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?
Since the 1930s, presidents have had broad powers to set tariff rates, but no discretion over where that money goes. Suppose, though, that Congress agreed to direct revenues to such a fund. It’s a dubious proposition in the current political climate, but play along.
Would it be appropriate for the federal government to take possession of one of the largest social media platforms in the world, especially if that platform’s owners were selling under duress?
The government will shut you down if you don’t sell, and the buyer is the government. Hmmmmm. … Seems more than a little out of line with not just the First Amendment but also the scope of the president's powers in Article II of the Constitution.
You could employ a legion of lawyers and spend years in court just sorting out all of the questions prompted by that one idea.
Our little thought experiment may only ever be just that, though. The idea may end up stuck in court or abandoned by an administration that is piling up projects far faster than they can be executed. The presidential Sharpie keeps pumping out new directives, but implementation is another thing.
Add the sovereign wealth fund to the ever-growing list of bold and transformative initiatives from the administration. And while they differ in their specific objectives, taken together the intention is clear: A full-frontal attack on the power of Congress.
And you couldn’t say that Congress doesn’t have it coming.
Fifty years ago, in the wake of Watergate and the Vietnam War, a resurgent Congress was bold and busy. With actions like the Impoundment Control Act of 1974, lawmakers sought to rein in an executive branch that many viewed as out of control.
The many abuses and deceptions of the Nixon and Johnson administrations convinced enough in Congress that the time had come to yank the leash. It was a remarkable about-face, seeing that Congress had spent much of the previous decades voluntarily ceding power to the presidency: The power to declare war, the power to make regulations and the power of direct oversight.
After rolling back the broad expansions of executive power under Woodrow Wilson’s presidency, the Great Depression, World War II and Cold War gave us a mostly quiescent Congress. The legislative branch started to resemble the one we have today, in which partisan allegiances, not preserving the power of Congress, determined whether a president’s ambitions would be checked or not.
Aside from that mid-1970s spasm of congressional dignity, that has been the story for most of the modern era. When then-President Biden took liberties on student loans or eviction moratoriums, a Democratic-controlled Congress cheered him on. Now, Trump is taking even more audacious actions and the Republicans in power are mostly willing to let him have his way.
Can Trump refuse to spend money as required by law? Can he shut down agencies duly created by Congress? Can he fire employees protected by civil service laws? Can he put the entire system of federal payments under the control of a campaign donor who has never sat for a confirmation hearing? Democrats say no, while most Republicans look at their shoes and repeat the mantra of the Trump era: “We’ll see what happens …”
So to the courts we will go. And that’s where things may tend to get very interesting.
While progressives have long and loudly lamented the direction of the current Supreme Court on matters of executive privilege, the left has given less notice to the overall trend of balancing power of the Roberts Court. Whether it was in upholding ObamaCare or, more notably, in last year’s decision striking down decades of deference to executive-branch agencies, one of the principle projects of the high court has been in shifting power—and responsibility—back to Congress.
It’s by no means clear that members of Congress, usually more interested in keeping their seats than doing their jobs, are prepared to take advantage of any windfall that reversals for Trump in the courts could provide.
But they may soon have the chance.
Chris Stirewalt is the politics editor for The Hill and NewsNation, the host of “The Hill Sunday“ on NewsNation and The CW, a senior fellow at the American Enterprise Institute and the author of books on politics and the media.
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