The President unveils a highly interventionist economic programme envisaging re-industrialisation on the back of higher infrastructure spending, trade protection and tax reform, with immigration controls to ensure that the benefits in more jobs and higher wages go to American workers.
President Trump’s first speech to Congress has received generally favourable reviews from all but his most relentless critics, with the speech referred to as “conventional” and “Presidential” in contrast to his Inaugural Address. The speech was indeed more conventional because unlike the Inaugural Address Donald Trump this took time took care to sugarcoat his speech with the standard cliches and bromides the US elite expects in speeches from the President. Thus whereas the Inaugural Address never once mentioned “freedom” – a shocking omission – the Speech to the Congress did so repeatedly.
It was the omission of the standard cliches and bromides which made the Inaugural Address seem to the US elite so stark and disturbing. By contrast by clothing his Speech to the Congress with the usual bromides and cliches Donald Trump reassured the Congress and won for himself a polite hearing.
This may be because Donald Trump has got himself a better speechwriter (his careful delivery shows the speech was carefully rehearsed) but a more likely reason is that Trump was addressing a different audience and varied his speech accordingly.
The Inaugural Address was pitched to the American people who had elected him whereas the Speech to the Congress was pitched to the Congress itself – first and foremost to his own party – whose cooperation Trump will need to carry out what is by any assessment a startlingly ambitious programme for his Presidency.
The result is that the Speech to the Congress is seen as more conventional though in reality Donald Trump did not retreat an inch from what is in every respect a radical programme.
The Speech to the Congress covered both domestic and foreign policy. For reasons of space in this article I will concentrate exclusively on what Donald Trump had to say about domestic policy. I will discuss what he said about foreign policy in another article.
Firstly, though the Inaugural Address has been criticised as offering a dark dystopian picture of today’s America, the Speech to the Congress was in reality no different.
Ninety-four million Americans are out of the labor force. Over 43 million people are now living in poverty, and over 43 million Americans are on food stamps. More than 1 in 5 people in their prime working years are not working. We have the worst financial recovery in 65 years. In the last 8 years, the past Administration has put on more new debt than nearly all other Presidents combined. We’ve lost more than one-fourth of our manufacturing jobs since NAFTA was approved, and we’ve lost 60,000 factories since China joined the World Trade Organization in 2001. Our trade deficit in goods with the world last year was nearly $800 billion dollars. And overseas, we have inherited a series of tragic foreign policy disasters…..
……to break the cycle of poverty, we must also break the cycle of violence. The murder rate in 2015 experienced its largest single-year increase in nearly half a century. In Chicago, more than 4,000 people were shot last year alone — and the murder rate so far this year has been even higher. This is not acceptable in our society.
Similarly, though the Inaugural Address has been criticised for setting the American people, against the elite, the Speech to the Congress not only did so again – expressly repudiating the policies of the recent past – but it actually went further, talking of Trump’s election victory as a “rebellion” of the common people against the elite
I will not allow the mistakes of recent decades past to define the course of our future. For too long, we’ve watched our middle class shrink as we’ve exported our jobs and wealth to foreign countries. We’ve financed and built one global project after another, but ignored the fates of our children in the inner cities of Chicago, Baltimore, Detroit — and so many other places throughout our land. We’ve defended the borders of other nations, while leaving our own borders wide open, for anyone to cross — and for drugs to pour in at a now unprecedented rate. And we’ve spent trillions of dollars overseas, while our infrastructure at home has so badly crumbled. Then, in 2016, the earth shifted beneath our feet. The rebellion started as a quiet protest, spoken by families of all colors and creeds — families who just wanted a fair shot for their children, and a fair hearing for their concerns. But then the quiet voices became a loud chorus — as thousands of citizens now spoke out together, from cities small and large, all across our country. Finally, the chorus became an earthquake — and the people turned out by the tens of millions, and they were all united by one very simple, but crucial demand, that America must put its own citizens first … because only then, can we truly MAKE AMERICA GREAT AGAIN. (bold italics added)
My colleague Adam Garrie has often spoken of Donald Trump as a classic conservative in the mould of Senator Robert Taft and there are indeed throwbacks to a more conservative past in Donald Trump’s outlook on foreign policy.
