Back in the financially tumultuous early years of the Obama administration, it was common to hear worthies of a certain ilk carp that “uncertainty” from Washington was harming economic growth. Here’s Steve Forbes complaining in early 2010—at the beginning of one of the longest expansions on record—that regulatory uncertainty was inhibiting a sustained recovery. Blackstone Group Chairman Steve Schwarzman, in the summer of 2010, compared the mild regulations the Obama administration had passed to Hitler invading Poland. Some of these gripes continued into the late Obama years: In April 2014, supply-sider Larry Kudlow moaned that the “incredible uncertainty about Obamacare and its taxes and regulations” was hampering the markets and the economy.
Of course, business and policy are always uncertain to a degree. And policy changes in 2009 and 2010 did create new mandates and requirements for businesses. But the stimulus, Dodd-Frank, and the Affordable Care Act were generally well–thought out, slow to materialize, and coolly implemented. And there’s simply no evidence that “uncertainty” about the path of policy in Washington, however you define it, hampered business investments, hiring, and especially market performance in the period between 2009 and 2016. Because “uncertainty” doesn’t really mean uncertainty—it’s just code used by supply-siders and right-wingers. What they really didn’t like was the fact that a guy named Obama was sitting in the White House, poised to raise their taxes. (Readers, he did. And the economy and S&P 500 survived.)
When President Trump was elected, the concerns of supply-siders and Wall Street titans over uncertainty seemed to dissipate. They were sure that the impending tax-reform package, regulatory reduction, and the repeal of Obamacare would cause the markets and economy to boom. An incoming administration hostile to facts, norms, and maybe even the sanctity of the republic? No concerns here! And, as Trump often reminds us, the markets have soared to new heights while volatility has decreased. But six months into his presidency, there is abundant evidence of actual uncertainty emanating from Washington—including but not limited to the policy chaos intentionally fomented by the Trump administration—that is beginning to harm business and investment.
Across the board, Trump has generally not bothered to staff up the government, thrown into question long-standing U.S. trade policy, and instigated and supported efforts to blow up the insurance industry. And it is starting to become clear just how these efforts are harming business.
“Trump’s Stalled Trade Agenda is Leaving Industries in the Lurch,” reads the lead story in the business section of Tuesday’s New York Times. Apparently, the uncertainty over whether Trump will impose tariffs on imported steel has been spurring foreign suppliers to ship more steel to the U.S.—which simply makes it more difficult for domestic producers to compete. Adam Behsudi of Politico has a fantastic, deeply reported article this week on how Trump’s decision to pull the U.S. out of the Trans Pacific Partnership—and the ensuing efforts by other countries to negotiate trade deals among themselves—is undermining the ability of U.S. agriculture producers to export. “I’m scared to death,” said Ron Prestage, a North Carolina businessman who had just made a big investment in a meat-processing plant in anticipation of more business after the passage of TPP. Behsudi also interviewed corn farmers in Iowa who have seen the price of their product gyrate in response to Trump’s hostile tweets toward Mexico. Trump promised to get Americans better deals on international trade. Instead he’s only delivered migraines.
Trump talked a big game about supporting pipeline construction during the campaign—especially the Keystone XL pipeline. But his slowness to staff up the federal bureaucracy has made it difficult for proposed pipeline projects to get off the ground. In May, Bloomberg reported that some $50 billion in work was either “slowed or stalled” because the Federal Energy Regulatory Commission wasn’t capable of approving them. “For the first time in FERC’s 40-year-history, the agency doesn’t have enough commissioners for a quorum to vote on project applications.” Last week, Politico put the amount of stalled shovel-ready projects somewhat lower: at $13 billion. “Trump’s slowness to fill vacancies at the Federal Energy Regulatory Commission is one reason for a growing backlog of natural gas pipelines and a gas export terminal awaiting approval from the agency, which has been unable to conduct major business since February.” Wasn’t this president supposed to be fossil fuels’ best friend?
Nowhere is Trump’s combination of chaotic management and policy ignorance more evident than in health care. With a substantial assist from Republicans in Congress, Trump has done an enormous amount to intentionally create uncertainty for health insurers and health providers. Over the past seven years, the massive health industry has rebuilt itself around the Affordable Care Act and anticipated levels of funding for entitlements such as Medicaid. But Trump has backed—and then not backed, and then backed again—legislation that would have slashed hundreds of billions from Medicaid and eliminated the individual mandate that keeps insurance markets stable. He has threatened on multiple occasions to withhold payments from insurers that offer plans on the exchange. And his Department of Health and Human Services is trying to undermine enrollment in insurance plans. The result, as Politico reported in an article headlined “GOP Uncertainty Over Obamacare Drives Out Insurers,” is that insurers are abandoning markets and lines of business.
President Trump has talked a great deal about a big infrastructure package, but nobody on his team has really bothered to flesh it out. Remember the clown show of infrastructure week in early June? The Trump administration says it wants to enlist the private sector to fund roads, bridges, and other vital projects, and its proposed budget zeroed out a bunch of grants and programs that support long-planned projects. All of which has had the effect of freezing progress and planning on dozens of ongoing projects. “The sudden uncertainty has left local officials who had long anticipated federal support for their projects worrying whether they will get it,” the Chicago Tribune reported in June.
And then there’s what happened on Tuesday when Trump, speaking from his golf club in Bedminster, New Jersey, injected an entirely new source of uncertainty into the world by threatening North Korea with “fire and fury like the world has never seen.” Markets immediately nosedived.
In the Obama years, there was uncertainty over whether the top marginal rate would be 35 percent or 39.6 percent. In the Trump years, there’s uncertainty over whether a country of 25 million people will be here tomorrow.