But those tax cuts, so far, have been a bust, never delivering the sustained surge in business investment that Trump surrogates promised. In fact, business investment shrank last quarter, and recent indicators suggest it could weaken further. That’s partly because of Trump’s trade wars, of course.
Major independent forecasters predict that the economy will grow about 2.2 percent in 2019. As I noted in a recent column, that means we added $2 trillion to federal deficits to get us to . . . the average growth rate we saw during President Barack Obama’s second term.
Well done, Mr. President.
Moreover, Trump surrogates have never provided actual evidence for the assumed straight line between the president’s deregulatory agenda and economic growth.
So let’s consider the kinds of federal regulations that Trump has been rolling back, the ones that are supposedly boosting the economy.
As a case study, take the administration’s decision Thursday to formally repeal a rule that granted expanded federal oversight of U.S. waterways. We are reverting to water-pollution standards from 1986 — a year from Trump’s favorite decade, which was not exactly a high-water mark, so to speak, for environmental protections.
For context, this is one of many deregulatory actions Trump has taken to allow more pollution. Others include allowing power plants to dump more lead, arsenic and mercury into the water; relaxing restrictions on the release of methane and fine particulate matter into the air; and legalizing a pesticide linked to brain damage in children.
This latest case involved the bodies of water the federal government can protect under the Clean Water Act, which makes it illegal to pollute a “water of the United States” without a permit. An Obama administration rule clarified that “waters of the United States” include streams and wetlands that feed larger waterways, including those used for drinking water. The government cost-benefit analysis it produced at the time found that this rule produced net economic benefits.
The Trump administration’s cost-benefit analysis, however, came to the opposite conclusion — chiefly because it abruptly decided that the largest category of benefits previously attributed to the rule could no longer be quantified at all. (The Trump administration said the research that had been used to quantify the benefits of protecting wetlands was too old, even though it cited even older research elsewhere in the same report.)
Therefore, these benefits were effectively assigned a value of zero. Voila, the rule must go.
This legerdemath aside, it’s not exactly clear how allowing greater water pollution would help supercharge economic growth. Sure, it might save some business a few bucks to be able to just dump toxic waste into a local tributary without a permit, but it’s difficult to argue this kind of thing has a substantial positive impact on the overall economy or public welfare.
After all, it’s generally less costly to not pollute the water system in the first place than to try to clean it up once it’s already polluted. Just ask Flint, Mich.
More broadly, this episode helps illustrate how Trump’s allegedly economy-enhancing deregulatory agenda often relies on a false dichotomy: If a policy is pro-environment, it must not be pro-business.
But, in fact, several of the Trump administration’s harmful deregulatory actions have faced significant opposition from the very businesses the administration claims to be helping.
Major players in the fossil-fuel industry have opposed that methane emissions relaxation I mentioned earlier, because they want to be able to make a credible case that natural gas can be clean and climate-friendly (or in any event, cleaner and climate-friendlier than some alternatives).
The auto industry has likewise opposed the administration’s rollback of fuel-efficiency standards. Four major automakers hashed out a deal with California that sets efficiency floors above federal requirements and provides automakers more regulatory certainty so they can plan for the future. The supposedly pro-business Trump administration’s response was to weaponize the Justice Department, launching a bogus antitrust investigation into the automakers.
The cumulative economic costs of such actions — based on damage to the environment, human health and rule of law — may be hard to fully quantify. But we know they’re not zero.