December 12, 2016

The Trump Presidency What Happens Now?

It seems fair to say that few president-elects have ever entered office with less certainty on public policy priorities than Donald Trump.

While running for office, Donald Trump was not beholden to a particular philosophical line of thought.  On some issues, he tracked well with the Republican Party that he represented, but on others he did not toe the party line.  He was long on grand statements but short on specifics.  He claimed, when elected, he would stop illegal immigration, slap tariffs on unfair trade, enact a huge tax cut, bring manufacturing jobs back to the United States, and cut burdensome regulations.  What he will tackle first has been front page fodder since he shocked the nation with his election on Nov. 8.

Dennis Nuxoll, vice president of federal government affairs for Western Growers, said there are a lot of unknowns about the details of what legislation in these various arenas will look like.  But generally speaking, he said the Trump Administration should be business friendly.  “There is a lot to be excited about,” he said.  “There are a number of significant areas of opportunity where he should be able to move the ball forward to the benefit of most of the members of Western Growers.”

Nuxoll listed tax policy, regulations surrounding environmental concerns, water policy and reform of the Endangered Species Act as four areas where a Trump Administration could be expected to offer relief.  On the flip side, he said there are some challenges the industry might face with regard to action the Trump Administration might take on immigration reform and trade policy.


Opportunities and Challenges Ahead

“We definitely expect positive changes with regard to tax policy,” he said.

Trump has called for the largest tax reduction in the history of the United States.  President George W. Bush was able to get a tax reform package through Congress in the early days of his administration that is currently the record-holder for tax reduction.  Trump campaigned on a reduction three times as large.

Nuxoll said a number of Trump’s supporters are calling for the elimination of the Environmental Protection Agency.  While that may be difficult to accomplish, he could certainly slash funding and roll-back a number of regulations that industry believes are onerous and anti-business.  There is also support among his backers for reform, if not elimination, of the Endangered Species Act.  Again, it may be very difficult to eliminate it, but legislative changes and how it might be administered are certainly possible over the course of the Trump presidency.

Water policy is another area where California growers are expecting immediate relief.  California agriculture has long argued that people should trump fish when it comes to providing water for the various constituencies of the Sacramento-San Joaquin Delta.  In fact, during the campaign, Trump showed his colors at a Fresno, Calif., rally when he declared that the state’s drought was government made as opposed to a lack of rain.

While reiterating that opportunities are many, Nuxoll said one must also look at the areas where Western Growers and its members will need to concentrate some lobbying efforts to mitigate potential problems.  Of course, Trump’s concern about illegal immigrants pouring into the country and taking jobs from Americans was well reported.  He promised to build a wall on our southern border to keep illegal immigrants out, while at the same time deporting millions that are already here.  What that policy will look like when enacted is anybody’s guess, but it could certainly impact production agriculture’s labor force.

Trade is another area of concern, especially to agriculture.  Trump did not talk about agricultural trade during the campaign, but instead focused on the loss of manufacturing jobs and promised to bring those back by enacting tremendous tariffs on imported goods, specifically from China.  He also noted that he wants to renegotiate, and possibly withdraw, from the North American Free Trade Agreement.  Nuxoll opined that the   type of trade policy Trump is advocating is difficult to ascertain.  And it is virtually impossible to predict how our trading partners would respond.  Retaliatory measures, however, are typically the tool of choice when these disagreements break out.  Western Growers’ members in its three home states have had lots of trade successes that could be in jeopardy.  And of course, production agriculture in the United States is very much tied to production south of the border.


The First 100 Days

In political parlance, the first 100 days of a new president’s term has special meaning.  In reality, the concept isn’t tied to a specific number of days but rather a general sense that a new president, straight from being the choice of the people, has an opportunity to tackle some priority issues right off the bat.  The president is never given a complete pass but, by virtue of the election, presidents assume political capital and determine how best to spend it.

After President Obama took office eight years ago, he articulated several main areas of emphasis and was fairly successful with a Democratic Congress in achieving success over the first 100 days to first year.  A job stimulus package, the Affordable Care Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act were passed.  He also was able to get Supreme Court Justice Sonia Sotomayor confirmed.  His effort to pass a climate change bill in those early days was successful in the House but did not make it out of the Senate.

