GERARD HOWLIN: Impasse and stasis in the US is in Ireland’s economic interests

Impasse is an undervalued resource. This is a great time for not getting things done. In our always-on world, inactivity isn’t a value that’s believed in. We know of no usefulness except the doing of things.

Bigger issues lurk. The blue light in our smart phones when kept beside the bed is causing a pandemic of sleep deprivation.

As comedy, we bewail political impasse here. We need strong government and strident action it seems. This ignores a truth that most of our problems were contributed to by governments that were so strong, they could not be checked.

The comedy, of course, is that those wailing loudly and often now, previously had long careers bemoaning the weakness of our Irish legislature.

If only we did things continental-style, we would be so much more sophisticated. What they really meant is their sense of inadequacy about a parochialism they associated with being Irish would be alleviated.

When we had a continental-style, 70-day impasse in 2016, it was as if the sky had fallen in. And now, poor dears, nothing has been the same since.

Impasse is an essential political tool. The separation of powers goes back to republican Rome. It is embedded in the American constitution, which is the basis for the longest continuum of modern democracy. The frenzied activity and nightly tweets of US president Donald Trump belie inactivity on issues that count here. It is too soon to be complacent, but the blitzkrieg promised at his inauguration is wilting.

Unfolding now are longer, messier and, ultimately, uncertain struggles on taxation and immigration. Those are the signature issues of a nativist plutocrat. Healthcare was adopted partly to better campaign for the political base of the Republican Party. Trump’s defeat on healthcare is important for us, however.

The money to be taken away from the care of the poor would have become tax cuts for the rich and corporations. Whatever the eventual outcome, the sums involved in US tax reform will be less, and so will the knock-on impact here.

Heathcare was very important politically because firstly it slowed the president’s momentum. It was the moment when first one, then another Republican senator dissented. The fact of effective dissent within his own party is especially important, given Trump’s bullying. It undermines his style of government.

It transforms dreaded ire into risible bluster. Dissent restates what some Republicans had not forgotten; Trump is not a Republican at all. The degree of dissent and of likely stasis ahead, exceeds three senators voting against their party on healthcare.

‘Mr Sam’ or Sam Rayburn, the longest-serving Speaker of in the history of the House of Representatives — a Texan who mentored Lyndon Johnson, who himself was a formidable leader of the Senate — had a pact with his members. They had to vote for a bill that was unpopular in their district only if absolutely needed.

They stood aside as the roll call progressed, waiting on a nod from Mr Sam. Hoping to be excused, they knew they must deliver if required.

In a system nearly absolutely controlled by seniority and the leadership, to refuse risked all hope of preferment. Reform in the 1970s shifted power to the floor. There will never be another Mr Sam in the House or LBJ in the Senate, changed systems won’t allow it.

Republican senate leader Mitch McConnell had no such powers of compulsion but a countervailing force keeps others in line for now. Just as power in Congress has passed to the floor, power in parties has switched to the primaries.

What is saving Trump from greater republican dissent is fear of being primaried by the forces that elected him. But if you are operating on tight margins, small losses at the edges mean the difference. It is on such things, that Ireland’s interests hinge.

Whatever may be ultimately decided in the US on tax reform, failure on healthcare likely affects its permanence. Unless there are alternative sources of income, huge tax cuts probably can’t be made permanent, because of an overriding legal requirement to balance the budget. Congress comes back in September, and must again try to pass a budget. This is critical for tax and is procedurally arcane.

It is only in the budget reconciliation process between House and Senate that a simple majority in the Senate will suffice to make changes on tax. Outside of the reconciliation process, Republicans require an unattainable, filibuster-proof 60 senate votes.

So in terms of time, in terms of available resources to play with, because savings in healthcare are off the table and in terms of parliamentary procedure, there is a limited window of opportunity this autumn for Trump to do something big on tax. What is done, matters to us enormously.

Already the agenda is reduced. Republicans have now abandoned a border adjustment tax. This would have meant two things. Imports would no longer have been deductible from company profits.

So the cost of goods and services manufactured here but used in the US would have soared and become less viable.

That would have been a suckerpunch to the Irish economy. On the flip side of that coin, US exports would not have been taxable, doubling down on the first impact. But thanks for impasse and stasis. There is the classical break between the branches of government.

There is division between parties and, in the case of Republicans — who control all branches of US government — particular divisions within it. And lastly, there is old-fashioned vested interest.

Services dominate modern economics and they baulked at an agenda which might have benefited some manufacturing, but would have screwed them. Globalisation has taken deep root. A nativist agenda finds it hard to travel from the campaign trail, into policy.

The issue now is how much money — given how little healthcare contributed — is found to fund cuts in US corporation tax.

Trump’s promised 15% seems impossible. Wherever below the current 35% it settles, while important it’s not central to Irish competitiveness for foreign direct investment.

Impasse across the Irish Sea means former British chancellor George Osborne’s agenda of further reducing UK corporation tax is off the agenda. That’s a silver lining in an otherwise dark Brexit. Playing at the edges for a living, you accentuate your advantages.

We live at the end of a long era defined by Thatcher and Reagan. Their promise seemed fulfilled in the fall of the Berlin Wall.

A new normal hasn’t arrived. Belatedly, we are experiencing a much more interlayered complexity in doing business at home. It is how much of the world works. It is certainly how the world seems set to work through the consequences of dislocation and instability.

Once misplaced parochialism lamented predictability here. Similarly misplaced sentiment misunderstands and resents the absence of a certainty if not authoritarianism that has passed here since. It’s akin to Russian nostalgia for Stalin. At least then you knew where you stood.

Whatever may be ultimately decided in the US on tax reform, failure on healthcare likely affects its permanence.


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