Trump’s $1 Trillion Infrastructure Plan: Lincoln Had a Bolder Solution

Donald Trump was an outsider who boldly stormed the citadel of Washington DC and won. He has promised real change, but his infrastructure plan appears to be just more of the same – privatizing public assets and delivering unearned profits to investors at the expense of the people. He needs to try something new; and for this he could look to Abraham Lincoln, whose bold solution was very similar to one now being considered in Europe: just print the money.

In Donald Trump’s victory speech after the presidential election, he vowed:

We are going to fix our inner cities and rebuild our highways, bridges, tunnels, airports, schools, hospitals. We’re going to rebuild our infrastructure, which will become, by the way, second to none. And we will put millions of our people to work as we rebuild it.

It sounds great; but as usual, the devil is in the details. Both parties in Congress agree that infrastructure is desperately needed. The roadblock is in where to find the money. Raising taxes and going further into debt are both evidently off the table. The Trump solution is touted as avoiding those options, but according to his economic advisors, it does this by privatizing public goods, imposing high user fees on the citizenry for assets that should have been public utilities.

Raise taxes, add to the federal debt, privatize – there is nothing new here. The president-elect  needs another alternative; and there is one, something he is evidently open to. In May 2016, when challenged over the risk of default from the mounting federal debt, he said, “You never have to default, because you print the money.” The Federal Reserve has already created trillions of dollars for the 1% by just printing the money. The new president could create another trillion for the majority of the 99% who elected him.

Another Privatization Firesale?

The infrastructure plan of the Trump team was detailed in a report released by his economic advisors Wilbur Ross and Peter Navarro in October 2016. It calls for $1 trillion of spending over 10 years, funded largely by private sources. The authors say the report is straightforward, but this writer found it hard to follow, so here the focus will be on secondary sources. According to Jordan Weismann on Slate:

Under Trump’s plan … the federal government would offer tax credits to private investors interested in funding large infrastructure projects, who would put down some of their own money up front, then borrow the rest on the private bond markets. They would eventually earn their profits on the back end from usage fees, such as highway and bridge tolls (if they built a highway or bridge) or higher water rates (if they fixed up some water mains). So instead of paying for their new roads at tax time, Americans would pay for them during their daily commute. And of course, all these private developers would earn a nice return at the end of the day.

The federal government already offers credit programs designed to help states and cities team up with private-sector investors to finance new infrastructure. Trump’s plan is unusual because, as written, it seems to be targeted at fully private projects, which are less common.

David Dayen, writing in The New Republican , interprets the plan to mean the government’s public assets will be “passed off in a privatization firesale.” He writes:

It’s the common justification for privatization, and it’s been a disaster virtually everywhere it’s been tried. First of all, this specifically ties infrastructure—designed for the common good—to a grab for profits. Private operators will only undertake projects if they promise a revenue stream. . . .

So the only way to entice private-sector actors into rebuilding Flint, Michigan’s water system, for example, is to give them a cut of the profits in perpetuity. That’s what Chicago did when it sold off 36,000 parking meters to a Wall Street-led investor group. Users now pay exorbitant fees to park in Chicago, and city government is helpless to alter the rates.

You also end up with contractors skimping on costs to maximize profits.

Time for Some Outside-the-box Thinking

That is the plan as set forth by Trump’s economic policy advisors; but he has also talked about the very low interest rates at which the government could borrow to fund infrastructure today, so perhaps he is open to other options. Since financing is estimated to be 50% of the cost of infrastructure, funding infrastructure through a publicly-owned bank could cut costs nearly in half, as shown here.

