From a purely economic perspective, President Trump had a lot to offer conservatives in 2017. Under the first year of his presidency, Congress successfully delivered the most comprehensive tax reform package since Reagan and the executive branch slowed the pace of regulatory growth. Unfortunately, Trump has appeared to pivot with the new year to points of contention with free-market conservatives, and the State of the Union address gives no indication that will change anytime soon.
So far in 2018, the White House has imposed significant new tariffs on imported solar panels and washing machines and leaked a memo outlining what could be an expensive and pork-filled infrastructure plan if legislators aren’t careful to check wasteful impulses. His State of the Union speech played up these themes, arguing for $1.5 trillion of investment into infrastructure and claiming that higher import taxes on consumers will create jobs.
If the first few weeks of 2018 are any indicator, the honeymoon period may be coming to an end.
While Trump did miss a key opportunity to expand trade opportunities by entering into the Trans-Pacific Partnership, conservatives were reassured when Trump did not institute a major tariff in all of 2017. Yet 2018 had scarcely begun before Trump instituted harsh tariffs on foreign imports of solar panels and washing machines.
Now, proponents of free enterprise are left to worry that Trump’s recent import taxes, which will harm consumers first and foremost, are just the opening salvo in a barrage of trade-related actions. Businesses have already been encouraged to take cheap shots at opponents by pursuing tariff “protection,” and Trump’s decision to institute tariffs in these cases can only encourage this sort of anti-competitive behavior. With NAFTA negotiations hitting a critical point, businesses cannot help but fear that access to the White House may soon be a better predictor of success than the quality of the products they offer.
Trump’s statements on infrastructure likewise should give pause to those concerned with economic freedom. Though the administration has suggested that the $1 trillion number being tossed around for infrastructure investment is actually only $200 billion of federal spending — which would then leverage the remainder in local and private investment — $200 billion is no number to sneeze at.
Infrastructure is unlikely to be the only item on the administration’s 2018 legislative agenda that gives fiscal conservatives headaches. In his State of the Union address, Trump called for an end to the Budget Control Act’s sequester of defense spending, to “fully [fund] our great military.” The House’s appropriation bill for the Department of Defense this year grants the DoD $23 billion more than what the Pentagon requested, and eliminates the defense spending sequester.
On top of that, the farm bill will come up for consideration sometime this year. The last farm bill, passed in 2014, promised reform and savings while cutting down on the rent-seeking behavior that plagues the agricultural industry. As has been the case in the past, it delivered few, if any, of these things. Free-market conservatives will look to use this go-around as an opportunity for meaningful reform, but it will most likely end up being just another source of vexation. Trump’s statements on behalf of workers in the American Heartland suggest that he will be reticent to do anything to conflict with the agenda of large agricultural businesses.
Trump’s State of the Union address touted the positive accomplishments of 2017, such as much-needed tax reform and slashing of regulations. But it also pointed to policies that may clash more with the goals of conservatives in 2018. As he wades into deeper political waters, hopefully Trump stays just as open to promoting economic freedom in 2018 as he was in 2017.
Andrew Wilford (@PolicyWilford) is a contributor to the Washington Examiner's Beltway Confidential blog. He is an associate policy analyst at the National Taxpayers Union.
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