Another stormy year ahead for the Trump administration

The Trump administration can expect another tumultuous year, but a win on tax reform

United States

Elected on a promise of business-like dealmaking and efficiencies, President Donald Trump’s administration has been spectacularly blundering, scandal-dogged and unproductive. Mr Trump has passed no significant legislation, while starting fights, including with his party and America’s allies, on a daily basis. America is in for another rocky year in 2018.

The early months will be dominated by a Republican bid to pass tax reform, and should deliver a rare success for Mr Trump. Having arranged this effort as part of the budget process, Republican leaders in Congress require only a simple majority for their plans, so no Democratic votes. Though they are deeply divided on most things, this should allow them to pass a reform that will include one or two welcome features. The current seven income-tax brackets should be cut to four, introducing some needed simplification. Yet the package will be much closer to George W. Bush’s unfunded tax cuts than the sweeping Reaganite reform Republicans have advertised their efforts as resembling. The meat of it will be cuts for business and the well-off, paid for by extra borrowing. It will be hard to spin that as either truly conservative or the middle-class tax relief the president had promised.

Mr Trump’s other big economic agendas concern deregulation and renegotiating trade agreements. On the first, he has made progress, but this will slow in 2018, as it becomes harder to scrap rules written by his predecessor, Barack Obama. The easiest way to do so—via a law known as the Congressional Review Act—has expired. And Mr Trump’s efforts to repeal or weaken environmental protections will be increasingly snarled up by legal challenges. 

Such setbacks make it likelier, as the president showed in his unilateral effort to poleaxe Obamacare, that Mr Trump will seek recourse in the grand gesture: for example, by withdrawing from NAFTA. His longstanding opposition to trade agreements has always been more political than reasoned. And among his most committed supporters, to whom Mr Trump returns (physically and metaphorically) in moments of duress, his protectionist diatribes are popular.

Further scandals and upheaval in his administration could similarly provoke the president, and these are assured. Several cabinet members are unhappy. It would be astonishing if Rex Tillerson makes it through 2018 as secretary of state, and only a little less surprising if H.R. McMaster remains national security adviser. Mr Tillerson’s exit would be cheered by many diplomats, yet his likeliest replacement, Nikki Haley, Mr Trump’s ambassador to the UN, would be no less willing to reduce the State Department as the president wants. Any changes to Mr Trump’s respected national-security team will increase concerns about the his ability to handle a foreign-policy crisis safely. North Korea’s nuclear-arms programme, which Mr Trump has sworn to defang, if necessary by force, is the most worrying flashpoint.

Another potential upset for Mr Trump concerns the investigation by Robert Mueller into Russia’s clandestine support for his election. A respected former FBI director, Mr Mueller has already indicted Paul Manafort, Mr Trump’s former campaign chief. Mr Manafort and an associate, Rick Gates, have pleaded not guilty to charges including money laundering and tax evasion. The special counsel is in addition believed to be investigating Mr Trump’s past business dealings with Russians, despite a warning from the president that this would constitute a “violation”.

Whatever Mr Mueller concludes, if the Democrats take back the House of Representatives in the mid-term elections in November, Mr Trump will be impeached. There is a fair chance of this happening. Betting markets lean marginally against a Democratic win (see next article). But with polls also suggesting waning enthusiasm for the president among his most committed supporters, the opposition party could triumph. 

Even if the House turns blue, Republicans will keep hold of the Senate—despite their best efforts not to. Besides Mr Trump, they are handicapped by an intra-party war between angry populists, geed up by Stephen Bannon and his Breitbart News website, and the party leadership. Still, the electoral map is strongly in their favour.

All this constitutes a poor outlook for America. Despite the prospect of a tax cut, the best that can realistically be hoped for in 2018 is more bad and divisive government, more deadlock and rancour on the Hill, but, with luck and skilled management from the ­nat­ional-security team, no new wars. Mr Trump could do a lot worse.

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