The US is considering a sovereign wealth fund. Alaska already has one and is funding a universal basic income.

• Bipartisan support is growing for a US sovereign wealth fund.

• The Alaska Permanent Fund, which distributes money to Alaska residents annually, could be a model.

• Challenges include funding sources, legislative obstacles and state-owned natural resources.

Bipartisan momentum is building around a sovereign wealth fund that could help the United States reduce its national debt or finance ambitious projects.

At the White House, top aides to President Joe Biden have floated plans for a fund to finance national security interests. And former President Donald Trump recently called for a similar state-owned investment fund to finance “great national efforts” during a campaign stop at the Economic Club of New York.

It is not clear how a US fund would be financed or how it would operate. However, lawmakers may have some kind of model in the Alaska Permanent Fund, which distributes the money it makes to state residents as annual dividends.

“The fund was originally established with income from mineral extraction, primarily oil, but within a few years of inception, its main source of income is investment returns,” Cash Transfer Lab chief executive Sarah Cowan previously told Business Insider. “It diversifies Alaska’s economy because right now the revenue from this fund is not primarily from oil.”

The Alaska Fund provides benefits that mimic a universal basic income—a recurring, unconditional payment distributed to people regardless of socioeconomic status. But there are some key differences. First, the dividend is tax-free; it is only paid annually and is not equivalent to a living wage.

Federal lawmakers likely see a sovereign wealth fund as serving a different purpose, such as supporting industries or financing supply chain initiatives. Creating one nationwide also comes with several legislative hurdles.

“Typically, many countries have passed special legislation to create a SWF, defining the source of capital, the investment mandate and the supervision system of the SWF,” Winston Ma, adjunct professor at NYU and author of The Hunt for Unicorns : How Sovereign Funds Are Reshaping Investing in the Digital Economy, Business Insider wrote via email. “Therefore, it is not a simple corporate setup. It will involve a lot of collaborative work between the executive and legislative branches – after the election.”

Sovereign wealth funds – such as the Global Pension Fund of the Government of Alaska or Norway, which is the largest in the world – are often funded by wealth generated from state-owned natural resources. The problem is that “natural resources in the US are mostly owned by states,” Ma said. So consolidating those revenue streams might require some back and forth.

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