Against Government Coercion? Not So Much

In his 1996 State of the Union address, President Bill Clinton said that “we know big government does not have all the answers. There is not a program for every problem. We know we need a smaller, less bureaucratic government in Washington — one that lives within its means.” He famously added, “The era of big government is over.”

It's been downhill ever since. President George W. Bush spent money at a rate that would make most Democrats’ heads spin. He expanded Medicare, he agreed to corporate bailouts, he went all Keynesian on us and argued that sending checks to people would stimulate the economy, and he ended his second term by saying these words: “I’ve abandoned free market principles to save the free market system.”

Next in line was the very popular Barack Obama, who proceeded to saddle the country with more entitlement spending in the form of Medicaid expansion and health care subsidies, and made soaking the rich a hip idea.

And now we have President Trump. As we saw on Tuesday night when he delivered his second State of the Union address, he couldn’t care less about small-government policies. To be fair, he delivered a bunch of lines that sound good to libertarians and free market conservatives. For instance, I can’t say my heart didn’t beat a little bit faster when he said: “America was founded on liberty and independence — not government coercion, domination and control. We are born free, and we will stay free.”

The problem is that for a guy who claims to be against government coercion, he certainly goes out of his way to guarantee that our future will be filled with government coercion.

For instance, during his very long speech, Trump never even mentioned the debt, which has reached $22 trillion, or the annual budget deficits, which are heading surely and permanently over the $1 trillion mark. While past Republican presidents may not have been fully honest about their commitment to fiscal responsibility, they at least felt that it was important to maintain the appearance of caring.

Not this president. In fact, according the Washington Post, when the president gave a preview of the speech to supporters and was asked why there was no mention of the debt, acting White House chief of staff Mick Mulvaney candidly replied, “Nobody cares.”

Leaving aside the fact that Mulvaney used to be a budget hawk until he went to work for Trump, we got to see a sample of the many things the president would like to spend taxpayer money on — things like infrastructure, a border wall, and cures for HIV/AIDS and childhood cancer. All that extra spending, plus his refusal to mention our growing debt, doesn’t square with his denunciation of government coercion, unless his definition of the word coercion excludes the government’s taxing the hell out of us to pay for exploding government spending.

His definition of coercion would also have to exclude the government’s creating a federal paid-leave program for all workers. Indeed, as he announced on Tuesday, “I am also proud to be the first president to include in my budget a plan for nationwide paid family leave — so that every new parent has the chance to bond with their newborn child.” Does he — and the various conservative groups supporting this proposal — not see that his scheme to guarantee that “every new parent” gets paid leave indeed involves the use of “government coercion”?

When, last year, the president proposed a federal paid-leave program funded through the unemployment-insurance program, he proposed no spending cuts to balance the extra spending, guaranteeing that taxpayers will have to be coerced into paying higher taxes. What’s more, once the program is in place, how long do you think it will take for this president, or future presidents, to impose a mandate on all businesses to grant 6 to 12 weeks of paid family leave? I say, not long. Unfortunately, the consequences will be real, as they have been every time in the past.

And then there is the trade stuff. During his speech, our allegedly anti-government-coercion president not only didn’t budge from his current protectionist policies, he actually demanded that Congress grant him even more power to further punitively tax the consumption of his fellow Americans. He said:

Therefore, we recently imposed tariffs on $250 billion of Chinese goods — and now our Treasury is receiving billions of dollars…. Tonight, I am also asking you to pass the United States Reciprocal Trade Act, so that if another country places an unfair tariff on an American product, we can charge them the exact same tariff on the same product that they sell to us.

First, notice how the president is bragging about raising billions of dollars in import taxes. Either he still doesn’t understand that American consumers pay a large chunk of these tariffs (and that these tariffs are bad for the overall U.S. economy) or he is truly proud to penalize Americans who buy foreign goods that he doesn’t approve of.

Second, the Reciprocal Trade Act that he wants Congress to pass would allow him to adjust individual tariffs upward to match those imposed by other countries. This would be calamitous for our postwar global-trading system. That system’s core is a non-discrimination principle. It means that World Trade Organization countries can set duties as they please; however, they must apply the same rates on the same item no matter where that item comes from. That’s what explains why the U.S imposes a 25 percent duty on imports of light trucks when many countries don’t, but applies that duty to every nation with which we don’t have a free trade agreement.

This requirement means that no member can unilaterally raise a duty on given items coming from one country alone. Yet making possible such unilateral tariff hikes on a country-by-country basis is just what the administration wants to do. If it does so, other governments will retaliate and litigate very quickly. This radical change will jeopardize a system that has done so much over the past three-quarters of a century to make global trade freer.

It would be bad news also for American taxpayers. According to my colleague Dan Griswold’s most recent study, looking at our 10 largest trading partners, if implemented the administration’s reciprocity plan means 25,800 upward tax-rate adjustments. Griswold notes that “the higher duties would apply to $583 billion in imports to the United States, raising the duties on 45 percent of imports from the affected trading partners.”

And that’s only looking at the top 10 trading partners. Once countries start retaliating with higher duties, it won’t take long before the U.S. finds itself in “192 tariff wars, one against each country on Earth,” as the Wall Street Journal noted.

These are only a few of the ways this president, contrary to his claim, embraces government coercion. Unfortunately, these policies are not close to being balanced out by his commendable support for school choice, his first step toward criminal-justice reform, his deregulatory agenda, and his cut to the corporate income tax rate. In fact, if you add his restrictive views on immigration and his repeated promise to not reform Social Security and Medicare, you end up with a president very much devoted to coercion.

Wouldn’t you say?

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Veronique de Rugy

AIER Senior Fellow Veronique de Rugy is also a Senior Research Fellow at the Mercatus Center at George Mason University and a nationally syndicated columnist. Her primary research interests include the US economy, the federal budget, homeland security, taxation, tax competition, and financial privacy.