The US and European media and political establishment remain in denial about Donald Trump. They are still not used to the US president’s style of doing business. They have conveniently forgotten how much they disliked Ronald Reagan while he was in power in the 1980s only to change their tune later. They have forgotten the truly disturbing behaviour of Richard Nixon, who resigned from office in 1974 after his attempts to hide illegal activities by his administration were revealed. His access to ‘the button’ alarmed his own defence secretary. Trump is of sound mind and body by comparison.
Trump has completed one year of his presidency and there is still no impeachment in sight. He has managed to legislate tax cuts, despite his insulting tweets about some Republicans in Congress. The tax cuts are regressive and will increase the national debt, but this is to be expected from a declared right-wing Republican. Neither the Reagan nor George W Bush tax cuts were progressive, nor were they models of fiscal probity. That is what you get if you elect a Republican president. Fiscal probity has not been a strong point of presidents of either party since 1945, Republican Dwight Eisenhower (1953-61) and Democrat Bill Clinton (1993-2001) excepted. Trump will not be the first to increase the debt.
The US economy has continued to perform well. Not just the stock market, but income growth and employment numbers look flattering, and inflation is still low. The succession to Janet Yellen, chair of the Federal Reserve, promises to be smooth. A serious geopolitical shock excepted, there is no reason why 2018 should not be a good year for the US. It seems that Trump’s unorthodox tactics with Kim Jong-Un, the North Korean leader, have worked enough to bring the country to talks with South Korea. Iran remains largely stable. The Israel-Palestine situation has not changed substantially, whatever the spectacle, despite Trump’s controversial decision to recognise Jerusalem as the capital of Israel.
The one issue still open is whether Trump will get the budgetary room for manoeuvre he needs for his infrastructure spending plans. Regarding his desire to repeal or reform the Affordable Care Act (better known as Obamacare), the result will depend on the outcome of the midterm elections in November. If Republicans return stronger, there will be another attempt.
Trump may yet be a highly successful president. Many in the US and elsewhere may be loath to admit it, but that is the reality.
Lord (Meghnad) Desai is Emeritus Professor of Economics at the London School of Economics and Political Science, and Chair of the OMFIF Advisers Council.