Better yet, however, might be an option that is gaining traction in Europe: simply issue the money. Alternatively, borrow it from a central bank that issues it, which amounts to the same thing as long as the bank holds the bonds to maturity. Economists call this “helicopter money” – money issued by the central bank and dropped directly into the economy. As observed in The Economist in May 2016:

Advocates of helicopter money . . . argue for fiscal stimulus—in the form of government spending, tax cuts or direct payments to citizens—financed with newly printed money rather than through borrowing or taxation. Quantitative easing (QE) qualifies, so long as the central bank buying the government bonds promises to hold them to maturity, with interest payments and principal remitted back to the government like most central-bank profits.

Helicopter money is a new and rather pejorative term for an old and venerable solution. The American colonies asserted their independence from the Motherland by issuing their own money; and Abraham Lincoln, our first Republican president, boldly revived that system during the Civil War. To avoid locking the government into debt with exorbitant interest rates, he instructed the Treasury to print $450 million in US Notes or “greenbacks.” In 2016 dollars, that sum would be equivalent to about $10 billion, yet runaway inflation did not result. Lincoln’s greenbacks were the key to funding not only the North’s victory in the war but an array of pivotal infrastructure projects, including a transcontinental railway system; and GDP reached heights never before seen, jumping from $1 billion in 1830 to about $10 billion in 1865.

Indeed, this “radical” solution is what the Founding Fathers evidently intended for their new government. The Constitution provides, “Congress shall have the power to coin money [and] regulate the value thereof.” The Constitution was written at a time when coins were the only recognized legal tender; so the Constitutional Congress effectively gave Congress the power to create the national money supply, taking that role over from the colonies (now the states).

Outside the Civil War period, however, Congress failed to exercise its dominion over paper money, and private banks stepped in to fill the breach. First the banks printed their own banknotes, multiplied on the “fractional reserve” system. When those notes were heavily taxed, they resorted to creating money simply by writing it into deposit accounts. As the Bank of England acknowledged in its spring 2014 quarterly report, banks create deposits whenever they make loans; and this is the source of 97% of the UK money supply today. Contrary to popular belief, money is not a commodity like gold that is in fixed supply and must be borrowed before it can be lent. Money is being created and destroyed all day every day by banks across the country. By reclaiming the power to issue money, the federal government would simply be returning to the publicly-issued money of our forebears, a system they fought the British to preserve.

Countering the Inflation Myth

The invariable objection to this solution is that it would cause runaway price inflation; but that monetarist theory is flawed, for several reasons.

First, there is the multiplier effect: one dollar invested in infrastructure increases gross domestic product by at least two dollars. The Confederation of British Industry has calculated that every £1 of such expenditure would increase GDP by £2.80. And that means an increase in tax revenue. According to the New York Fed, in 2012 total tax revenue as a percentage of GDP was 24.3%. Thus one new dollar of GDP results in about 24 cents in increased tax revenue; and $2 in GDP increases tax revenue by about fifty cents. One dollar out pulls fifty cents or more back in the form of taxes. The remainder can be recovered from the income stream from those infrastructure projects that generate user fees: trains, buses, airports, bridges, toll roads, hospitals, and the like.

Further, adding money to the economy does not drive up prices until demand exceeds supply; and we’re a long way from that now. The US output gap – the difference between actual output and potential output – is estimated at close to $1 trillion today. That means the money supply could be increased by close to $1 trillion annually without driving up prices. Before that, increasing demand will trigger a corresponding increase in supply, so that both rise together and prices remain stable.

In any case, today we are in a deflationary spiral. The economy needs an injection of new money just to bring it to former levels. In July 2010, the New York Fed posted a staff report showing that the money supply had shrunk by about $3 trillion since 2008, due to the collapse of the shadow banking system. The goal of the Federal Reserve’s quantitative easing was to return inflation to target levels by increasing private sector borrowing. But rather than taking out new loans, individuals and businesses are paying off old loans, shrinking the money supply. They are doing this although credit is very cheap, because they need to rectify their debt-ridden balance sheets just to stay afloat. They are also hoarding money, taking it out of the circulating money supply. Economist Richard Koo calls it a “balance sheet recession.”

