What Trump Could Learn from the U.K.'s Theresa May at Today's Meeting

Theirs is a relationship that could mirror that of Ronald Reagan and Margaret Thatcher

When U.K. Prime Minister Theresa May visits President Trump on Friday, Brexit will no doubt be at the top of their discussion list. After Britain invokes Article 50 and begins withdrawal from the European Union, it will be possible to start discussing the parameters of a trade deal with America.

Steve Baker, who represents Wycombe in Parliament, told me: “I am convinced we should have ‘talks about talks’ with the goal of having at least the main points of agreement in draft by the point we are ready to formally negotiate a free-trade agreement.”

Let us also hope that the leaders will have time to talk about taxes, welfare benefits and airport privatization — three areas where the United States could usefully copy Britain.

Taxes

Take taxes, for example. The U.K. corporate tax rate is 20%, the lowest in the European Union, and scheduled to fall to 17% in 2020. No wonder the EU is worried about Brexit. Countries such as Germany and France, which have corporate tax rates of about 33%, are concerned that companies will decamp to Britain in search of lower rates, just as many multinationals like to be headquartered in Ireland due to its 12% rate.

Trump has proposed a 15% corporate rate, and House Speaker Paul Ryan included a 20% rate in his tax plan. America needs to follow Britain’s example and enact these proposed rates into law. A lower rate will result in substantial behavioral changes on the part of corporations, encouraging them to move their offshore earnings back to America.

Welfare

Then, take welfare benefits, which have influenced the share of prime-age workers in the two countries. Since 2009 it has become easier in the United States to become eligible for food stamps, Social Security disability payments, Medicaid and subsidized health insurance. In contrast, the U.K. has clamped down on the provision of benefits, and people can have benefits cut off if they do not mean certain requirements, such as looking for work.

It’s not surprising that the labor force participation rate — those employed or looking for work — has risen in the U.K. and declined in the U.S.

In 2001, the United Kingdom and United States both had labor force participation rates for prime age workers — defined as those ages 25 to 54 — of 84%. Since then, the U.K. rate has increased to 86% and the U.S. rate has declined by three percentage points to 81%.

When people drop out of the labor force, the economy suffers. A country’s well-being depends on how much people work, and how productive they are when they work. With fewer Americans working, our GDP growth is lower, so it is more difficult to pay for programs such as Social Security, defense and national parks.

Airports

Finally, take airports. Prime Minister Margaret Thatcher began the privatization of Heathrow, the main airport in London. It is now operated by Heathrow Airport Holdings, a consortium led by Ferrovial, a Spanish company. Manchester Airports Group is another private consortium that operates four other airports: London Stansted, Manchester, Bournemouth and East Midlands.

Airport privatization can result in streams of private funding going to renovate U.S. airports. This revenue is not just generated from the air traffic, but from the associated shopping malls, restaurants and hotels that can be put in place. Heathrow is a model airport with branches of London’s luxury stores, such as Harrods, and regular stores, such as the John Lewis department store and Boots, a drugstore.

President Trump campaigned on the basis of encouraging the private sector to invest in airports, and he could make good on his promise by following Britain’s example. According to a recent Congressional Research Service study, in order to make airport privatization more attractive, Congress should allow the use of airport revenue for non-airport purposes; allow private bonds to have the same tax treatment as public ones; streamline the approval process; and make it easier for private owners to receive Airport Improvement Program Grants.

Donald Trump and Theresa May are both beginning their terms of office. They came into office on anti-establishment platforms. We should hope that their partnership will be as fruitful as was the partnership between Ronald Reagan and Margaret Thatcher.

This piece originally appeared on WSJ's MarketWatch

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Diana Furchtgott-Roth is a senior fellow and director of Economics21. She had previously served on the transition team for President Trump. Follow her on Twitter here.

This piece originally appeared in WSJ's MarketWatch