Philippe Waechter
The US administration’s partial shutdown marks a first in the country’s history: this is the first time that we have witnessed this type of situation when the same party occupies both the White House and Congress.
It was somewhat different during Barack Obama’s presidency in 2013, as Congress was not in Democrat hands, and looking further back, President Jimmy Carter came up against difficulties in financing his budget with his Democrat majority at the end of the 1970s, but there was no shutdown.
This failure for President Trump and Congress to get along has been the hallmark of the current Republican administration’s first year. The power dynamics between the two institutions ends up creating a puzzling sort of inefficiency. The disagreement of the moment is on the Deferred Action for Childhood Arrivals program, which involves young foreign-born individuals who arrived in the US as children. It turns out that Trump is in favour of a law to welcome them in the end, but the Republicans are unhappy with a bill partly drafted with Democrat agreement.
Beyond the partial and temporary shutdown of the US administration, it is worth making a number of remarks on the Trump administration’s first year as a whole.
The first is a radical change in communication. Specialists on the US economy and society along with many others must now pay particular attention to tweets from the White House as they can provide information on new policies for economy strategy, US diplomacy and any number of other issues.
The second change is the new non-cooperative international politics coming out of Washington, even with close and friendly countries e.g. Mexico, Japan, the UK and even Germany.
This makes international relations bumpy as America is no longer the mainstay around which other countries can unite, but rather a country that does not even try to rally up its usual partners. A new, as yet unclear, balance is emerging for the western world. This can provide Europe with an opportunity to carve out a special role for itself – it is up to Europeans to grab this opportunity.
Trump’s economic model is a zero-sum game: other countries’ gain is the US’s loss. These dynamics must be reversed. It is this very approach that explains pressure from Donald Trump at the start of his term to repatriate manufacturing jobs to the US.
By Philippe Waechter, Chief Economist, Natixis Asset Management