The Federal Reserve has already bought $3.6 trillion in assets simply by “printing the money” through QE. When that program was initiated, critics called it recklessly hyperinflationary; but it did not create even the modest 2% inflation the Fed was aiming for. Combined with ZIRP – zero interest rates for banks – it encouraged borrowing for speculation, driving up the stock market and real estate; but the Consumer Price Index, productivity and wages barely budged. As noted on CNBC in February:

Central banks have been pumping money into the global economy without a whole lot to show for it . . . . Growth remains anemic, and worries are escalating that the U.S. and the rest of the world are on the brink of a recession, despite bargain-basement interest rates and trillions in liquidity.

Boldness Has Genius in It

In a January 2015 op-ed in the UK Guardian, Tony Pugh observed:

Quantitative easing, as practised by the Bank of England and the US Federal Reserve, merely flooded the financial sector with money to the benefit of bondholders. This did not create a so-called wealth affect, with a trickle-down to the real producing economy.

. . . If the EU were bold enough, it could fund infrastructure or renewables projects directly through the electronic creation of money, without having to borrow. Our government has that authority, but lacks the political will.

In 1933, President Franklin Roosevelt boldly solved the problem of a chronic shortage of gold by taking the dollar off the gold standard domestically. President-elect Trump, who is nothing if not bold, can solve the nation’s funding problems by tapping the sovereign right of government to issue money for its infrastructure needs.


Ellen Brown is an attorney and author of twelve books, including the best-selling Web of Debt. Her latest book, The Public Bank Solution, explores successful public banking models historically and globally. Her 300+ blog articles are at She can be heard biweekly on “It’s Our Money with Ellen Brown” on PRN.FM.

55 Responses

  1. One of best heavy brain articles
    Ellen is a genuis
    This is a keeper

    Critical issue handled be one smart lady

    Read this or die of frustration
    Good Ellen
    Tom havens

  2. Thank you, Ellen. We’ll keep pointing to the facts 🙂

  3. While I agree with you entirely about the option that benefits Americans the most I think it is exceedingly prudent of President Elect Trump to not stir up any more ire than he already has. He’s already embroiled in Soros’ Color Purple revolution. No need to infuriate further the powerful and corrupt globalist financial corporate constituencies if he plans to make it to his inauguration.

    And he does.

    The forces arrayed against him are global in scope and sufficiently terrified of the consequences of a Trump presidency for him tread carefully – very carefully – at this time of transition. No need to feed the Beast any additional reasons to display extreme psychosis. These is absolutely zero advantage to Trump to threaten powerful, influential interests any more than his winning this election has already done. These have lobbied a great many in the Swamp for favors. He can’t exactly attack the citadel while at the same time needing their cooperation.

    Nope. I am positive we will see growth in wisdom and understanding in this . His 170 IQ has already bested two political machines arrayed against him. As such he cannot rock the boat too much. He must make nicey-nice. This, in turn means he will have to SEEM to go against some of his stated objectives. An ameliorative, conciliatory stance is the wisest course to take if one wishes to avoid an even larger obstacle a bit further along the way.

    Temperance, compromise and seeming total capitulation buys more than just time. It buys cooperation.

    My certainty that growth will occur in Trump over time in office is the trajectory he took from no political office to POTUS. That takes some deft maneuvering. He demonstrated the ability to do that by changing his campaign staff more times than I can remember. The last staff he chose took him over the top. That’s deft management and a good grasp of the terrain – and the fact that one must adjust, as required by the times.

    Great article. I hope he reads it.

    • Well said. I hope you’re right. Thanks Gillian!

      • Yes, let’s remain optimistic. Some good points there. Trump did come in on Conservative ticket, but I’m hoping he’s strong enough to take them on. Yes, lets hope he gets to read some of Ellen’s articles, or that some of the MMTers get to advise him. They said they are prepared to work with him. Trump has already said that the US cannot run out of dollars, so he had some idea – more than most politicians.

