A Step Back from Trump’s Start

Michael J. Boskin

Michael J. Boskin is Professor of Economics at Stanford University and Senior Fellow at the Hoover Institution. He was Chairman of George H. W. Bush’s Council of Economic Advisers from 1989 to 1993, and headed the so-called Boskin Commission, a congressional advisory body that highlighted errors in … read more
 

STANFORD – The first few weeks of Donald Trump’s presidency have contained what felt like a year’s worth of activity and rancor. The US media is “all Trump, all the time” – and they’ve had plenty of fuel. Amid Trump’s initial moves to “shake up” Washington, DC, including a five-year lobbying ban and approvals of pipelines that President Barack Obama had blocked, he has made some serious – and avoidable – mistakes.

Trump is far from the first president to arrive in the White House planning to shake things up. President Jimmy Carter tried, but immediately ran afoul of his own party’s leadership in Congress – and subsequently struggled to get anything accomplished. For example, Congress turned his proposed tax cut for dividends into one for capital gains.

Carter’s successor, Ronald Reagan, was far more successful in pushing through tax-cutting reforms, as well as advancing the military buildup that helped win the Cold War. But he was unable to rein in spending.

Bill Clinton attempted to remake America’s health-care system. He failed, leading to a stunning loss for Democrats in the 1994 midterm congressional elections. People complain about disorder in the Trump administration, but Clinton’s White House was so disorganized that he had to bring in Leon Panetta as Chief of Staff and David Gergen as a communications counselor to right the ship.

Now, it is Trump’s turn to attempt a shake-up, and he is approaching it differently than his predecessors. But Trump can’t change the rules of the game singlehandedly; he must work within the constraints of the US government’s many mediating institutions and strong system of checks and balances.

Many of Trump’s policy priorities – including tax reform, some deregulation, a military build-up, infrastructure spending, and the repeal and replacement of the Affordable Care Act – will require legislation. That means assembling winning congressional coalitions. Many who support, say, tax cuts and deregulation will oppose his spending increases and demand entitlement reform.

Trump will also have to deal with courts, which already ruled against his early executive order to bar entry to the US by anyone from seven Muslim-majority countries. But his rebuke of the courts and judges who struck down his travel ban paled in comparison to Obama’s attack on the Supreme Court during his 2010 State of the Union address. And neither amounted to a “threat to democracy” when compared to President Franklin D. Roosevelt’s proposal to pack the Supreme Court with additional justices who would uphold his economic program.

Time will tell if Trump and his team develop the skill and patience to work effectively within the system they ran against, accepting compromises to achieve success. (The last major tax reform took two years.) Carter did not, and failed; Reagan often did, and succeeded. Clinton eventually found success, too, by cooperating with Congressional Republicans to reform welfare and balance the budget.

On foreign affairs, however, the US president has substantial authority. Trump has discomfited some US allies, including by raising doubts about America’s commitment to NATO. His cabinet officials have recently sought to reassure those allies, while insisting that they address defense-spending shortfalls. In any case, Trump’s initial meetings with the leaders of the United Kingdom, Japan, Canada, and Israel were positive.

On trade, Trump’s statements have also been somewhat disconcerting. Beyond withdrawing from the Trans-Pacific Partnership, he has suggested renegotiating the North American Free Trade Agreement and threatened to impose high tariffs on Chinese imports. But Congress may push Trump toward a more moderate approach. Recall that Obama also campaigned against NAFTA.

To be sure, Trump is right that better adjustment mechanisms for America’s left-behind blue-collar workers are long overdue. But trade, on balance, has done much more good than harm, and the overwhelming majority of manufacturing-job losses in the developed world have resulted from technological advances like automation.

Fortunately, Trump has a strong team in place to help navigate complex foreign-policy issues. He has made some excellent cabinet choices, including three I know well: Secretary of Defense James Mattis, Secretary of State Rex Tillerson, and Secretary of Transportation Elaine Chao. These are intelligent people with great integrity, strong interpersonal skills, and excellent management ability; they will tell Trump what he needs to hear. Trump’s Supreme Court nominee, Neil Gorsuch, has been widely praised.

Trump’s blunders, so far, strike me as rookie mistakes. He rushed the order on his travel ban, failing to vet it with the relevant departments. His first national security adviser, Michael Flynn, had to resign, after it emerged that he had misled Vice President Mike Pence about discussing US sanctions with the Russian ambassador before Trump’s inauguration. Trump has tussled with the intelligence community over (illegally) leaked information.

Trump delivers hyperbolic and even false statements more frequently than his predecessors. Such statements can sow uncertainty and division. His initial policy proposals and decisions may reflect his actual goals, but can also be presented in a particular way as a negotiating tactic or a media strategy. In any case, clearer communication would benefit Trump and the public alike.

Some Democrats are now so enraged that they are demanding “total resistance.” Here in California, some are hysterically calling for the entire state to become an immigration sanctuary; there is even talk of secession. Senate Democrats, for their part, worked hard to delay approval of Trump’s cabinet nominations, undermining further the administration’s functioning. Hundreds of top positions still await nominees.

Trump, like all presidents, wants to win. He knows that he must deliver results that improve people’s lives. Fortunately for him, the expectation that he will deliver relief from Obama’s regulatory stranglehold and high taxes on capital has, for now, buoyed stock markets, and the Democrats seem to be self-destructing.

If Trump is to take full advantage of these trends to advance his reform agenda, he will need to give his cabinet a greater role in policy and improve coordination with and among White House staff. And he will need to turn his attention from courting controversy to advancing his policies. Otherwise, even his supporters will begin experiencing Trump fatigue.