Despite the predictions of pollsters and pundits to the contrary, Donald Trump engineered a stunning upset of Hillary Clinton in this week’s presidential election.
Not only did Trump win the presidency, but the Republicans held their majorities in both the U.S. House of Representatives and Senate. This gives Trump the possibility of having his legislative agenda passed through Congress by friendly majorities.
The only hang up is that the majority in the Senate is less than the 60 Republicans (it was 51 as of this writing) needed to make the Senate filibuster-proof. This means that some negotiation and compromise with Senate Democrats could be necessary to pass Trump’s legislative agenda.
Impact on Landscape Contractors
What impact will the Trump presidency have on landscape contractors? Let’s look at several areas where Trump’s policy pronouncements during the campaign, if implemented, might affect your business.
A word of caution: Trump’s policy pronouncements during the campaign should be taken with a grain of salt. I don’t think we should take them literally. Trump has shown himself to be a showman and negotiator. Look at the campaign as more of a carefully scripted reality show, where conflicts are set up among participants for entertainment and impact value.
Trump has shown himself to be a flexible pragmatist rather than a stubborn ideologue. That’s what drove many of his primary opponents crazy. He’d float an idea, then modify it over the course of a few days as he got feedback from the press and the public. So, all this may change once he gets into office and the pragmatist in Trump takes over.
Economy
Trump has promised to produce economic growth of 3.5 percent per year under his administration. Over the past year, the U.S. economy has grown an average of 1.5 percent, according to the U.S. Bureau of Economic Analysis. Although many economists are skeptical that Trump can produce this level of growth, Trump has stated that he can do even better than the 3.5 percent in his economic plan.
How does he plan to stimulate this level of growth? His economic plan consists of three major components: tax cuts, a rollback of government regulations and renegotiating trade deals that he believes now harm the U.S. economy.
Tax Cuts
Trump has proposed restructuring the tax code, reducing the corporate rate and implementing new, lower across the board personal income tax rates. An analysis by the Tax Foundation found middle-class earners (those making roughly $50,000 a year) would keep, on average, an extra $1,000 a year. Those who make $450,000 and up would get more than $100,000 on average.
These cuts would add about 0.17 percentage points to the current rate of economic growth. The Tax Foundation estimates the cuts would add $10.14 trillion to the federal deficit over the next decade, after accounting for economic growth.
Trump has a good chance of getting his tax ideas through Congress. His original tax proposal has been modified greatly, since it was first floated, to align more with that of House Speaker Paul Ryan’s.
Regulatory Roll-back
Trump promises to eliminate “every wasteful and unnecessary regulation.” He specifically cites EPA’s Waters of the U.S. (WOTUS) regulation, although that regulation has been held up by a federal court injunction. It’s likely he will have EPA and the U.S. Army Corps of Engineers withdraw the regulation.
It’s difficult to say which other regulations may fall. He has promised to ask his new agency heads to conduct a thorough review of all federal regulations for possible elimination. Likely to be targeted are those regulations that were implemented during the last two years of the Obama administration, such as:
- The new federal overtime rule, which is scheduled for implementation this Dec. 1, and
- The new pesticide rule, which is scheduled to be finalized before the end of the Obama administration.
Trade
Renegotiating U.S. trade agreements was a cornerstone of Trump’s campaign. Over the past several decades, foreign trade has become a larger and larger part of the U.S. economy. However, some sectors, especially manufacturing, have been hit harder by globalization than others.
Trump made many statements during the campaign that have led some to believe that he could start trade wars with some of our major trading partners. Increasing U.S. tariffs on imports could result in retaliatory tariffs on U.S. exports. This move would hurt those sectors of the U.S. economy dependent on exporting American products, leading to an overall decrease in economic growth.
We’ll have to trust that Trump will talk tough and not take actions that would precipitate a trade war.
Immigration
Immigration was the issue upon which Trump launched his campaign. His policy proposal is to build a wall along the U.S./Mexico border, make Mexico pay for it and round up the undocumented living in the U.S. and deport them. At one point, he even proposed creating a special police force to handle the rounding up and deportation.
Over the course of the campaign, Trump softened his immigration policies. Just a few weeks ago in his 100-day plan, Trump said he would submit legislation to Congress that would fully fund the construction of the wall, seeking an appropriation from Congress to build a wall. Trump estimates the wall will cost about $8 billion-$12 billion.
He plans to force Mexico to pay for the wall by blocking remittances from undocumented Mexicans living in the U.S. to their families in Mexico. However, if he deports all undocumented Mexicans living in the U.S., no one will be left to pay for the wall.
My sense is that Congress will balk at the $12 billion wall price tag (others believe it will cost as much as $25 billion). What may happen is that part of a wall will be built that integrates with the existing border fence that was started during Bill Clinton’s administration and extended by George Bush. Photos will be taken and victory declared!
Deporting the undocumented could cause the most problems for landscape contractors. In his Aug. 31 immigration policy speech, Trump reiterated that he would create a task force to deport the undocumented. He promised to triple the number of Immigration and Customs Enforcement deportation officers, strictly enforce all U.S. immigration laws and deport anyone who is here undocumented.
According to a 2015 Pew Research Center study of employment of undocumented workers in the U.S., almost a quarter or 24 percent of all workers in the landscape industry were undocumented in 2012. The landscape industry has one of the highest concentrations of undocumented workers of all the industry groups it studied.
Surveys of landscape company owners consistently identify finding workers among the top three problems they face in running their companies. Imagine the impact if 24 percent of our industry’s workforce vanished. Competition for the remaining workers would intensify enormously, making any current labor shortages even worse.
As well, our industry will be competing with other heavy users of undocumented workers, such as construction, apparel manufacturing and agricultural crop production.
So even if you don’t or don’t think you employ undocumented workers, any disruption in the undocumented immigrant labor force will have a significant impact on your landscape contracting business.
I believe Trump will find some “bad actors”—criminals who are undocumented—and make a show of deporting them and then, quietly, not go any further.
Guest-worker programs (H-2B)
At first blush, Donald Trump would seem opposed to guest-worker programs. After a March primary debate, Trump issued a statement that if elected, “I will end forever the use of the H-1B as a cheap labor program.” The H-1B program, used extensively by the technology industry, allows foreign workers with specialized skills to enter the country legally and work in specific areas where workers are scarce.
But Donald Trump himself makes extensive use of the H-2B seasonal worker program in his hotels and golf courses—the same program used by landscape contractors.
Will a President Trump be more favorable and understanding toward companies using H-2B than the tech companies using the H-1B program? It’s difficult to say at this point, but we could hope that he would understand the business need for seasonal workers.
Obamacare
Trump has pledged to “repeal and replace” Obamacare—the Affordable Care Act (ACA)—in his first 100 days. The ACA now provides health insurance for about 20 million Americans. Trump, however, he has never specified what he will replace it with. The repeal will be easy, but the replacement will be very difficult.
I find it hard to believe that Trump will take health insurance away from 20 million Americans without having some way of providing them an alternative. The political fall out would be tremendous.
Although the House of Representatives passed a bill to repeal Obamacare over 60 times, it did so with the assurance that the bill would either die from filibuster in the Senate or be vetoed by President Obama. Now it has the real possibility of passing.
Practically, I think legislation will be crafted that “repeals” Obamacare, while replacing it with another program with many of the same provisions as Obamacare but under a different name. The program will be streamlined with some of the most objectionable provisions removed, such as the coverage mandates.
Let’s hope that President Trump is Trump the pragmatist.
