Setting corporate strategy and regulatory compliance has never easy during the Trump Administration, and an article from the New York Times earlier this week demonstrates why that’s so. The article is worth a compliance officer’s time, since it’s quite possible we’re about to enter a period of even greater regulatory and political mess.
The piece looks at the Trump Administration’s attempt to roll back automotive fuel economy targets set by the Obama Administration. OK, fair enough; those fuel economy standards were never going to be easy for automakers to hit, and a new presidential administration is entitled to try rolling back the actions of its predecessor.
The challenge for President Trump is that California has legal authority to set its own fuel economy standards. Since California is more environmentally conscious than most states, its standards are much higher than what the Trump Administration wants. And since California is also a huge state with a thriving car market, those standards carry great weight with the auto industry as a whole.
So when California regulators essentially cut their own deal on fuel economy with four car makers last month, Trump blew his usual gasket. He hauled other car makers into the White House and hectored them not fall in line with the first four, although at least two more automakers seem ready to do just that.
If enough car makers agree to California’s standards, Trump’s own plans will unravel. At best, he’ll face a lengthy court battle with California as the state defends its right to set air pollution standards. At worst, California might win, and split the U.S. car market in two — which automakers would hate, so now they’re in the odd position of arguing against the Trump Administration’s push to lower fuel economy.
The relevant question for regulatory compliance professionals is why the Trump Administration has taken so long to pull together its plans here. Trump has been in office for more than 30 months. His desire to roll back fuel economy standards is not new.
The answer is in these three paragraphs of the NYT story.
Simply put: Trump can’t keep a team together. The turnover in his administration is sky-high. Various groups track turnover at the Cabinet level. At the lower staff level, so many people come and go that keeping track is a fool’s errand.
That brings us to this basic truth —
Incompetence leads to incoherence, which leads to impotence.
The Trump Principle, Over and Over
We see that dynamic with the Trump Administration, time and again. It’s led by Trump himself, who embraces his ignorance and can’t hold a consistent position on anything. It’s fed by sycophants and grifters revolving through the Administration.
Trump doesn’t know what he wants, so his people don’t know what to do. So they struggle to mount effective arguments on one issue after another: fuel economy, gun control, tariffs, payroll taxes, bans against Huawei equipment, immigration reform, antitrust in the technology sector, and on and on. Which leaves them impotent to drive changes they want, far more than any respectable presidential administration should be.
Say it again: incompetence leads to incoherence leads to impotence. We’ve all seen that in the corporate world. It happens in political administrations, too.
I’m sure some Trump worshippers will read those words and say they’re sour grapes or liberal bias or whatever. Well, tell that to the automakers trying to develop plans for fuel economy compliance, or importers trying to develop tax compliance strategies, or telecom firms wondering what to do with Huawei equipment, or tech firms wondering whether they should make that next acquisition.
The Trump Administration talks big, but in many ways it dithers and flails because its CEO doesn’t know what he wants from one moment to the next. That whirlwind-of-fists routine only stays fresh for so long, while real CEOs at real companies get ever more exasperated. And when CEOs don’t know how to develop long-term strategies amid the chaos, compliance officers working to keep regulatory compliance efforts sharp are just as lost, too.
From Here to 2020
So why might this zaniness get even worse? First, consider another article earlier this week from Axios.com, which points out the obvious: Trump will need a second term to cement most of his legacy, because most of what he’s done so far is pronouncement rather than policy.
Should a Democrat defeat Trump in 2020, that candidate will have ample power to reverse Trump Administration policies with a flick of the pen, and get to work on his or her own agenda. And unlike the amateur hour we’ve seen in the White House since 2017, a President Joe Biden or Elizabeth Warren might actually know what they’re doing.
That is, I suspect, one reason why the Business Roundtable released its statement this week calling for an expanded definition of a corporation’s purpose. The CEOs of America understand that President Trump’s re-election is precarious at best, and the potential for a Warren or Biden Administration is no joke. So the BRT is laying groundwork now to show it’s receptive to issues beyond shareholder return. Just in case.
Trump knows his jeopardy, too. So we’re going to see more rash statements that sound like policy changes but really aren’t, while the minions making the sausage fumble around and ultimately take actions that bear a striking resemblance to nothing.
Which will feed public frustration even more, and leave businesses uncertain about the big strategic bets they should make, because who wants to make a big bet when everything might change on Nov. 3, 2020?
None of this will do compliance functions any favors either, especially if we’re serious about anticipating change and adding strategic value. That’s a tall order when the people setting the regulatory landscape are bumblers — a truth becoming more clear every day.