion, and is on the verge of going bankrupt.
In the US, the states already lead the way
It’s worth noting that sovereign wealth funds are not “foreign” to American shores. In fact, 20 US states already have their own sovereign wealth funds, including Alaska ($78 billion—greater than Alaska’s state GDP), Texas ($56 billion), New Mexico ($34 billion), Wyoming ($26 billion), and North Dakota ($8.5 billion). Most of these are seeded by oil revenues earned by each state, which are then invested so that the state can benefit from ongoing investment returns. Some states, like Oregon and Minnesota, seed their SWFs with revenues earned from the public’s use of state lands. Most of these SWFs are fairly small, a couple of billion dollars or less, and nearly all of them use their funds for a single purpose: to help fund public education.
The Altman plan is certainly innovative, since US companies don’t usually give an ownership stake to a government. Once the $800 billion in seed money is invested, it could yield a net gain of $1.4 trillion to $2.5 trillion, depending on how it is allocated and for how long. But it is designed to be a one-time “wasting trust”—the Treasury gets $800 billion dollars up front, and begins an orderly liquidation over 10 years. Once 10 years have passed, the fund is finished. The one booster shot of financial adrenaline would be over. The CEOs of AI companies can say, “Hey, we tried to alleviate the harms of our invention,” but the Band-Aid would be temporary. Given that, a 5% stake is actually insufficient, and the White House should insist on more.
Even better, Norway's and other countries’ sovereign wealth funds are self-replenishing “permanent funds,” which makes a big difference. The single-shot Altman plan wouldn’t come close to plugging the large gap in America’s looming financing needs. A better plan would be to establish a more permanent revolving fund by selling 10-year Treasury notes to the public on a month-to-month and year-to-year basis to raise seed money, which would then be invested for a decade to produce capital gains, with all Americans as beneficiaries.
The benefits of “universal capitalism”
With a well-designed Federal Permanent Revenue Fund, what might the federal government do with an extra three to four trillion dollars per year? It could plug the $2.5 trillion shortfall in Social Security, which by 2032 is going to result in America’s 52 million retirees taking a 22 percent haircut, a loss of about $8000 or more per year for many beneficiaries. Or the federal Department of Housing and Urban Development, which currently spends around $20 billion each year to build or preserve affordable housing, could receive a large injection of money to partner with states and ramp up housing production all across the country. Or it could be used to pay unemployment benefits to AI-displaced workers.
The possibilities—the needs—are endless. The returns to beneficiaries could take multiple forms, including housing, education, healthcare, climate mitigation, childcare, and other public services and goods. And by designing the fund to incorporate the best practices for anti-corruption management used by successful countries like Norway, Australia, and Singapore, it is possible to maintain the right institutional guardrails. Some might worry that the stock market could crash and everything will sink underwater. However, since 1928, the US stock market has risen on average about 10% per year, and the market is up roughly 3 out of every 4 years; over any five to 10 year period, investments in index funds tied to the S&P 500, the Nasdaq or Dow Jones have always risen, and often outperformed America’s top blue-chip companies such as General Electric, AIG, IBM, Ford, and General Motors.
The fact is, the greatest “gold rush” of investment gains has been occurring for the past 70 years in the US economy, and the vast majority of Americans have missed out. That’s why the top 10% of wealthiest Americans own 93% of all stock equities today. This is the exact unfairness in capitalism that Louis Kelso, the financial visionary of universal capitalism, was determined to address. Kelso was a corporate finance attorney who first crafted the blueprint with his basic formula of “form a regulated trust => raise seed money => invest seed money => let it grow over time => reap the future returns on behalf of the broader public.”
A successful sovereign wealth fund designed like Norway’s could produce greater ownership and wealth for all Americans from the future returns on the SWF's investments. These funds would allow everyday people to benefit from the wealth creation generated by America’s most valuable businesses, and by new technologies like AI. Once initiated, a fund will take several years for its investments to reach maturity and be fully loaded. So the sooner America gets going on its launch, the better.
Steven Hill was policy director for the Center for Humane Technology, co-founder of FairVote, and political reform director at New America. See more of his writing at his Substack newsletter DemocracySOS.
