The constitutional stress test intensifies.

Can the president create an investment fund for federal dollars without congressional authorization? Could the government use it, at his direction, to acquire a social media company?

That the start of a sovereign wealth fund, a sort of state-backed private equity operation, is only the third or fourth most legally and constitutionally controversial action of the beginning of the third week of the second Trump administration tells us that we are swimming in the deep waters now.

Before we get to the letter of the law and the spirit of the Constitution, though, there are practical considerations about the first federal sovereign wealth fund.

Like the fact that the United States of America is, in the politesse of the finance world, “illiquid.” Our nation has very wealthy citizens but a government that, like the newest U.S. senator, is rich in assets, but can’t meet its obligations. Washington has run up a $36 trillion debt but only has an annual income from taxpayers of something like $5.5 trillion.

The nations and U.S. states, like Alaska and Texas, that have these funds often use them to maximize the revenues from natural resources. These funds are typically a way to make sure that politicians don’t fritter away the proceeds of finite resources on short-term outlays. But Uncle Sam already did that.

So where’s all the wealth to put in a sovereign wealth fund? President Trump suggests that, no surprise, tariffs may fill the coffers. But how could a president invent a new place to keep money and fill it by diverting money funds from the destination ordained by law and the Constitution — the Treasury — and into investments directed by the president and his team?

© The Hill