The Cost

of other industries. And if you speak to other industry CEOs, they’ll tell you, ‘Yes, it’s been quite a dramatic thing.’ And I think we still need more. We’ve burdened ourselves with too much—I mean, I hate to call it regulation, because it sounds like it’s a good thing. It’s nothing but politics, corruption, stupidity, red tape, bureaucracy. Take ten small businesspeople to lunch or dinner. And ask them what they have to go through. Forget big companies. I’m talking about people who own one store, two stores, or three stores. And they’ll start telling you about federal audits, state audits, OSHA, workers’ comp, insurance, litigation, the ability to get licenses, how long it takes, how many multiple licenses you need.”

The bank CEO continues: “And that’s a form of corruption. That’s not because they were just stupid. It’s also that a lot of jobs rely on, you know, not getting permits done quickly. I mean, talk to any real estate person about how long it takes to get a certificate of occupancy. In New York it took 12 years to get the 49 permits required to rebuild a bridge that was basically broken. It could have dropped and killed people. Twelve years. And think of the cost of that, by the way. The Army Corps of Engineers had to come in four times. Four times!”²⁵

The Trump administration recently issued a final rule to speed approval of infrastructure projects. The president tells us that projects that in the past might have waited for a decade or more for approval will now receive action within two years. “That’s one of the biggest things I will have done. You watch,” he adds.

Trump tells us he made deregulation a priority “because I went through, you know, years and years… to get approvals” while running a business. “I understand the system. It’s a consultant system. The consultants go up to Albany or they go down to Washington and they make it very tough. So you have to hire consultants and pay them millions of dollars to get a simple approval. No, I know that business.”²⁶

Beyond Speaker Pelosi, it turns out there’s at least one prominent Democrat who might not wish to shred the entire Trump deregulatory agenda. Former president Obama may still be claiming credit for the success of the Trump economy prior to the pandemic. But in an ironic twist, Obama seems to be among the many Americans who are benefiting from Trump’s war on Washington red tape. That’s because the former president is currently seeking to build the Obama Presidential Center on the South Side of Chicago.

Among the opponents of the massive Obama construction project is Charles Birnbaum, head of the Cultural Landscape Foundation. Birnbaum says that the City of Chicago is using “a Trump-era policy position” to argue that the federal government can’t put up any new obstacles to the Obama plan.²⁷

As president, Obama famously told America’s entrepreneurs, “You didn’t build that.”²⁸ He meant to say that business founders benefited from lots of government services and therefore had not really succeeded on their own. Now, thanks to Trump, it seems that Obama may finally be able to build that presidential center.

Will he now agree with Trump that red tape becomes beautiful when it’s cut?

4

Trump’s Tax Revolution

Is Donald Trump Serious?” asked a New York Times headline on September 29, 2015. The story by columnist Joe Nocera began: “As part of his ongoing effort to make a mockery of the American political process, Donald Trump released his tax plan on Monday morning.”¹ Candidate Trump’s most egregious offense against conventional media wisdom was his proposal to slash the U.S. corporate income tax rate from 35 percent to 15 percent.

The real mockery was the damage the tax had been inflicting on American competitiveness and American workers. When combined with state and local taxes, the total U.S. tax rate on corporate income amounted to nearly 40 percent, the highest in the industrialized world. Also, if an American company brought home the profits made in a foreign market, the Internal Revenue Service taxed those profits, too—even if they had already been taxed by another government overseas. So U.S. companies had an incentive to keep the money offshore instead of investing it in their U.S. factories.

The IRS tax bite on business was so large that numerous U.S. firms were opting for a so-called corporate inversion, merging with a foreign company and locating the new combined business outside the United States. During the final years of the Obama administration, the Treasury Department issued a flurry of notices intended to prevent American companies from fleeing the country—or at least to make it extremely costly and difficult to leave.

After the rookie Republican presidential candidate announced his plan for reform in 2015, Nocera charged that “Trump’s proposed 15 percent corporate tax rate is so low that companies wouldn’t need to leave to enjoy drastically lower taxes.”²

Imagine that: a policy that doesn’t chase business overseas. Candidate Trump correctly diagnosed that the broken U.S. tax system was chasing wages overseas, too. Trump’s big idea was that a lower tax burden would encourage businesses to invest more in the United States. This business investment would buy more tools and technology for U.S. workers to use on the job and allow them to be more productive. And if workers could get more work done each day, they could demand higher wages.

While the media and political establishment reacted in horror to the idea of a lighter business tax burden and treated Trump’s proposal as outrageous, it was hard to argue with him on the merits. Even the economic team at the Obama White House had acknowledged the benefits to workers of a lower corporate tax rate.

Not that Team Obama ever did anything about it, but they did acknowledge the truth in the 2015 Economic Report of the President: “When effective marginal rates are higher, potential projects need to generate more income if the business is to pay the tax and