Thanks to strict COVID-19 state lockdowns, the American economy has plummeted faster than it did during the Great Depression. According to federal statistics, gross domestic product fell 5.0 percent in the first quarter of 2020 after bouncing between plus 2.0 to 4.0 percent during the three years prior. After hitting all-time lows from 2017 to …
Thanks to strict COVID-19 state lockdowns, the American economy has plummeted faster than it did during the Great Depression. According to federal statistics, gross domestic product fell 5.0 percent in the first quarter of 2020 after bouncing between plus 2.0 to 4.0 percent during the three years prior. After hitting all-time lows from 2017 to 2019, unemployment has skyrocketed to more than 13 percent, putting more than 15 million Americans out of work. The Trump administration, Congress and the Federal Reserve have resorted to emergency measures, including trillions in new spending and intervention in the financial markets, to alleviate the suffering and prevent the economy from seizing up.
Thanks to the Supreme Court, however, Trump could do more. Under the Court’s decision upholding the Obama administration’s deferred immigration programs last week, Trump could unilaterally cut income taxes by 50 percent, accelerate infrastructure projects and cut red tape for starting new businesses. He could create a “recovery permit” that would give businesses the right to sidestep agency red tape, burdensome environmental regulations and onerous obstacles to opening new enterprises.
A faster Trump recovery could come thanks to—unintended, no doubt—Chief Justice John Roberts and the four liberal justices. Their majority decision in Department of Homeland Security v. Board of Regents blocked President Trump’s repeal of the 2012 Deferred Action for Childhood Arrivals (DACA) program, which halted the deportation of aliens brought to the U.S. illegally as children, and a parallel 2014 program that suspended the removal of their parents (DAPA). While I count myself among the supporters of the policies behind DACA and DAPA, the Constitution vests Congress with the power over immigration and thus the sole right to decide what categories of immigrants can remain in the country legally.
Even though federal immigration law requires the deportation of the DREAM-ers and their parent aliens, the Court allowed President Barack Obama to refuse to enforce it by simple executive fiats. To make matters worse, Trump could not simply reverse Obama’s orders, but had to pretend the orders were legal and use the cumbersome Administrative Procedure Act to reverse them. “Even if it is illegal for DHS to extend work authorization and other benefits to DACA recipients,” Roberts found, DACA “could not be rescinded in full without any consideration whatsoever of a” non-deportation policy other than on ground of its illegality. Until the Trump administration goes through the laborious result of enacting a new regulation to undo DACA and DAPA, approximately six million aliens can remain in the U.S. in defiance of federal immigration statutes.
According to Regents, presidents can now stop enforcing laws they dislike, hand out permits or benefits that run contrary to acts of Congress and prevent their successors from repealing their policies for several years. This gives Trump the opportunity to jump-start an economic recovery by declining to enforce the tax laws and economic regulations—shall we call it an economic deferred action program, EDAP? Just as Obama refused to enforce the immigration laws, Trump can decline to fully enforce the tax laws. While Obama offered humanitarian reasons for helping the DREAM-ers, Trump could argue that he is helping the poorest Americans, those hardest hit by the COVID economic collapse, and that he is accelerating an economic recovery from the pandemic shutdowns.
The core of the Trump EDAP might cut taxes across the board. For example, instead of 10 percent, Trump could make the lowest tax bracket zero (for singles at $9,700, married at $19,400). He could cut the 12 percent bracket to 6 percent (singles up to $39,475, married up to $78,950), and the 22 percent (singles up to $84,200, married up to $168,400) and 24 percent brackets (singles up to $160,725, married up to $321,450), to just 11 and 12 percent. He could cut the higher brackets—of 32 percent, 35 percent and 37 percent—by less, say a third.
Tax cuts would provide an enormous boost to the economy, far greater than the proposals kicking around Congress, such as temporarily suspending the payroll tax or extending unemployment insurance. Rather than keep the unemployed on public assistance, it could give them the incentive to work and keep more of their own pay. The prospect of reaping more of the benefits of their own risk-taking and entrepreneurship would encourage the middle class to start opening more small businesses. A unilateral tax cut favoring the poor would answer attacks on Trump that he does not care about minorities or the inner cities. Cutting taxes to zero for the poor could provide the most immediate, direct financial boost for minorities hit hardest by the pandemic.
Trump could go even farther to restart the economy. If he wants to boost infrastructure spending, he could issue permits allowing federally financed or regulated construction projects to go forward. He could waive all federal requirements for approval, such as the years required to go through environmental reviews, and suspend conditions that drive up the costs of construction projects (such as the Davis-Bacon Act, which require federal projects to pay high union wages). All it requires is for the president to defer action under environmental laws, permitting regulations and other excessive federal laws.
Critics would say that this economic deferred action program would violate the law, because the president would not be fulfilling his responsibility to “take care that the laws be faithfully executed.” But, according to the Supreme Court’s DACA opinion, presidents now can use their prosecutorial discretion to set the enforcement level for any federal law at zero.
If Trump wins re-election this November, the tax cuts and recovery permits could remain good for the next five years. Even if Joe Biden wins, the Court’s decision means that it could well take at least two years for his administration to repeal the Trump program. In the meantime, the poorest Americans will have more money in their pockets to save and spend and more American businesses can get back to work faster.