The repatriation of cash flowing in the wake of the Republican tax law will reduce pollution and energy use at home, according to the former Chairman of the White House Council on Environmental Quality for the presidency of George W. Bush.
However, those gains may falter unless Trump fills the position that Jim Connaughton occupied during the eight years of the Bush Administration, Connaughton said Wednesday. The White House withdrew Trump's nominee to head CEQ this month after she was pilloried by senators for rejecting science and lacking expertise.
"It is my belief that President Trump's single greatest environmental accomplishment will be the tax reform combined with the infrastructure streamlining," Connaughton said in an interview last week.
That's because the U.S. is relying on a vast quantity of outdated infrastructure—power plants, highways, building systems, manufacturing plants—that has been awaiting an infusion of capital. And when infrastructure gets replaced and updated, Connaughton said, it becomes more efficient.
"It's only when you have the money to do capital stock turnover, when you're actually replacing or modernizing old infrastructure, that you get these big gains," he said.
The Republican tax law allows corporations to repatriate capital at reduced rates for a limited time, so corporations effectively have new money sitting on their balance sheets. Some of that will go to modernization, some will go to shareholder dividends, which will give individual shareholders more money to upgrade their own infrastructure, and some will go to stock buybacks that increase the value of companies, allowing them to borrow more money at cheaper rates.
"However we do the math, we're talking about ultimately trillions of dollars more money than was available before the policy, that allows us to replace old inefficient stuff with newer, cleaner, much more efficient stuff," Connaughton said. "And the numbers are so much bigger than any other single policy I've ever worked on."
For example, the Clean Air Act emissions-allowance trading program was a $24 billion investment in pollution control, Connaughton said. Under the new tax law, just one company—Apple—could bring home $300 billion.
However, the administration can lose the opportunity to bring that repatriated cash to bear on infrastructure unless it fills key positions that remain vacant more than a year into Trump's presidency, Connaughton said.
"This delay in staffing these functions will make it very very hard to make the kind of progress on the deployment of this capital we discussed," Connaughton said. "The infrastructure streamline, the regulatory reinvention, it just makes it exceedingly difficult if you don't have the leadership with the Senate-confirmed status to negotiate with the Congress, you know, to produce reasonable outcomes. I'm dismayed at the pace of things. It's got to pick up if there's to be as much progress as I think we could achieve."
My full interview with Connaughton will be broadcast this week on Off The Charts, the podcast of the Energy Policy Institute at Chicago, which I host.
Part of an ongoing series on conservative climate action.