Zeihan on Geopolitics: Trump's Early Days, Part I

The Donald has been president for a few days now. Here’s what I’ve got, broken into bits as I’m able to piece things together. I apologize if this is somewhat stream of consciousness but as we all know, prognosticating about the new American president is not your normal spectator sport.   Part I: Executive Action, Obamacare, Regulation and the Obama Legacy I’ve spoken before of the danger of Obama choosing to not enforce laws that he did not agree with, in large part because of the dangerous precedent it set as regards not simply to civil liberties, but to the rule of law itself. What good is Congress, after all, if its constitutionally-granted powers of legislation can simply be bypassed by a recalcitrant or capricious executive? I don’t bring this up to forecast that is what Trump will do, although the thought has certainly crossed my mind (repeatedly) in recent weeks. Instead, Trump seems to have found an… elegant way around my concern. Rather than following Obama’s precedent of simply ignoring preexisting laws he found distasteful, on his first day Trump instead tinkered with executive flexibility in a starkly different way. In his Day One executive action on Obamacare, Trump directed the IRS that whenever it has any discretion with respect to any aspect of enforcement on Obamacare, that it is to exercise that discretion in favor of individuals and not in favor of the government. (Keep in mind that come Tax Day, it is up to the IRS to impose penalties upon anyone who has failed to purchase health care insurance.) The impact of such an approach is potentially wide ranging to say the least. First, it does an end-run around Obama’s signature achievement. The IRS already possesses wide latitude at enforcing tax law. For example, when the IRS was having a spat with House Republicans in 2015 which resulted in Congress cutting the IRS’ budget, the IRS responded by using its regulatory latitude to simply not answer its phones. With Trump’s new executive order, the IRS will almost certainly not even bother checking if 22-year-olds have indeed purchased their Obamacare-mandated health insurance because the income from the penalties wouldn’t be worth collection. Such “enforcement” in effect kills Obamacare without even resubmitting the issue to Congress. (Of course, it does not replace Obamacare; that’s a far thornier topic for another time.)   Washington, D.C. Second, the new approach potentially signals a very easily-replicable pattern for regulation writ large. Regulatory agencies often use their executive latitude to pick fights with prominent personalities or companies or institutions as a means to induce compliance across the board from folks who would normally resist (think back to how the prosecution of high-profile personalities like Martha Stewart did wonders for dissuading insider trading). If executive orders force the bureaucracy to begin with a presumption against the government, then many existing regulations cease to hold much weight. This holds triply so for regulations rooted in executive privilege as opposed to Congressional law. I anticipate EPA-related regulations -- which haven’t had a lick of Congressional law added to them in six years -- to face particularly harsh gutting. And perhaps most importantly, unlike Obama’s preferred method of non-enforcement of laws he disagreed with, there is zero legal recourse for Trump’s enforcement-lite. You could sue the government should the executive agencies not be enforcing the law or magicking up their own regulations and reinterpretations, but you cannot sue the government for implementing laws within Congressionally allowed ranges. Agencies will still have to go through the motions of formally repealing Obama-era regs, but considering how few laws Obama got through Congress and how heavily he relied upon re-interpretation and executive-originated regulations, this approach could eliminate Obama’s entire legacy in functional terms in a matter of weeks. Many -- including me -- arched an eyebrow at Trump’s earlier assertion that he would reduce the federal government’s regulatory burden by three-quarters within a year. Now my other eyebrow has moved up as well.   BOOK PETER FOR YOUR NEXT EVENT Twitter