The impact of a Trump presidency on New Zealand
The Tangerine Tornado could become the next leader of the free world.
The latest polls have him drawing level with Hilary Clinton.
A Bloomberg opinion piece says don't over-think his rise, it's simply the same celebrity factor that saw Arnold Schwarzenegger elected governor of California, pro wrestling's Jesse Venture become governor of Minnesota and Jerry Springer the mayor of Cincinnati, Ohio.
Whatever the reason, the Tangerine Tornado could be heading for the Whitehouse.
Here is how it will affect us.
1. Trump economic policy effect on New Zealand: nothing
His Hairness has radical ideas, including raising taxes on the rich and well, whatever strikes him mid-speech or as he's eating his cornflakes.
But there's the thing. The way the US political system works, the President doesn't actually introduce any legislation and has very limited standalone executive powers (witness Obama's impotence in areas where he stands in the minority, such as gun control). Rather, a friendly member of Congress has to introduce it. Trump will be able to manage that. But, as things stand, he won't be able to get any legislation passed (and legislation must be passed by the House of Representatives and the Senate, who then mash together a compromise bill.
Trump faces two scenarios:
1. A Democrat-controlled Congress that's out-and-out hostile.
2. A Republican Congress that's out-and-out hostile.
Trump's anti-trade, pro-tax increases on the rich and business message has gone down a storm with angry blue-collar workers during the primaries but he still only has a tiny number of endorsements from members of Congress or Senators who, naturally, are scratching their heads his populist policies that are closer to Bernie Sanders than Republican orthodoxy. More will come over to Donald's side as November approaches in mindless, back-a-winner fashion, but it's likely a solid minority (or even majority) of Republicans in Congress will refuse to vote for or bankroll any Trump policies.
Trump's failure to get an endorsement from the Republican speaker, Paul Ryan, is unprecedented. In fact, the pair now seems to be in a cold war. Having sealed the nomination, this is the point where Trump is supposed to start making reconciliatory noises with his party's establishment. Instead, through either lack of impulse control or blind ambition, he now seems to have set his sites on Ryan. It's breathtaking gal. While it's possible to see Trump winning the White House given the celebrity factor and his Winston Peters-eque skills for harnessing anger at politics-as-usual, attempts to marginalise Ryan and other establishment figures (for example, by pushing forward with his threat to push Ryan out of the chairman's role at the convention) will lead to a guaranteed split, and tears.
After a piece of legislation passes Congress, it has to go to the President to be signed (or veto).
Then, there's a potential third stage: the Supreme Court can challenge if a bill fits the US Constitution. And remember the recent death of Justice Scalia means (if Republican attempts at stalling fail), Obama can install a liberal Justice for a 5-4 liberal majority. On the off-chance Trump gets a bill through Congress for the mass deportation of 11 million people, or restricting entry to the country based on religion or ethnicity, the Supreme Court will shoot it down in flames.
The operative words will be gridlock, and status quo.
2. Trump trade policy effect on New Zealand: Nothing
If the Trans-Pacific Partnership agreement doesn't make it to a ratification Congress until after Trump enters office, Trump will exercise his power of veto. Que sera, sera. We have no TPP now, and with Clinton also promising to veto it and Congress going cold on trade deals, it's already dead in the water (the TPP requires ratification from countries representing 80% of the GDP of original signatories to come into effect. That means no US ratification, no TPP).
Maybe this will be a good thing, ultimately sparking a new deal that might actually give Fonterra meaningful access to US markets, and take a progressive approach on issues like copyright.
Trump would probably be up for a trade war with China or Mexico but again that would require legislative support from Congress. Members would be up for a few show-pony measures but not any major action that would throw the world economy into recession and them out of office.
3. Trump foreign policy effect on New Zealand: Beneficial
The president has a freer hand on foreign policy but just how free is actually very murky and surprisingly undefined in terms of what actions require Congressional approval. After the disaster in Vietnam, Congress reasserted itself. The pendulum swung back the other way with the first Iraq war, but with the mess of the second Iraq war and Afghanistan, we've again seen a stronger role for Congress, and a general expectation that any major adventure offshore should have Congressional approval.
Trump would push the limit of course but he also faces the constraint that wars or other major deployments usually require a major hike in the defense budget –- and that definitely needs Congressional approval.
It would also make life a lot simpler for the New Zealand government.
At the moment, John Key knows Iraq and Afghanistan are a big complex mess and that no quick military stab is going to undo complex problems caused by decades of tangled policy. But we're a US ally, and we've obliged to be seen to be a team player on any action that is articulated by President Obama in reasonably rational-sounding language.
But if Trump wants an incursion to seize all the oil wells in the Middle East or similar, it's simple to say no.
New Zealand can become a refuge of sanity, and many a refuge for disillusioned Americans full stop. Yes, that would push up Auckland house prices.
Tune into NBR Radio’s Sunday Business with Andrew Patterson on Sunday morning, for analysis and feature-length interviews.