Trump must push hard to meet growth target

President Donald Trump is set to move decisively on the economy, but he must scale huge hurdles to accomplish three to four per cent economic growth.

Radical policy changes are required — tough to do even in this era of aggressive executive orders.

House of Representatives leaders are working on corporate tax reform that will close loopholes, lower rates to internationally competitive levels and shift part of the tax burden to imports. It has a decent chance of winning enough bipartisan support in the Senate, but much more needs to be done. Congress has only so much tax-writing room, and personal tax reform may be booted into next year.

Treasury secretary-designate Steven Mnuchin has stated upper income individuals will not see a reduction in their overall tax burden, but they pay more than 80 per cent of the personal income taxes. Hence it remains a puzzle how taxes can be meaningfully cut to stimulate growth.

Whatever Congress ultimately decides, genuine tax relief will require bigger deficits. Those are an anathema to many Republicans and in any case don’t guarantee growth.

George W. Bush slashed personal income taxes, Barack Obama expanded entitlements and both relied on bigger deficits as opposed to pruning spending elsewhere. Each presided over moribund economies.

Trade deficits with China and on oil subtract $500 billion annually from the demand for American-made goods and services, kill millions of jobs and stifle research and development and tax growth.

Confronting China on trade with a 45 per cent tariff won’t get Beijing to stop undervaluing its currency, subsidizing exports and blocking market access for American-made goods and services.

Trump must gird for a broad crisis with China, deploy the full range of America’s geopolitical and economic assets and compel Beijing to reckon its shaky economy cannot withstand an all-fronts confrontation with the U.S., without risking the Communist Party’s grip on power.

Energy and Interior departments committed to drilling in the eastern Gulf of Mexico and off the Atlantic and Pacific coasts — and ending the endless federal harassment of shale producers — could make America energy independent.

However, the lack of 60 Republican votes in the Senate will require guerrilla warfare to accomplish the results American voters deserve.

A good deal of what Obama imposed was by executive orders that can now be repealed. However, he also imposed overly aggressive, burdensome regulations by statutes, and those are more difficult and timeconsuming to nix.

All can be axed or reshaped by Congress, but the Trump administration can expect a pitched battle from progressive Senate Democrats dedicated to remaking the American economy in the lowgrowth, high-unemployment model of continental Europe.

We can expect the only remaining consequential Democrats — those who can filibuster in the Senate — to rely on the 60-vote rule to try to run out the clock until the 2020 presidential elections.

In the end, Republicans in Congress may have to resort to a grand budget reconciliation bill, or for their senators to reluctantly vote to suspend the 60-vote rule to push through reforms.

Trump will have to marshal public support for radical measures to overcome a barrage of criticism and protests from liberal politicians and the media.

America’s first dealmaker is not a man inclined to small deeds, and these will be the measure of his presidency.