You can call what America is going through a swing to the right. You can call it an historic inflection point. You can call it the end of the era of what has been called progressive politics. You can call it a new paradigm. But these terms do not fully capture what is about to happen in America, if all goes as Trump has planned. It is a revolution, minus the gore.
A government that believed climate change is an existential threat is being replaced by one that believes it is a hoax. A government that believes in raising taxes is being replaced by one that believes in lowering them. A government that opened the nation’s borders is being replaced by one that favours mass deportations. A government that instinctively regulates is being replaced by one that instinctively deregulates. A President most comfortable in union halls is being replaced by one who is comfortable on the floor of the New York Stock Exchange. If that ain’t an economic revolution, flawed as most revolutions are, it is hard to tell what is.
No More Greening
Start with the revolution in climate policy. Greening is done and dusted. The new government believes there are probably as many positive as negative effects of a warmer climate, that there is no climate crisis, and therefore no need to spend billions to avoid it. Relying on the sun and wind for energy is a mistake. Instead, relax restrictions on permitting for fuel transport facilities, and “drill, baby, drill”. And give nuclear a nod. Remove or relax fuel economy and emission standards designed to make it unprofitable to manufacture petrol-driven vehicles, and to drive EVs’ market share from 7.6 per cent to 70 per cent by 2032. Stop using scarce military funds to end carbon emissions from military bases by 2035.
Buyers of EVs will no longer receive subsidies of $7,500, which is scheduled to cost the taxpayer $390 billion by 2031. A government unfazed by past failures to pick winners is attempting to push some $400 billion in loans out the door before it is slammed shut by a new government that believes private-sector capital markets do a more efficient job of allocating capital.
Tax Consumption, Not Work
Revolutionary tax and labor market changes are also being considered. The use of tariffs to generate income, while lowering corporate and personal taxes, is a shift from taxing work to taxing consumption, a long-held objective of conservative economists. Removal of taxes on tips and overtime work would have a similar goal, while increasing the labor supply. Which massive deportations would reduce. Estimates are that 13 and 25 per cent, respectively, of national and Texas construction workers entered the US illegally, making it reasonable to wonder who will build the factories and infrastructure in a booming Trump economy.
Jimmy Carter Had It Right: Deregulate
Perhaps the most revolutionary aspect of Trumpism will be played out in the regulatory field. The House budget committee chairman reports, “President Biden is on track to impose more regulatory cost on our economy than any President in history, adding $1.4 trillion since coming to office … a staggering 45 times the regulatory costs accumulated under Trump and almost five times the regulatory costs added under President Obama.”
Much of this cost results not from legislation but from the rules the administrative agencies promulgate to implement those laws. “The Great Deregulator” – get this – President Jimmy Carter, White House resident from 1977-1981, deregulated oil prices, the trucking, railroad, and communications industries, and set the stage for airline deregulation. Trump as the man in the tradition of Carter’s deregulatory onslaught is a delicious thought.
Trump is planting an oil-state governor at the interior department, the executive of a fracking company at the department of energy, committed deregulators as chairs of the agencies that oversee the financial community, including crypto currencies and auditing firms, and competition enforcers who are relaxed about most mergers, with the exception of those in Silicon Valley, which the new team has in its bomb sights. Unloosing Elon Musk on rules-writing, bloated regulatory agencies, is the frosting on the cake that the new administration is baking.
The Beneficiaries Of the Status Quo Won’t Surrender
But for Trump to have his revolution, he will have to overcome forces with a substantial stake in the status quo; government workers, big business, regulators and Democratic governors.
The federal government employs more than 2 million civilians, many with job insurance recently enhanced by Biden, few likely to roll out the carpet for sacker-in-chief Elon Musk. Big business does not keep a list of government benefits it is prepared to surrender. The federal government’s almost 300,000 regulators do not see themselves as impediments to economic growth, but as guardians of the economic system. All survived Trump once before and are confident they can hold out during Trump Mark 2 until relieved by the voters in 2028.
Also digging in are leaders of the New Resistance – blue state governors marshalling millions of taxpayer dollars to fight Trump on the beaches of California and the high-rises of Chicago; they will never surrender. EVs will be subsidized, permits denied, regulations proliferated.
Trump Woos The Unions
The odd part of the revolution is Trump’s position on labor. He has nominated pro-union Lori Chavez-DeRemer to be his Secretary of Labor. She is beloved of trade unions: AFL-CIO president Liz Shuler supports her. So do the Teamsters and teachers unions. The nominee opposes right-to-work laws that leave workers free to reject union membership, and when in congress regularly voted to support the big-union agenda.
Add to that Trump’s support of the longshoremen, threatening to strike against the introduction of automation at the nation’s ports. It causes “distress, hurt, and harm” to American workers and isn’t worth the cost-saving, Trump posted.
Whether these moves are calculated to swing more union members to his side in any political showdowns, or part of some quiet grand bargain, with trade union bosses agreeing not to call strikes that would slow the economy, no one knows. Or perhaps merely “take-that-Joe-Biden” as the self-styled most pro-union President in American history departs the stage.
The American Gamble
Trump has the advantage of a rich inheritance: a fully employed, growing economy, wildly innovative, productivity rising, further outpacing other countries and the EU. Americans have elected him to make an already Great America, Greater still. They are betting the Great America they have in the hope of winning something Greater. That is no small wager.