Trump’s approach to domestic politics is however anything but conservative. On the contrary with his talk of “rebellion” and his criticism of the elite (the Speech to the Congress used the words “drain the swamp of government corruption” once again) Donald Trump is positioning himself on domestic policy as a flamboyant Progressive like his Republican predecessor Theodore Roosevelt rather than as a true conservative like Robert Taft.
As might be expected of someone with such an outlook Trump’s ideas for domestic policy are highly interventionist and essentially ‘Big Government’ and even paternalist.
Thus his demand for tougher immigration (including the border wall) is squarely linked to a demand for more jobs and higher wages as well as in order to fight crime
At the same time, my Administration has answered the pleas of the American people for immigration enforcement and border security. By finally enforcing our immigration laws, we will raise wages, help the unemployed, save billions of dollars, and make our communities safer for everyone…..Protecting our workers also means reforming our system of legal immigration. The current, outdated system depresses wages for our poorest workers, and puts great pressure on taxpayers. Nations around the world, like Canada, Australia and many others — have a merit-based immigration system. It is a basic principle that those seeking to enter a country ought to be able to support themselves financially. Yet, in America, we do not enforce this rule, straining the very public resources that our poorest citizens rely upon. According to the National Academy of Sciences, our current immigration system costs America’s taxpayers many billions of dollars a year. Switching away from this current system of lower-skilled immigration, and instead adopting a merit-based system, will have many benefits: it will save countless dollars, raise workers’ wages, and help struggling families — including immigrant families — enter the middle class. I believe that real and positive immigration reform is possible, as long as we focus on the following goals: to improve jobs and wages for Americans, to strengthen our nation’s security, and to restore respect for our laws.
(bold italics added)
Trump also wants a massive plan for $1 trillion investment programme in US infrastructure, whilst pointedly drawing attention to the fact that the last time the US government initiated a major infrastructure programme was back in the 1950s under President Eisenhower
Another Republican President, Dwight D. Eisenhower, initiated the last truly great national infrastructure program — the building of the interstate highway system. The time has come for a new program of national rebuilding. America has spent approximately six trillion dollars in the Middle East, all this while our infrastructure at home is crumbling. With this six trillion dollars we could have rebuilt our country — twice. And maybe even three times if we had people who had the ability to negotiate. To launch our national rebuilding, I will be asking the Congress to approve legislation that produces a $1 trillion investment in the infrastructure of the United States — financed through both public and private capital — creating millions of new jobs. This effort will be guided by two core principles: Buy American, and Hire American.
(bold italics added)
The reference to “Buy American, and Hire American” shows that the infrastructure programme is as much intended to boost US employment and US industry as it is to improve US infrastructure. In other words it is as much as anything a job creation public works programme, just like the ones of President Franklin Roosevelt’s New Deal.
This comes with a frank repudiation of globalist free trade orthodoxies, about which Trump had a great deal to say
We must create a level playing field for American companies and workers. Currently, when we ship products out of America, many other countries make us pay very high tariffs and taxes — but when foreign companies ship their products into America, we charge them almost nothing. I just met with officials and workers from a great American company, Harley-Davidson. In fact, they proudly displayed five of their magnificent motorcycles, made in the USA, on the front lawn of the White House. At our meeting, I asked them, how are you doing, how is business? They said that it’s good. I asked them further how they are doing with other countries, mainly international sales. They told me — without even complaining because they have been mistreated for so long that they have become used to it — that it is very hard to do business with other countries because they tax our goods at such a high rate. They said that in one case another country taxed their motorcycles at 100 percent. They weren’t even asking for change. But I am. I believe strongly in free trade but it also has to be FAIR TRADE. The first Republican President, Abraham Lincoln, warned that the “abandonment of the protective policy by the American Government [will] produce want and ruin among our people.” Lincoln was right — and it is time we heeded his words. I am not going to let America and its great companies and workers, be taken advantage of anymore. I am going to bring back millions of jobs.
Even the cuts in taxes Trump is talking about are clearly pitched at achieving his programme of industrial regeneration
Right now, American companies are taxed at one of the highest rates anywhere in the world. My economic team is developing historic tax reform that will reduce the tax rate on our companies so they can compete and thrive anywhere and with anyone. At the same time, we will provide massive tax relief for the middle class.
