The measure of Trump’s presidency
Restoring growth is center stage, and so is China
Donald Trump must scale huge barriers to accomplish 3 to 4 percent economic growth. Sweeping measures must be implemented, and that will prove no mean task.
George W. Bush slashed personal income taxes without fundamentally altering corporate incentives to create tax dodges and offshore production. Barack Obama expanded entitlements — partially financed with higher taxes on Americans who invest and create jobs. Both relied on big deficits and accomplished only anemic growth.
House leaders are working on corporate tax reform that will close loopholes, lower rates to internationally competitive levels and shift part of the tax burden onto imports. It has a decent chance of winning enough bipartisan support in the Senate but much more needs to be done.
Trade deficits with China and on oil directly subtract $500 billion annually from the demand for American made goods and services, kill millions of jobs and stifle R&D.
Confronting China on trade with a 45 percent tariff, alone, won’t get Beijing to stop undervaluing its currency, subsidizing exports and cease blocking market access for American-made goods and services. It can push back by harassing U.S. companies with operations in China and imposing new barriers on U.S. products, and more broadly by squeezing Taiwan, upping the ante on militarization of the South China Sea and further enabling North Korea.
Mr. 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 with the fact that their shaky economy cannot withstand an all front confrontation with the United States without risking the Communist Party’s grip on power.
Energy and Interior Departments committed to opening up drilling in the eastern Gulf and off the Atlantic and Pacific Coasts — and ending the endless federal harassment of shale producers — could make America energy independent. However, as with many other issues, the lack of 60 Republican votes in the Senate will require guerrilla warfare to accomplish the results American voters deserve for awarding Trump the presidency.
On the supply side, it’s a lot more expensive to start a business and make things in America than in the 1980s and ’90s, because of the growth of the regulatory state. Just compliance with labor market, health care, financial, environmental regulations and the like require hundreds of thousands of employees and cost businesses billions of dollars.
Imposing an efficacy test on regulations — requiring just what is absolutely needed to accomplish legitimate goals for protecting workers, the environment, consumers and financial stability, and then jettisoning the rest — should be the overarching objective as Mr. Trump’s Cabinet goes to work at Labor, EPA, Treasury and elsewhere in the far flung federal regulatory apparatus.
A good deal of what President Obama imposed was by fiat — executive orders that can now be repealed. However, he also imposed overly aggressive and burdensome regulations established under statutes, and those are more difficult and time consuming to nix.
Just as the law required the Obama administration to publish and take public comment on proposed regulations before imposing new rules — and then endure legal challenges from businesses and Republican state officials — the Trump administration will have to repeat those steps and face litigation from environmental groups, labor unions and Democratic governors.
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 low-growth, high unemployment model of continental Europe.
After losing the presidential election, muffing the opportunity to capture the Senate and managing to hold only 18 state governorships — not to mention their minority standing in the House and most state legislatures — we likely won’t be hearing Mr. Obama pontificating on the sidelines that elections have consequences. Instead, we can expect the only remaining consequential Democrats — those who can filibuster against the popular will 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 to push through a panoply of reforms, and Trump will have to marshal public support for radical measures to overcome a barrage of criticism and protests from liberal politicians and the media.
Bigger than his vision and knack for picking competent executives will be his salesmanship.
America’s first dealmaker is not a man inclined to small deeds, and these will be the measure of his presidency.