    • A great comment you have made in response to Ellen’s great article.

      Bill Still, a huge proponent of Public Banking, calls Trump’s handling of his campaign the Agility Model. In this You Tube he explains it –

  4. The classic method that is used to prevent inflation while goosing the economy with QE, etc is to keep the money at a high level and away from Main Street. There are not enough of the 1% to make Trickle-Down a valid program. The 1% don’t spend excess income – they invest it by buying up assets and creating monopolies through mergers and acquisitions. They are buying up rental property in mass. Soon rents will make the majority of Americans rent-poor. Home ownership is the lowest it’s been for decades. In LA and Orange Counties, it’s about 46%. The Millennials may never know what home ownership is.s

  5. The Art of the Deal – where the public puts up 82% of the equity needed, possibly more if you count repatriated funds tax incentive, and the public gets no return and most likely significant higher fees.
    The deal makers take little risk and for that little risk demand extremely high returns. If things go south – well, with little equity – they bail out through bankruptcy court.

    I prefer the old fashion way for public works projects – Float a long term bond and collect the cost through taxes/fees – with full transparency to the public throughout the process.

  6. The first sentence is completely wrong since the election was rigged:

    Those who forget history are condemned to repeat it.

    • Yes Arindan, the election was rigged, but the desperation of the Rust Belt, of the under-educated, honorable citizens and many more, allowed the Republic a second chance. Even with a known 3 million votes cast by illegals, and voter fraud detected in many places – polls remaining open 2 hours longer in Nevada, allowing felons to vote in Virginia – Trump won in the Electoral College by a landslide.

  7. Abe Lincoln’s debt-free money is the answer….debt-based money must be outlawed for all time !

  8. Reblogged this on amnesiaclinic and commented:
    Some good, innovative thinking needed or we end up with the same old, same old….

  9. Ever think that Google – all the companies on the internet – are based on rip-offs of what the public owns and should be utilities? Where would they be without US satellites and communications utilities we built with our tax dollars? Tax and regulate to pay the debt?


    • Hey, Feibel. “THE PUBLIC IS STUPID AND IGNORANT AND LAZY” is a stupid, ignorant, and lazy generalization. Apparently the people were not as stupid, ignorant, and lazy as Hillary and her handlers thought.

  11. Reblogged this on Dreams of Liberty and commented:
    There is a way if the priority is the people and not the 1%.

  12. Donald Trump would take Ellen Brown’s clear and wise advice if it weren’t for the fact he’d put his and his family’s lives at existential risk. Taking on the deep state in any form of real-results manner takes the courage of a saint willing to sacrifice it all for humanity. Considering the examples of JFK, MLK, RFK and so many other men and women through history, Bernie Sanders’ decision to stop instead of go all the way with Dr. Jill Stein (she called for nationalization of the Federal Reserve), and one starts realizing the immensity of raw courage and personal power necessary for such a battle.

  13. Filed under: Ellen Brown Articles/Commentary Tagged: | Abraham Lincoln, Donald Trump, Greenbacks, helicopter money, infrastructure financing
    Justaluckyfool, on November 14, 2016 at 7:45 pm said:

    ” Reverse, .. an economic recovery program that has privileged the recovery of financial markets and corporate profits has fueled the increase in wealth inequality, in the United States and across the world.”(Mehrsa Baradaran).
    Reverse that program, make the money FLOW to “…help form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity,…”

