Donald Trump unveiled a radical new plan to use cash from tariffs to fuel a sovereign wealth fund to invest in roads, airports and defense technology on Thursday.
It is the sort of ‘build the wall’ idea beloved by the former president as he searches for a populist proposal that can excite voters.
Wealth funds are generally set up by governments awash with spare cash generated by oil or gas finds. And Saudi Arabia, the United Arab Emirates and Kuwait have some of the most powerful examples.
But the idea will face the immediate skepticism of economists amid questions about whether Americans would trust politicians to invest billions of dollars on their behalf and whether it is even constitutionally possible.
‘Why don’t we have a wealth fund?’ Trump asked his audience at the Economic Club of New York. ‘Other countries have wealth funds.
Donald Trump unveiled a radical new plan to use cash from tariffs to fuel a sovereign wealth fund to invest in roads, airports and defense technology
‘We have nothing. We have nothing.
‘We’re going to have a sovereign wealth fund.’
The U.S. has run deficits for years, which means the debt has continued to grow and there is no spare cash to put into a wealth fund.
The idea of government running investments also runs counter to the market-driven approach, which prefers using private markets than a federal-controlled investment vehicle.
Trump laid down a radical marker on Thursday, upending that orthodoxy and tying the idea to another of his policies, imposing 10 percent tariffs on imports and higher penalties on goods from China.
‘We’ll put tremendous amounts of money … that will be taken in through tariffs and other intelligent things, and we’ll have the greatest sovereign wealth fund of them all,’ he said, ‘that will be used to do things that will be great for our country, including to invest and wisely invest and build it up bigger and stronger and better than any place on Earth.’
The fund, he added, will be used on everything from transport to defense.
‘We will build extraordinary national development projects and everything from highways to airports and to transportation, infrastructure ..all of the future,’ he said.
‘We’ll be able to invest in state of the art, manufacturing hubs, advanced defense capabilities, cutting edge medical research and help save billions of dollars in preventing disease in the first place.’
Most wealth funds invest cash windfalls from oil, gas or minerals. But Trump plans to use revenue from new tariffs on imports
Republican presidential nominee and former U.S. President Donald Trump shakes hands with Senior chairman of Sullivan & Cromwell H. Rodgin Cohen at the Economic Club of New York
And he said it would generate a ‘gigantic profit’ that would help pay down the national debt.
The U.S. does already have a number wealth funds, run by states. The biggest is the Alaska Permanent Fund, which uses income from oil and mineral resources.
But Trump’s big idea got short shrift from economists, with critics warning of the chance of corruption.
‘”Sovereign wealth fund” sounds cool but here’s how it’ll go,’ posted Brendan Duke, a senior director for economic policy at American Progress, and Biden White House alumnus. ‘Trump charges Americans what is effectively a national sales tax.
‘He’ll hand the money over to a crony like [billionaire businessman] Jeffrey Yass to manage.
‘Who’ll invest the money in Trump properties and bailing out Elon for Twitter.’
Trump also used the speech to promise he would slash tax rates for companies that manufacture domestically and set up ‘low-tax’ zones on federal lands where construction companies would be encouraged to build homes.
And he announced plans for a government efficiency commission headed by billionaire supporter Elon Musk if he wins in November.
***
Read more at DailyMail.co.uk