The mea­sure of Trump’s pres­i­dency

Restor­ing growth is cen­ter stage, and so is China

The Washington Times Daily - - OPINION - By Peter Morici Peter Morici is an econ­o­mist and busi­ness pro­fes­sor at the Univer­sity of Mary­land, and a na­tional columnist.

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.

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