  14. DOOR NUMBER TWO: USE the $1to $5 trillion
    **”Corporate Repatriation of Trillions of U.S. Dollars”.
    DONALD J TRUMP, use the $1 to $5 Trillion ( U.S. Dollars )owned by US Corporations that is frozen overseas.
    Make a special deal to repatriate these trillions of dollars.
    The corporations will be offered the right to purchase “Special 2016 5Yr Treasury Bonds with 0% interest…TAX FREE; Before this door will be closed with a heavy tax assessment!
    $1 to $5 trillion will be used to purchase “TAXPAYER INCOME REVENUE PRODUCING ASSETS that will create 25 million new jobs. Done while producing a stream of tax revenue to be used by Congressional appropriations.
    QE! A simple change in direction of doing something for the common bettering of all the people.Not the banks!
    Especially those in need now.
    The FEDS did in fact QE for the Private For Profit Banks.
    $$$$$$16,000,000,000,000.00 (TRILLION) .
    The FEDS made direct purchase of bank assets.
    Why not have the FEDS do for the States exactly that-purchase from each state $100 billion of State improvement bonds w/ terms of 2% for 36 years.(??5.0 TRILLION ??)
    Thereby creating 25 million new jobs and producing new infrastructure and disaster relief while at the same time producing an income stream (tax revenue)or as banks call “Net Interest Income”, (money that by law is to be turned over to Congress for appropriations).
    The answer is already known by Obama and Hillary but both decided to not do it, both decided
    it was better to stay with the rigged system.
    AS OBAMA SAID(almost 5 years ago), (12/11/11 “60 MINUTES)”You can’t raise revenues by lowering taxes unless you get the money from somewhere else.”

  15. First of all, the money issued *is* debt.

    People with bank accounts are familiar with this. That account is their asset, but the bank’s liability (i.e. debt). Writing a check assigns at least part of the bank’s liability to the payee. Dollars are simply checks made payable to cash drawn on the U.S. central bank (“The Fed”).

    Therefore “helicopter money” would necessarily increase national “debt” (in quotes because, unlike household debt, there is absolutely no risk of involuntary insolvency).

    As for what Trump will do… Here’s what Warren Mosler (one of the founders of Modern Money Theory says:

    “Trump won largely because people couldn’t bring themselves to vote for Clinton, and not so much because anyone like him or his presumed agenda. And along the way he destroyed the Republican party, which may or may not sit so well with Republicans in Congress …..So it’s not like he has a mandate to do anything or that he can rely on Republican support for anything.”

    “Regarding his proposed tax cuts, under current law bills can’t be introduced in Congress unless they are ‘paid for’, so, for example, to introduce a tax cut it has to be paid for by spending cuts. Yes, Congress could change the law or override it but that would require Senate approval, and that takes a 60% majority that Republicans don’t have.

    “So my point is that at best it’s going to take a very long time to get anything done. And the way all the charts are decelerating it could all get pretty ugly waiting for the kind of fiscal adjustment needed to reverse course.

    • Nothing will change until smart people stop getting fooled.

      Trump is not an outsider, because outsiders don’t get billions in free advertisements. They are usually ignored. (You didn’t see Ron Paul’s rally speeches on any of the networks, did you? He also got HUGE crowds of young people.) Trumps infrastructure plan is no different than Obama’s stimulus plan. Why is there no outrage? His voters were promised good paying, long term factory jobs. Not temporary road/bridge construction work.

      Another fallacy is “bills can’t be introduced in Congress unless they are ‘paid for’”. Then how did we go from $9T national debt to $20T? Was Obamacare really paid for? Can you count $500B in reduction to Medicare Trust Fund costs as an offset to health care subsidies for Obamacare “paid for” or is it double counting? (If you don’t know, check the “Statement of Social Insurance”, the audit of these statements received a clean unqualified opinion through FY 2009. FY 2010 and after Obamacare was passed, received a disclaimer and has received a disclaimer ever since. (The full audit of the US financial statements has NEVER received anything but a disclaimer since it was required 20 years ago.)

      My theory – this Stimulus 2.0 will hand out the funds to continue the surveillance network – the control of the people – Orwell’s world. Stimulus 1.0 jump started the smart grid. Stimulus 2.0 will put all the sensors and tech in place to jump start the smart city and the connected car. The people WILL BE CONTROLLED. electronically. Trump will take his marching orders just like Obama did.

