Memoirs of the Addams Administration 28.

President Donald Trump’s foreign policy doesn’t seem that far off the mark: beat up on ISIS, try to square petty quarrels among the Gulf States, nudge the European NATO members to increase their defense spending to the promised levels before they talk about coercing the Russkies, figure out what to do about North Korea without blowing up the world, and start renegotiating the North American Free Trade Agreement (NAFTA).  The Democrats had turned against the Trans-Pacific Partnership during the election season, so the election of Hilary Clinton wouldn’t have made any difference there.  The Trump administration bailed on the Paris Climate Agreement, but the effects will be felt only at the margins and for a time.  Eventually, the United States will come back to supporting it.

The big problems have been in domestic policy.  What if the Republicans had chosen to work on something other than health care as their first order of business after the November 2016 election?[1]  What if they had gone with a big infrastructure bill?  Lord knows the country needs one, the Democrats have been just as neglectful as the Republicans on this matter in recent decades, and there could have been some kind of bi-partisan agreement on action.  Failing that, what if they had gone with a major tax over-haul?  Lord knows the country needs one, and there would have been lots of chances for horse-trading.

But no, the Republicans had to lead-off with efforts to “repeal and replace” the Affordable Care Act (ACA).  They had made it their battle cry for years before Donald Trump became their president.  Senate majority leader Mitch McConnell failed to assemble the minimum number of votes for the latest iteration of “repeal and replace.”[2]  Now all the things that might have been done, but were not done, face a steep up-hill climb.[3]

Still, beyond all the chortling over Republicans’ self-inflicted wounds, lie two realities.  First, the health-care market places already had begun to contract for reasons rooted in the ACA.[4]  Second, during the Obama administration, a federal court had invalidated the subsidies that made health insurance marginally affordable.  So, Republicans may get one more chance to get it right.  They need to think anew and act anew.

In contrast, the domestic economy is a mess.  “Trumponomics” consists of cutting corporate taxes and federal regulation in order to stimulate business activity; reforming welfare to get more Americans back into the labor force; re-negotiating trade deals to achieve equity; and stimulating the energy sector by relieving the burdens upon coal.  This will result in a 3 percent economic growth rate, he says.[5]

Many economists believe that 3 percent growth is a fantasy.  The Congressional Budget Office (CBO) guesses that these changes will produce only 1.9 percent growth.  The American economy can grow only if it has an expanding labor force.  So, no border wall.

[1] In the same ways that the first Barack Obama administration might have sought an adequate stimulus bill, rather than shifting its efforts to the creation of a costly new entitlement program in the form of the Affordable Care Act while the country slogged through an inadequate recovery from the financial crisis.  Paul Krugman had argued that the Obama stimulus bill was half a s bog as it should be, spread over two years instead of front-loaded into one year, and included tax cuts that would be used to de-leverage rather than spent to stimulate the economy.  As best I recall, President Obama was reported (by Bob Woodward) to have remarked that “Look, I get the Keynesian argument, but the American people aren’t there.”

[2] “GOP’s “repeal and replace” bill dies,” The Week, 28 Jult 2017, p. 4.

[3] See:

[4] The Democratic solution to this problem is ever-larger subsidies.  The budget effects do not concern them.

[5] “Issue of the week: Trump’s MAGAnomics” plan.” The Week, 28 July 2017, p. 34.

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