March 18, 2019 | Reading Time: 4 minutes

Trump Didn’t Rewrite Rules of Republican Economics

The president is the product of an ideological evolution already underway.

It’s by now a familiar argument.

The president has redrawn the boundaries of Republican economic orthodoxy. Donald Trump favors tariffs; a command-and-control economy; and raising taxes (at least on his political foes). His party has historically opposed these but is nonetheless going along. An acquiescent GOP gives the impression that he’s redrawn the boundaries.

To understand the whole truth, however, I think it’s important to see that Trump has advanced his economic views in the absence of ideological push-back. This absence is indeed partly due to partisan politics. Trump is popular with Republican voters. Ergo, the Republicans have good reason to keep quiet and stick with the program.

But the absence of push-back is also due to a Republican Party having run out of good ideas worth defending. Indeed, it has been advancing the same two for more than 40 years. The Republicans know being seen as the party of big business hurts them with the wider electorate. So they argue that anything that’s good for big business is good for everyone. Deregulation unleashes private enterprise to hire more. Business tax cuts do the same. With such renewed freedom, payrolls rise, revenues increase, and deregulation and tax cuts, in the end, pay for themselves. All true, except it’s false.

To be sure, after each time the Republicans have lowered taxes, in the early 2000s and again in 2017, the US economy did see a slight bump in growth, as more people had a little more money to spend. But those bumps were short-lived, because the GOP’s aim was not to expand prosperity structurally, but to enrich the already very, very rich by extracting more wealth. Ultimately, GOP economic policies take more than they give.

To say the Republican Party has run out of ideas worth defending might be giving the Republicans more credit than they deserve. An equally valid, and probably more accurate, argument is that they never believed their policies in the first place. They already had goals in mind and merely rationalized their way toward them. That would explain the apparent insanity of pursuing failed policies while predicting successful results. Deregulation and tax cuts don’t spur long-term growth, but knowing that doesn’t matter. Growth wasn’t the point. The point was enriching the very, very rich.

Just spoke to Mary Barra, CEO of General Motors about the Lordstown Ohio plant. I am not happy that it is closed when everything else in our Country is BOOMING. I asked her to sell it or do something quickly. She blamed the UAW Union — I don’t care, I just want it open!
— Donald J. Trump (@realDonaldTrump) March 17, 2019

The president said last night that he spoke to the CEO of General Motors. He demanded that Mary Barra reopen an Ohio plant she had closed for sound business reasons. In doing so, Trump comes off as a fascist or communist, depending on which you fear most. That’s not in question, though. In question is how this relates to Republican economic politics. Honestly, I don’t see them as that very different.

They do differ. Trump is overt, careless and lazy. The Republican Party has historically been none of these. It has found acceptable (or at least tolerable) ways of justifying expressions of power. But just because Trump and the GOP differ in style doesn’t mean they differ otherwise. Each seeks to serve a political minority: For Trump, a racist white working class (though not all white working class voters support him); for the GOP, the very, very rich. (Indeed, the racist and the rich are often the same.)

Even as Republicans railed against the evils of “big government,” it labored mightily to ensure that the economy liberated the very, very rich from their previous moral and political obligations while putting more responsibility of those earning less and having fewer resources to live up to the responsibilities being thrust on them.

Over four decades, the US tax code has been written and rewritten, with occasional help from the Democrats, for the purpose of serving the very, very rich at the literal expense of everyone else. Has Donald Trump redrawn the boundaries? Yes, a little. But Trump’s actions have been in keeping with the Republican Party’s long-term goal of securing minority rule while seeing that a majority of Americans pays for it.

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The GOP’s critics have long said all of the above, but I don’t think any of that was as clear as when the party capped deductions for state and local taxes. This does not affect red states, as most do not have high tax rates. It does effect blue states, though. The Republicans enacted, without support from a single Congressional Democrat, a law that in effect raised taxes on liberal states that voted for the president’s 2016 opponent. The Republicans will always favor tax cuts, unless they don’t like you.

This was on top of an already untenable reality, which was that blues states were sending more revenue to the federal government than red states. Put another way, red states get more federal aid than blues states. As a result, blue states had been subsidizing red states, because red states refuse to tax themselves. In a very real sense, the Tax Cuts and Jobs Act of 2017 puts a double burden on blue states: they not only pay, but pay twice. All the while the Republicans pretend to be conservative.

The GOP is not conservative. Not anymore. Once it empowered the federal government to extract wealth from blue states, it stopped being the party of federalism, or the decentralization of power. The GOP, like the president, has been revealed to favor centralized power as long as those wielding power are Republican. In the end, Trump didn’t cause Republican economic policies to shift from conservative to authoritarian. The president is, however, a product of that change.

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John Stoehr,
The Editorial Board
stoehr.substack.com