Trump’s traditionally Republican economic choices

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The big question when Donald Trump was running for the US presidency was, How is his economic policy different from mainstream Republican economics? Now that he is president, the big question is, How is it not?

Candidate Trump was seen as a radical departure from Republicans’ conservative tradition: He jettisoned the belief in free trade and a global economy cherished by both big business and free-market ideologues. He engaged in thinly-veiled racist rhetoric. He appealed to working-class voters with attacks on the elite. He displayed open contempt for “liberalism” in the classic sense – what conservatives in America like to call “conservatism” – through a toxic mix of contempt for free speech, an embrace of verbal and physical bullying, and general authoritarian leanings. He even displayed a willingness to embrace big government when – like right-wing populist movements across the world – it served the interests of his supporters.

Other than his rejection of trade and globalism, however, it is hard to see how any of that marks a departure from the real Republican brand since at least Richard Nixon. And even the anti-globalism actually practiced by Trump in office reflects a larger world view that is perfectly consistent with what Republicanism, and to a lesser extent “conservatism,” have long become.

The ultimate question, then, is how much that fits with the interests of business. And the depressing answer is that it fits perfectly with the perceived self-interest of virtually every individual business in the country – but very badly with the overall, and long-term, interests of American business. In that, it is exemplary of why we ought to be worried about the American future.

Despite initial Establishment uneasiness during the election with Trump’s populism, nationalist xenophobia, and transparent incomprehension of economics and global affairs, the business elite has been surprisingly happy with this Outerborough interloper crashing their club. Just as Trump discovered when he left Queens for Manhattan, the business elite will accept you if there is enough money in it for them. And that has certainly proved true of the Trump presidency.

The President and his team have taken a sledgehammer to the entire edifice of environmental and workplace regulation, seemingly intent on tearing it down completely. They have rewritten the tax code in virtually every way desired by business interests and, of course, billionaires like Trump himself – even jettisoning the one tax plank from Trump’s campaign that sounded a truly populist note: elimination of the carried interest deduction for hedge fund managers. In doing so, Trump, as well as congressional Republicans, have ballooned the federal deficit against which they disingenuously railed for decades – making clear once and for all that modern conservatism is not really about fiscal restraint at all: It is only about cutting taxes on the wealthy and cutting spending on the poor. (In fact, White House officials announced recently the largest spending rescissions in history – to the Children’s Health Insurance Program, of all things – in order to “signal” their intention to compensate for their heretofore loose fiscal policies that benefited rich Americans.)

Even President Trump’s position on trade – the main area where he has deviated from conservative and business-community orthodoxy – has revealed itself to be less about lack of commitment to unbridled markets (Trump has always attacked government regulations) than his commitment to racism: Trump does not really want to limit trade or population flows with European countries (except, perhaps Germany, since Angela Merkel has been less flattering of his ego) – he wants simply to punish (let us say) non-Nordic countries, like, say, Mexico, China, and (absurdly) South Korea. Right now, that is a relatively small price for big business to pay in return for Trump’s pliancy otherwise.

The one complicating factor in this story is the new economy. Despite Trump’s intuitive mastery of Twitter, he appears to lack much feel for technology; his affinities (as well as his supporters) clearly lie with old-fashioned, hard-hat industries. In many ways, his administration represents not simply a wistful return to an earlier age of unbridled extractive industries employing a male-dominated workforce scattered across smaller, all-white, blue-collar towns throughout the country’s interior. It is, rather, an active assault on both the economy and lifestyle of the socially-liberal, multi-racial, urban-centered, globally-oriented, high-tech world of the two coasts that largely rejects both Trump and the Republican Party (as discussed in my article here and in this exchange with Tom Edsall.)

The tech industry was extremely wary of Trump early on: He certainly did not reflect its social and lifestyle values, and during the campaign he sided with the FBI over Apple on whether the government could force tech companies to build “back doors” into their products. Nevertheless, the administration sided from the outset with the big Internet providers against consumer advocates on net neutrality and data privacy – and that seems sufficient for the industry to make peace with him. As I argued here a year ago – and as Mark Zuckerberg’s recent appearance before Congress has finally made many realize – tech today represents not some new-fangled Age of Aquarius but, in reality, just another extractive industry (except that, now, you are the raw material). And, like all other industries, it has found in that a friend in Donald Trump.

In contrast, in almost every way, the Trump presidency has turned its back on the Trump candidacy’s promises of looking out for the little guy (or, at least, for the President’s own supporters). His working-class supporters, particularly in extractive and manufacturing industries, will be the hardest hit by his tariff policies, are bearing the brunt of higher health insurance premiums directly occasioned by his assault on Obamacare, will suffer higher taxes under his tax bill even as large corporations and plutocrats continue to receive historic tax windfalls, and will have their Social Security and Medicare gutted under the deal he has supposedly promised Republican leaders once he is successfully re-elected. Rising gas prices, more workers leaving the active workforce, barely-rising wages even as the job market tightens: These are all criticisms leveled by candidate Trump at the administration of Barack Obama that have turned out to be even truer under the administration of President Trump.

Yet, his support remains steady at near-90% levels amongst Republicans, highlighting the distinction between left-wing and right-wing populism: The former channels resentment against higher socio-economic classes; the latter, against lower classes, especially those already most marginalized.  That the Trump Administration is rewarding the wealthy at their economic expense doesn’t alienate Trump supporters, so long as he attacks the “real” socio-economic threats they perceive everywhere else – through trade wars abroad and aggressive deportations at home – which he, in fact, is doing.  His opponents miss the point in ridiculing his self-dealing and his Administration’s corruption as breaching his promise to “drain the swamp”: That’s not the “swamp” his supporters had in mind at all. Theirs is one filled with grasping, free-riding minorities and foreigners, subsidized by liberal elite professionals in order to keep “real Americans” down.

What unites these disparate elements of Trump’s personality, his politics, and his policies is their consistent focus on short-sightedness and selfishness. Both are well-documented realities of Trump’s business “brilliance” – including his multiple casino bankruptcies and the resulting restructurings to impose the losses for his misjudgments on everyone else but him. As discussed here, as well, the hallmark of the issues that Trump zeroed-in on to appeal to alienated voters – trade and immigration – is that, while they benefit the country as a whole, they nonetheless produce losers. The tragedy of the moment is that Trump’s opponents are offering very little to those on the short end of the stick from these developments, who are right to be angry – while Trump’s appeal to them is based purely on selfishness, not on what is best for the country as a whole.

Unfortunately, the same can be said of the entire thrust of Trumponomics at the moment. In abandoning fiscal responsibility, turning tax policy into the worst form of pigs-at-the-trough feeding frenzy, and concertedly disinvesting in all public goods – most notably education, scientific research, infrastructure, quality-of-life, and equality of opportunity – Republicans and their cheerleaders in the business community may be snatching a few short-term gains for each of themselves individually. But they are undermining the long-term foundations of the economy upon which they all ultimately depend. 

The symbiosis of government and business into a one big rent-seeking enterprise is precisely what principled conservatism has opposed for decades, and criticized in modern liberalism. The Republican elephant was always more than happy to join the Democratic donkey at the feeding trough, however, while cynically cloaking itself in conservative rhetoric. Candidate Trump explicitly campaigned against just this – and yet, as both a private individual and as President, Donald Trump literally personifies it. In Trump’s America, more so than ever before, government itself is up for sale. This represents perhaps the logical end-point of the short-term, self-serving ideologies that passed for “conservatism” or “pro-business” in recent decades – but it also has represented the end-point of democratic and capitalist decline throughout history.

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