      It is human nature to want Hope. I give the TPTB a lot of credit for their programming/marketing. They have it down to a science. But as smart people I deplore you to pay attention to what his actions are not his words. Hiring the head of the Republican party – the establishment – as your chief of staff – is not a good signal.

    • WRONG; ““Regarding his proposed tax cuts, under current law bills can’t be introduced in Congress unless they are ‘paid for’, so, for example, to introduce a tax cut it has to be paid for by spending cuts.”
      There is a better way;The answer is already known by Obama and Hillary but both decided to not do it, both decided
      it was better to stay with the rigged system.
      AS OBAMA SAID(almost 5 years ago), (12/11/11 “60 MINUTES)”You can’t raise revenues by lowering taxes unless you get the money from somewhere else.”
      SEE my earlier comment: “**”Corporate Repatriation of Trillions of U.S. Dollars”.
      DONALD J TRUMP, use the $1 to $5 Trillion ( U.S. Dollars )owned by US Corporations that is frozen overseas.
      Make a special deal to repatriate these trillions of dollars.
      The corporations will be offered the right to purchase “Special 2016 5Yr Treasury Bonds with 0% interest…TAX FREE; Before this door will be closed with a heavy tax assessment!
      $1 to $5 trillion will be used to purchase “TAXPAYER INCOME REVENUE PRODUCING ASSETS that will create 25 million new jobs. Done while producing a stream of tax revenue to be used by Congressional appropriations.”

  16. […] Trump’s $1 Trillion Infrastructure Plan: Lincoln Had a Bolder Solution […]

  17. Reblogged this on TwistedPolitix.

  18. Ellen, Thanks, good stuff.

    Abraham Lincoln had a mentor. His name is Alexander Hamilton. Hamilton established Public Banking in the United States. Attached are the four founding documents of the founder of Public Banking and inventor of an anti-colonial banking system- Alexander Hamilton.

    Not the Broadway Hip Hip Show Alexander Hamilton- but the real person, an immigrant from the West Indies, a genius, and the close aide of George Washington in the Ameican Revolution, And arguably the reason the United States succeeded as a nation, and did not dissolve following the collapse of the Articles of Confederation, was the genius of Alexander Hamilton!!
    Here is a link to his four seminal documents put together by LaRouche PAC

  19. Reblogged this on My WordPress blog.

  20. Privatizing state-owned enterprises did not work out well when the Soviet Union was dissolved. The bureaucrats who formerly ran them bought them for their personal accounts at fire-sale prices.

  21. If the global economy is in a deflationary trend, is it prudent to reflate with one off spending? Yellen said today that the economy is already at full capacity. what about the dangers of over stimulating with more debt. the 1% president creates the 1/10% and the 99 and 9/10% wealth disparity gap?

  22. […] ⇧   Trump's $1 Trillion Infrastructure Plan: Lincoln Had a Bolder Solution | WEB OF DEBT BLOG […]

  23. Kudos to those who posted actual ideas about solutions here. Continue to do that. Trump shows signs of listening to the public. Then we need to wait and see what he does. I’ve always supported Ellen’s idea about issuing our own money and abolishing the Fed. So far no one has managed to survive any attempts at doing that. But we are indeed in strange times. So before you count us scrappy Americans out, I would wait to see what transpires.

  24. Ellen, The David Dayen quote you cited was from “The New Republic”–not “The New Republican”. Thanks for the great article.

  25. […] But as Ellen Brown puts it: “the Devil is in the details”. In a recent post on her blog Web of Debt, Ms. Brown pulls the curtain back on Trump’s financial […]

  26. […] But as Ellen Brown puts it: “the Devil is in the details”. In a recent post on her blog Web of Debt, Ms. Brown pulls the curtain back on Trump’s financial […]

  27. You lost me at “countering” inflation because of the “multiplier” effect and public banking.

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