H.R. 3400: How to Pay for Stimulus Without Going Into Debt

[Post Summary]

Let my beloved come to his garden...
—Song of Solomon

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One concern dominating debate over an economic stimulus package surrounds the matter of paying for everything. The assumption is the nation must go deeper into hock. Nothing could be further from the truth. In fact, there's already legislation creating functional financing institutions facilitating infrastructure investment at zero cost to the taxpayer.

This piece of legislation puts to practice unique capacity the United States constitutionally possesses, allowing government ability to create finance corporations. With this power Congressionally-directed capital expenditures (such as infrastructure investment) can be paid for with credit essentially created out of thin air. None of it affects annual budgetary considerations.

The legislation is H.R. 3400 — the Rebuilding America's Infrastructure Act.

Think of power afforded by a "Federal Bank for Infrastructure Modernization" as being similar to a 401(k). When you borrow against your 401(k), who do you repay? That's right, you repay yourself, interest and all.

Here, though, interest charges are minuscule. They're only as much as is needed to pay for administrative costs associated with managing the Bank.

This thing is right from the playbook of Alexander Hamilton. It also is precisely what FDR did to transform Hoover's Reconstruction Finance Corporation into a national bank financing all sorts of necessary, life-uplifting, productivity-enhancing infrastructure projects during the depths of the Great Depression. Without these investments, it is doubtful the United States could have played such a decisive role in defeating vile thugs in high places who were doing the nasty bidding for fascist financiers bankrolling their regimes. Fascism is no match against the fruits of national banking.

Don't get me wrong. There are issues surrounding national banking requiring thoughtful deliberation. There are risks of political conflict-of-interest. But that's what Congress is for. It's there such concerns are rightly vetted.

The simple truth is there are investments largely affecting a particular locale whose benefits stand to affect everyone. Consider investments facilitating trade among states and the rest of the world. These stand as perfect candidates for financing through a national bank.

Likewise, every loan created through a national bank — directed toward projects legislated in Congress — is paid back in full through revenues generated as a consequence of productivity gained by the fruits of the investment. Thus, there's nothing inherently inflationary about the arrangement. The only "new money" created is that which accrues from increased wealth produced as a consequence of expanded economic productivity.

You are going to be hearing more about national banking over months and years ahead. There simply is no better way to address severe deficits in infrastructure investment such as the United States has deferred over the past forty years.

—Tom Chechatka