POLICY IMPLEMENTATIONS EXPECTED DURING THE FIRST SIX MONTHS
by Sunil J. Wimalawansa
With proper, fair, honest, and transparent goals and financial management through proper channeling of resources into infrastructure, security, law and order, education, and healthcare with equal opportunity, we can expect to achieve a new prosperous era.
( January 8, 2017, Washington DC, Sri Lanka Guardian) Part #8 of this series of articles explored what is expected and should be carry out during the first three months to Trump-Pence administration. In addition, there are many second-tier actions expected not only by supporters of Mr. Trump but also by the vast majority of Americans. Some of these include:
- Lifting some of the regulatory restrictions on exploration of $50 trillion reserves of energy production opportunities that were banned due to environmental and climate change concerns related);
- A sensible and balanced approach to protecting the environment and preventing worsening of climate change versus job creation and economic growth;
- Building a physical and electronic embedded security barrier (wall) in the southern border with Mexico (perhaps, paid by instituting a new tariff of 2.0%, “southern border tax” for all imports (currently, 270 billion/year) that would generate the needed 5.4-billion-dollar revenue per year, to build the wall—thus, indirectly paid by Mexico);
- Renegotiating the Trans Pacific Partnership (TPP) and North American Free Trade Agreement (NAFTA) for the benefit of American businesses and people;
- Engaging in tough but fair negotiations in favor of the United States; negotiations with all sectors in America with the goal of creating new jobs and gain long-term benefits for exports and the country, such as financial/banking, manufacturing, security, healthcare, energy, and pharmaceutical services.
- Enforces laws to eliminate discrimination and related biased activities at federal, state, and local levels;
- Naming the currency-manipulating countries and placing appropriate pressure to improve bilateral relationships;
- Ending the defense sequester to facilitate the rebuilding and modernization of United States armed forces to enhance its ability to take decisive swift actions, and effectiveness and predictability (not necessarily to expand personnel);
- Reconsider initiating a missile defense system to protect America;
- Reform the failing current healthcare system into an affordable and fair, extensively available, and, cost-effective healthcare system (modernizing the Affordable Care Act);
- Education reforms across America and improving the standard of education;
- Minimize the tremendous resource wastage (estimated to be more than one-trillion dollars, annually) in federal and state systems;
- Eliminate inefficacies and unproductive state and federal bureaucracies from all departments;
- Revamping the Department of Veterans Affairs.
While few of these can be achieved in relative ease, other require congressional approvals thus, going to take a longer time.
This is an area in which Mr. Trump is expected to receive bipartisan support (from leading democrats such as, Chuck Schumer, Nancy Pelosi, Joe Manchin, and others) for passing legislation for the approval of funds. However, the Trump administration needs to explain to Congress and to the public, from where this proposed trillion dollars comes from. The mere suggestion of having a private-public partnership to generate funds is inadequate.
The anticipated Trump-tax reforms will be associated with a significant reduction of tax revenue to the government. This expected abrogation of government revenue in 2017, the government must rely on funding the treasury through other means. Such as the increase payroll taxes and the taxes generated through growth and profits of companies. However, there will be a significant financial gap between the funds needed and income generation for the government. This necessitates the administration to succinctly explain how they propose to fill this financial hiatus tangibly, in a transparent manner.
Actions are needed to smoothen out the impending widening financial gap:
With the loosening of regulations and reductions in corporate and repatriation taxes, there is no doubt the economy will surge. However, this is going to take some time to materialize. In the absence of yet another massive quantitative easing (QE; as the U.S. Central Bank, the government was engaged in for many years, that can increase inflation), government must explain to the constituents the plan to overcome this without further adding to the budget deficit.
To fund major ambitious projects such as large-scale infrastructure development, cannot be done in a vacuum; the treasury needs to have adequate reserves. Even the establishment of a private–public partnership as currently discussed for the proposed national infrastructure development program, likely to increase the budget deficit, at least in the short term. Is this the expectation of the new government?
Nevertheless, with the estimated gross domestic product rate increasing from the current ‘aggregate’, anemic growth rate of 1.8% to the expected, vibrant 4.0% or more, the economy will be reenergized, as will the corporate sector, treasury, and the country. What matters most is creating local jobs, particularly high-paying manufacturing jobs in the United States, so that people will be put back to work that they are eagerly seeking. A win: win situation for the country/government and its people.
Provision of tax credits to corporations and stimulus packages will not work:
To avoid conflicts of interest and potential failures, and inevitably adding inefficiencies to the system, the infrastructure projects should not be link to tax credits as incentive (some call unintentional bribes) for companies. Providing tax-credits or providing a stimulus packages for infrastructure development is an unwanted and a dangerous path to take, which is likely lead to wasting billions of dollars of taxpayer’ funds.
In addition to increasing the risk of failures, such off-track methods also create lack of financial transparency and encourage financial/accounting scandals. Funds should not be provided as “future benefits” for the corporate sector. Instead, funds should be directly provided for those who carry out the work, but not as incentives. In the unlikely event, if one of these methods is opted, it would provide a signal to the public that the government is engaging in secretive dealings and providing favors to selected corporations. This is not the type of publicity that the new administration should seek for.
Similarly, the provision of “stimulus packages” and providing money (hand-outs) to various sectors, inducing special-interest groups, construction, and federal research and development establishments such as National Institutes of Health, National Science Council, NASA, are recipes for failure. The country vividly witnessed such during the early part of the Obama administration. This is an unwise path to take.
What the constituents would expect:
Members of Congress must realize that the success of the presidency and the country depends on positive working relationships between the executive and legislative branches of the government. Thus, deals should be made across the aisle that help these two branches of the government to work collaboratively to navigate difficulties. Voters will be watching carefully of the actions of politicians and hold them accountable for their failures and successes.
To be Continued
Professor Sunil J. Wimalawansa, MD, PhD, MBA, DSc, is a physician–scientist, social entrepreneur, educator, and philanthropist, with strategic long-term vision. The author can be reached via wimalawansa.org