Trump’s economic policies won’t outlive presidency
President Donald Trump lost his bid to win re-election, and when he leaves the White House most of the distinctly Trumpian elements of his approach to economic policy will leave with him.
To many Republican politicians, the 2020 election results look like an endorsement of the economic approach of the last four years. Their party gained seats in the House of Representatives, will probably keep control of the Senate and maintained their grip on state legislatures. Trump increased his support among African-American and key Hispanic voters. Trump coasted to victory in states like Texas and Ohio, where pre-election polls showed him struggling, and won about 8 million more votes than in 2016, the latest counts show. (President-elect Joe Biden outpaced Hillary Clinton’s 2016 performance by over 10 million votes.)
The message that some in the GOP will take away from this is simple: If it weren’t for the coronavirus pandemic, the strong U.S. economy would have given Trump the victory.
But Trump’s main legislative accomplishment — his 2017 tax cuts for corporations and households — was straight out of the standard Republican playbook, and had nothing to do with the president’s conservative populism or economic nationalism. The same goes with Trump’s efforts to deregulate the economy.
By contrast, Trump’s hostility to immigration was distinctly populist — and will probably have staying power in the GOP, to the potential detriment of the economy. Set aside the issue of illegal immigration, which has long been a Republican concern. The Trump administration wanted to slash legal immigration, as well. And in 2017, some Senate Republicans joined with Trump’s effort to halve the number of green cards awarded annually. It’s hard to see what would cause the Trump-emboldened immigration hawks to soften their opposition.
I hope the next few years see an internal battle in the GOP over this issue, but I expect pro-immigration Republicans to avoid it. Pro-growth Republicans should be making the case that the U.S. needs more immigrants.
The U.S. faces a demographic headwind, and growing the economy will require more, not less, immigration. Immigrants start businesses at higher rates than native-born Americans, and those new businesses fuel innovation and create jobs. If future green cards were issued to immigrants with relatively more skills, the benefits to the economy would be even more considerable.
And if the Republican Party doesn’t take down the “immigrants aren’t welcome” sign that Trump hung on the Statue of Liberty, the U.S.’s role as a magnet for some of the world’s most ambitious, daring and hardest-working migrants will diminish, threatening future prosperity.
Apart from hostility toward immigration, the other notably Trumpian aspects of economic policy will not have staying power with the mainstream GOP.
Under pressure from business leaders, I expect the center of gravity in the party to recover its pre-Trump support of free trade and globalization. Many in the GOP will continue to push for U.S. businesses to move factories and operations out of China, and more populist Republicans will support measures aimed at returning those activities to the U.S. But hawkishness toward China is not the same as aversion to trade. The days of Republican support for tariffs against U.S. allies are over.
The same goes with Trump’s hostility to international institutions like the North Atlantic Treaty Organization and the World Trade Organization. The political right will not continue Trump’s attempts to weaken and delegitimize the post-WorldWar II liberal international order; doing so will be seen as too big a threat to prosperity.
Many Republicans are unconcerned about adding to deficits by cutting taxes, incorrectly believing that tax cuts often pay for themselves. Deficit spending is another matter for them, and Republican concern about adding to the national debt thwarted Trump’s desire for a round of economic stimulus this fall. Republicans will continue to be concerned about the spending side of the debt ledger, and will resume their attempts to cut future spending on Medicare and Social Security. Trump froze these efforts during his time in office, but the GOP’s opposition to entitlement-program cuts will not outlast his presidency.
Some Republican politicians are interpreting the election results as evidence that the future of the GOP is as the party of workers, not business elites. The GOP should put workers closer to the center of their policy agenda. But doing so would not be a continuation of Trump’s policies. His actual accomplishments for the working class are scant. He didn’t deliver on promises to reduce drug prices and strengthen health care. His promised manufacturing revival never materialized — his trade wars actually cost manufacturing jobs.
Trump did put the working class at the center of his rhetoric, and GOP politicians noticed. Now, the party needs to translate this rhetorical emphasis into a policy agenda. If it can, it would be building on Trump’s presidency — by moving away from it.
Strain is a Bloomberg Opinion columnist. He is director of economic policy studies and Arthur F. Burns Scholar in Political Economy at the American Enterprise Institute. He is the author of “The American Dream Is Not Dead: (But Populism Could Kill It).”