Even on health and education, where Trump is closest to classic Republican positions, he is far from being a non-interventionist conservative. For example his criticism of Obamacare is not that it takes the government into area (health policy) where it has no place, but that it is inefficient and expensive and isn’t working
Mandating every American to buy government-approved health insurance was never the right solution for America. The way to make health insurance available to everyone is to lower the cost of health insurance, and that is what we will do. Obamacare premiums nationwide have increased by double and triple digits. As an example, Arizona went up 116 percent last year alone. Governor Matt Bevin of Kentucky just said Obamacare is failing in his State — it is unsustainable and collapsing. One third of counties have only one insurer on the exchanges — leaving many Americans with no choice at all. Remember when you were told that you could keep your doctor, and keep your plan? We now know that all of those promises have been broken. Obamacare is collapsing — and we must act decisively to protect all Americans. Action is not a choice — it is a necessity. So I am calling on all Democrats and Republicans in the Congress to work with us to save Americans from this imploding Obamacare disaster.
Trump’s solution to the US’s health care crisis is a mix of platitudes and fudging around the edges which could very well end up making the present disastrous situation worse, but it does not amount to the government pulling out and doing nothing and leaving it to the unregulated market to do its work
Here are the principles that should guide the Congress as we move to create a better healthcare system for all Americans: First, we should ensure that Americans with pre-existing conditions have access to coverage, and that we have a stable transition for Americans currently enrolled in the healthcare exchanges. Secondly, we should help Americans purchase their own coverage, through the use of tax credits and expanded Health Savings Accounts — but it must be the plan they want, not the plan forced on them by the Government. Thirdly, we should give our great State Governors the resources and flexibility they need with Medicaid to make sure no one is left out. Fourthly, we should implement legal reforms that protect patients and doctors from unnecessary costs that drive up the price of insurance — and work to bring down the artificially high price of drugs and bring them down immediately. Finally, the time has come to give Americans the freedom to purchase health insurance across State lines — creating a truly competitive national marketplace that will bring cost way down and provide far better care. Everything that is broken in our country can be fixed. Every problem can be solved. And every hurting family can find healing, and hope.
Overall Trump has a coherent vision of how he wants to lead America. He wants a re-industrialisation programme fuelled by tax changes and a big increase in infrastructure spending, whilst looking for caps on imports and immigration to ensure that the benefits in jobs and higher wages go to American workers. It is the sort of programme that the Democratic Party of Franklin Roosevelt, Harry Truman and Lyndon Johnson might easily have come up with.
It is easy to see where it could all go wrong.
As Trump says himself it is decades since the US engaged in a public works programme on anything like the scale that he envisions. It is far from clear whether the US today has the management skills for such a programme (the Hurricane Katrina debacle suggests not) and with Trump apparently intending that most of the work will be done by private companies it is easy to see how it could all end in burgeoning corrupting, with the building of roads that go nowhere and of bridges in the wrong places, much as has happening with the spending from the EU’s structural funds in much of Europe.
More seriously, Trump is proposing to cut taxes whilst hugely increasing spending on infrastructure and the military. He does not say how he proposes to pay for all this. Indeed his speech had nothing to say about the budget at all.
Cutting the overseas aid budget and spending on the State Department is hardly going to make up the numbers. Presumably Trump is hoping that the higher growth from his policies will lead to higher tax revenues which will cover the cost of his infrastructure and defence programmes.
It might turn out right, but it is a big gamble at a time when the US’s debt to GDP ratio is already above 100%, and speaking for myself I can’t help but worry that the US’s budget deficit and its level of debt will probably be even higher at the end of the Trump administration than they are now.
There also has to be a serious concern that if the slack in the economy is less than Donald Trump supposes – with fewer workers willing to work than he imagines, and with US industry unable to produce the goods he wants it to – it could all lead to a big rise in inflation. In that case the Federal Reserve Board may feel obliged to raise interest rates sharply, bringing the whole economy – and Trump’s programme – to a juddering stop.
The President has nonetheless unveiled a clear vision, even if the devil will be in the detail, and even if it is easy to see how things could go wrong. Certainly his speech cannot be criticised for being content free.