Saturday 29 April 2017

President Trump battles the Washington Beltway (Sunday Guardian)

By M D Nalapat

Although Donald Trump was advised to reach out to the Washington Beltway, US’ Lutyens Zone, he has disregarded such counsel in several particulars. 
WASHINGTON: The relationship between New York and Washington is similar to that between Mumbai and Delhi. The first does not like, nor thinks highly of the second, and the sentiment is reciprocated. Both Delhi and Washington are the source of rule upon rule, restriction after restriction, on what Mumbaikars and New Yorkers do best, which is make money through business. Delhi and Washington spend the money that Mumbai and New York pay out in taxes, and constantly search for ways of getting more out of these commercial capitals, so as to meet the cost of the many schemes that are popular less with the people than with the officials and politicians who make money off them. These are, of course, eager to don a Robin Hood dress, professing to take from the wealthy to give to the poor. Except that it is not the underprivileged, but the well-connected who garner most of the benefits of policy decisions made in the capitals of the world’s two largest democracies. The 45th President of the United States, Donald John Trump, is a second-generation New Yorker and his family consists of third and fourth generation New Yorkers, a type of citizen as distinct from the Washington elite as quintessential Mumbaikars are from the self-obsessed, self-pampering denizens of the Lutyens Zone. In 2014, that location went into shock on 14 May when Narendra Damodardas Modi won the right to be the next Prime Minister of the Republic of India, but recovered its spirits on 26 May, when some of the most consequential names in the Modi government were from the very core of the Lutyens Zone.

The new Prime Minister of India had a transformational agenda to implement, and has sought to co-opt elements of the Lutyens Zone in this task. However, these habitués of the Lutyens Zone, while overtly pretending to be won over, have sought to derail and delay as many Modi initiatives as they could. They have succeeded in blocking the Land Bill and in delaying GST by two years. However, now that the UP elections have shown that only Narendra Modi has the trust of the voter, and not rivals who are residents of long standing within the Lutyens Zone, it is expected that the Prime Minister will accelerate implementation of reforms that are essential to push India onto a high growth track, and convert the country’s governance system into a 21st century, rather than the existing 19th century construct. However, completion of such a historically essential process may take two Modi terms, possibly a bit more. The good news is that after the 2014 Lok Sabha results, UP 2017 has given Modi all the tailwind needed to force through reforms on a scale never before seen in free India.

Although Donald Trump was advised after his inauguration to reach out to the US counterpart of the Lutyens Zone, the Washington Beltway, he has disregarded such counsel in several particulars. Even the US President’s “establishment” picks, such as Defense Secretary James Mattis and National Security Advisor H.R. McMaster may be termed friends of the Beltway, but not its members, while high-level choices such as Treasury Secretary Steven Mnuchin and Education Secretary Betsy DeVoss are far removed from the Beltway fraternity, as are many others including FCC chief Ajit Pai and Trade Commissioner Peter Navarro, both of whom are facing attacks from the traditional establishment for their counter-Beltway views, as indeed is President Trump himself. On 26 April, President Trump announced changes in the US government’s approach to taxation by suggesting alterations that are as consequential in their future impact as Franklin Roosevelt’s New Deal was, although aimed in a different direction. Not at the people at large, but at the business community, in the expectation that these will power the economy into a 3% or higher rate of growth, so that jobs grow and the fiscal deficit shrinks. 

Unlike in India, where both the Home as well as the Finance Ministries have long been resistant to accelerated change, the US Treasury Department has, within a hundred days, begun implementing Donald Trump’s promise of lower tax rates, while the Defense Department has already thrown away several Obama-era restraints on the military. The differences between the approaches to governance of Modi and Trump are many. The former’s careful manoeuvres have ensured largely supportive press and television coverage, even as the Prime Minister has incrementally, but steadily, gone about changing the texture of governance. In the case of Trump, his public disdain from Day One for the Beltway and its policy choices has resulted in a blizzard of negative press reports on a scale seen in the past only in the case of Richard Nixon in his final months in the White House. This is partly the consequence of Trump’s own decision to bypass the media, including by breaking hallowed Beltway traditions such as attendance at the annual White House Correspondents Dinner. 

Narendra Modi had thirteen years as Chief Minister of Gujarat to acclimatise himself with the machinery of government before taking over the most powerful post in the country, while Donald Trump had no such exposure before taking charge of the US government. However, the byproduct of this lack of familiarity in the case of Trump has been a willingness to quickly impose changes in policy on a level unprecedented since the 1930s. In particular, President Trump has mandated that two existing regulations must be removed before any new regulation comes into effect. Should he survive the campaign designed to ensure that he be removed through impeachment before 2020, and given his fighting spirit, this seems likely, the US is going to be a very different place in less than four years than it was before Trump took charge. In the case of Narendra Modi, transformational change within the governance system and its policy matrix is taking place at a much more measured pace than that set by Trump. Therefore, completion of the “Modi-fication” of Government of India will require a second Modi term, and BJP president Amit Shah can be expected to deploy all the weapons in his armoury to ensure that this takes place.

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