One aspect of the Trump administration’s agenda that doesn’t get much recognition, because it seems kind of esoteric, is its policies on regulatory reform. While everyone is focused on the tax reform initiative (the left fighting it, the right supporting it albeit with a certain half-heartedness) and its implications for the economy (the left says it won’t help, the right hopes it will), we have already seen a pick up in the economy since Trump was elected. Indeed the improvement began even before he was sworn in, suggesting that it was, at least in part, already baked in from the Obama years and its policies.
The economy had been on a slow upswing during Obama’s presidency (something the left credited him with, the right denied because of its historically slow progression). Certainly it would be odd to credit Trump with economic improvements even before he took office and yet it is undeniable that economic indicators (like capital markets) took a sharp upward turn on his election. And that upturn has continued and gained momentum since he took office despite all his policy flailing and rhetorical hyperbole. His agenda has certainly been stymied in Congress and the courts for the most part (although we’re about to see if a Congress that shares his party affiliation can now deliver on one significant effort, tax reform). So how can we actually credit Donald Trump for the improved economy?
The answer lies in the forgotten ingredient: Deregulation. Almost entirely below the radar in the ongoing battle over tax reform and its implications, the Trump administration has pursued a policy of regulatory reduction at the federal level. This not only delivers on expectations in the business community (demonstrated by the enthusiasm with which Trump’s win was initially met in the capital markets). It really does ease burdensome business obstacles on economic activity, the engine the country needs to begin to pull itself out of the fiscal hole both parties have previously managed to put us in.
Arguably the ongoing improvement in economic indicators we’ve seen in Trump’s first year in office is partly anticipatory, but it has gained steam because the Trump administration has actually been delivering on the promised regulatory reduction.
This is an important untold story about the Trump presidency. For all his personal flaws, and they are legion, Donald Trump promised to address the regulatory burden that had been growing and accelerating in the Obama years (probably contributing to the historically slow economic recovery) and he has been doing so.
Now on to tax reform.