With a Republican Congress and his self-proclaimed abilities as a great negotiator, Trump is expecting to be every bit as successful as his predecessor in those first 100 days to first year.  What will be on his agenda?

Interestingly, it is expected to be filled with several of the same policies issues confronting Obama.  Trump has already announced that a stimulus package is high on his priority list.  Just like eight years ago, this type of jobs creation program tends to cut across party lines with both Republicans and Democrats expected to line up as co-sponsors.  The size of the package and how it will be paid for will be debated, but Nuxoll believes it will be one of the very first things a Trump Administration achieves.

He is also expected to nominate a Supreme Court justice within days of taking office.  This is a little trickier because of the make-up of the Senate.  Only the Senate confirms Supreme Court nominees and filibuster rules in that body do allow for the blocking of a nomination, as it is only the Senate that confirms such nominations.  Democrats have already pledged to block any nomination that falls in the “very conservative” category.  Of course, Trump could pick someone in that arena and ask the Senate to suspend its filibuster rules.  That might be a fight he wants to pick, but one occurring so early in his presidency might derail other efforts where a suspension of such rules is highly unlikely.  But Trump is an unknown as he has never governed before.  It is that lack of conformity that made him popular and he may be willing to move in unchartered territories.

The repeal and replacement of the Affordable Care Act (ACA) may well be his biggest early challenge.  Nuxoll said repealing the act is very high on President-elect Trump’s agenda and is also a high priority for Congress.  While the repeal of all the funding for the ACA can happen quickly, Nuxoll  believes constructing a replacement will take a good portion of the first year Trump is in office.  While there have been some pieces of legislation offered up as a replacement, the future president’s preferred policy is unknown.  However, it is expected that the repeal of the law is likely to be accompanied by a two-year phase out period, which Speaker of the House Paul Ryan has advocated.  That will give Trump and Congress an opportunity to come up with an alternative.

And they do need to come up with an alternative.  While Congress can use the reconciliation bill to repeal funding for the ACA without Democrat involvement, it cannot eliminate the provisions that are part of the act in that manner.  There will need to be separate legislation.  So the Democrats in the Senate will have some leverage on this issue and will undoubtedly use it.

Substantively, the replacement of the ACA will be a challenge because there are more than 20 million people currently getting health care coverage under ACA.  It would be politically difficult for Congress to eliminate health insurance from those people overnight.  In addition, everyone else with health care coverage is reaping several advantages of other ACA provisions, such as no lifetime cap for care, minimum policy amounts, non-discrimination of coverage for pre-existing conditions, and extended care for children up until the age of 26.

Nuxoll expects trade to be another issue that Trump tackles very quickly.  He has railed against NAFTA for months and he has  said that he will immediately request a renegotiation with the two other partners—Canada and Mexico.  That probably would not be an easy road as both of those countries have issues with the agreement as well.  As examples just within agriculture, Canada might try to renegotiate tariffs on U.S. lumber while Mexico is concerned with sugar tariffs.  Trump  has then said that within 100 days after starting renegotiations if he is not pleased with new terms by Canada and Mexico, he will ask Congress to withdraw the United States from the accord.  Like with many other issues, the president-elect has not articulated details concerning his unhappiness with NAFTA so it is not certain what might be negotiated that would be to his liking.

And, of course, immigration reform in some manner will be an early agenda item for the new president.  A few days after the election he noted that, once in office, he would deport two to three million illegal aliens who have criminal records.  Even the most generous estimates put the number of illegal aliens who have serious criminal records at a few hundred thousand.  To deport two million—an amount Trump has previously referenced—will take a different metric.  And then there is the “wall.”  It was a cornerstone of Trump’s campaign.  He said he’s going to build it and Mexico is going to pay for it.  Estimates put the cost at tens of billions of dollars.  Trump and his various immigration advisors have said once border security is accomplished and once deportations of millions of criminal aliens have  been successfully prosecuted, then the Trump Administration will turn attention to creating new legal mechanisms for immigrants remaining in the country (according to Trump “the good folks” here illegally who have not been deported) and revising legal immigration systems that allow people in from abroad.

All in all, 2017 is shaping up to be a year like none before it.  It may be the greatest ever or it may live up to the sentiments of the old Chinese curse: “May you live in interesting times.”