Milling & Baking News - May 23, 2017 - 32

Washington Update X

Inside President Trump's early
days offers interesting dynamics
BY ROBBIN JOHNSON

Pundits of every stripe used the "first
100 days" as a benchmark to measure President Donald Trump's performance, but House passage on his
105th day of the American Health
Care Act has created an entirely new
debate. It is clear that any effort to "repeal and replace" the Affordable Care
Act (sometimes known as Obamacare)
is likely to be slow and arduous. It
might be useful, however, to revisit
those earlier days, as much of interest to the agricultural community has
been put in motion - and doubt.
During his campaign for president,
Mr. Trump promised to put "America
First," with a number of steps laid out
in defining this new path. Those included - on the trade front - withdrawing from "bad" trade deals like
the proposed Trans-Pacific Partnership (T.P.P.) and the 23-year-old North
American Free Trade Agreement
(NAFTA), as well as labeling China
a "currency manipulator." All three
steps would undermine important
U.S. agricultural export interests.
On security matters, future support
of the North Atlantic Treaty Organization (NATO) was questioned, getting
bogged down in Middle Eastern chaos
was criticized, and Russia was lauded
as a promising ally in the war on terror.
While less direct threats to agricultural interests, such steps called into
question the post-WWII framework
America had built up.
This checklist caused widespread
heartburn and not just among Democrats conditioned to object to any Trump
initiative. Many Republican and independent voices worried aloud where
this apparent elevation of "protectionism" and "isolationism" might lead.
Actions reinforce concerns
Actions by President Trump in his
early days reinforced those concerns, as
he followed strategist Steve Bannon's
advice to withdraw from the T.P.P. President Trump also was reportedly on the
verge of announcing plans to withdraw
from the NAFTA when calls from Mexican President Enrique Peña Nieto, Canadian Prime Minister Justin Trudeau
and persuasive voices from family adviser Jared Kushner and the agricultural
export community prompted a change
of course. Instead, renegotiations were
promised down the road. A series of investigations on such things as steel and
32 / May 23, 2017 XMilling & Baking News

aluminum imports' effects on national
security, new duties on Canadian lumber imports and saber-rattling over Canada's "supply management" protection
of its dairy and poultry industries, however, keep concerns front and center.
More encouraging was the reorganization of the White House economic
team to give a stronger hand to Gary
Cohn and Treasury Secretary Steve
Mnuchin on foreign economic policy
matters. It also is true that Congress
plays a steadying hand in trade policy.
And in the absence of U.S. leadership
on trade reforms, partners like Japan

and the European Union seem willing
to step forward.
The about-face on China was even
more pronounced. Far from labeling
the country a currency manipulator,
President Trump has met personally
with Premier Xi Jinping and apparently is working with the Chinese in
a coordinated effort to isolate North
Korea and curb its nuclear ambitions.
On the European front, Trump national security and foreign policy officials have reaffirmed America's commitment to NATO. In the Middle East,
a reckless use of chemical weapons on
his own people by President Bashar alAssad of Syria prompted an immediate
retaliatory strike by the United States.
U.S.-Russian relations were strained
as a result, and a more realistic President Trump is probing where the United States and Russia can cooperate to
stabilize the region. President Trump
also has said some reassuring things
about the Iran nuclear deal he vilified
during the campaign, but he still keeps
his threat to tear it up near at hand.
Domestic affairs
The Trump administration began
moving boldly to deliver on campaign
promises to curb illegal immigration,
repeal and replace Obamacare, lighten
the regulatory burden on banks and
businesses, and reform corporate and
individual income taxes. Here it quickly

encountered the reality of American
government's system of checks and
balances. Courts have blocked two initiatives from the Trump administration
on immigration, although immigration
rates have dropped noticeably.
The first attempt at health care reform had to be withdrawn to avoid
an even more embarrassing defeat
because House Republicans could not
round up enough votes to pass it.
Though encouraged by some to
abandon the effort because of its political risks, President Trump and the
House leadership pressed ahead,
eventually passing a measure by the
close vote of 217 to 213. The issue
now moves to the Senate and may yet
founder over different priorities for
expanded access versus lower insurance costs. Still, the stigma of failure
has been at least temporarily removed.
Perhaps of greatest interest to businesses and the agricultural community is
President Trump's tax reform proposal.
For individuals, it would go down to
three tax brackets (10%, 25% and 35%)
while eliminating some deductions (including for state and local taxes) and
repeal both the alternative minimum tax
and the estate tax. For corporations, it
would lower the maximum rate to 15%,
grant a lower, one-time tax on repatriated
earnings and implement a territorial tax.
It also appears to have moved away
from the idea of a border-adjustment
tax but leaves open how to offset reduced revenues. The prospect of lower
business taxes already has encouraged
many U.S. companies to announce
plans to invest more in U.S. plants.
The May 3 issue of The Wall Street
Journal even reported that Chinese
companies are looking afresh at investing in America. Approval of the
proposals, however, is a long way off,
facing procedural hurdles in the Senate, worries about tax avoidance from
its "pass-through" provisions and the
many parochial interests that will lobby for their specific desires.
Many other initiatives have been
launched or are under consideration
within the Trump administration.
Given all of the barriers that impede
change in the American system of
government, it is way too early to predict which will come to fruition. MBN

Robbin S. Johnson, a fellow
with the Hubert H. Humphrey
Institute of Public Affairs,
is a contributing editor at
Sosland Publishing Co.
bakingbusiness.com / world-grain.com

http://www.bakingbusiness.com http://www.world-grain.com

Milling & Baking News - May 23, 2017

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