After the Honeymoon
Donald Trump and the Republicans Shotgun Marriage Is Off to a Rocky Start
Things got hot and heavy between conservatives and populists, but they don’t really belong together over the long haul.
Many Congressional Republicans regard Donald Trump as an interloper, so it’s not surprising that their political marriage of convenience is already showing signs of strain. They’re bickering over health care now, but the deeper source of discord is the basic incompatibility of conservatism and populism.
During the campaign, Trump echoed Republicans in caricaturing Obamacare as a “disaster” that demands immediate repeal. Yet he also distanced himself from GOP dogma by assuring working class voters that he wouldn’t take away their health coverage and let them “die in the streets.”
And he didn’t stop there. Trump also promised to replace Obamacare with better health coverage for everyone, at less cost. He declined to bore voters with details about how he’d pull off this policy miracle.
Instead, Trump has outsourced the job of coming up with a plan to repeal and replace Obamacare to House Speaker Paul Ryan, who actually does have concrete ideas about health policy. Yet Ryan is a doctrinaire libertarian, which means he doesn’t believe government has a responsibility to guarantee everyone coverage. His goal is always to shrink government’s role to enlarge personal freedom—evidently including the freedom to go without health coverage. His views don’t square with Trump’s brand of crowd-pleasing populism, which often involves a more expansive view of government’s power.
Flatly contradicting Trump’s commitment to insurance for everyone, the Ryan plan would deprive as many as 24 million Americans of health insurance, according to the non-partisan Congressional Budget Office. Those who remain covered would get skimpier benefits and if they happen to be old, poor or sick, or live in rural areas, will pay higher premiums, co-pays, and deductibles. House Republican blueprint also would gouge huge holes in Medicaid spending for low-income Americans, while handing high-income families a big tax cut.
In short, the GOP bill favors the young, healthy, and wealthy and hammers Trump voters. Yet the president not only backs the Ryan plan ”1000 percent,” he is lobbying GOP skeptics hard to get on board. Evidently, Trump’s zeal to cut deals has overwhelmed his compassion for the working class. He described himself last week as an “arbitrator” whose job is merely to help Republicans compose their differences, not offer ideas of his own.
That may not be easy. Arch conservatives, led by Sens. Ted Cruz and Rand Paul and the House Freedom Caucus, complain that Ryan’s plan is “Obamacare lite” because it retains some of the basic structure of the Affordable Care Act, including costly insurance mandates and a penalty for people who don’t buy insurance. On the other side of the party, GOP moderates worry that Ryan’s plan would flood states that expanded Medicaid (including 16 Republican governors) with millions of low-income people to take care of.
Although he’d never acknowledge it, Trump is in a tough spot. He’ll look ineffectual if he and his party fail to pass a bill replacing Obamacare soon, despite controlling Congress and the White House. But even if he succeeds, his “victory” will come back to haunt him, just as President Obama’s did in the midterm elections of 2010 and 2014. If the CBO projections prove even half right, President Trump’s first big accomplishment will be a betrayal of his promises to working class Americans.
Looming right behind health care is the next big item on the Trump agenda—tax reform. Once again, the White House is leaving the details to Ryan, the GOP’s wonk-in-chief. Ryan has come up with another ambitious contraption that’s also giving Republicans fits—a “border-adjusted cash flow tax.’”
The border adjusted tax is intended to raise enough money to sharply reduce the corporate income tax, which almost everyone agrees is too high and gives U.S. companies an incentive to leave profits parked abroad to avoid a bigger tax bite at home. But because it taxes imports while exempting exports, it has split big business into winners and very vocal losers.
Unlike his health plan, Ryan’s border tax is intellectually consistent with Trump’s economic nationalism, which frowns on imports and threatens to penalize U.S. companies who move production or supply chains abroad. But it’s not politically consistent with Trump’s concern for average working families. Because they consume more of their paychecks than better-off Americans, blue collar workers will be hit harder by the rising cost of imports, which economists say will also raise the price level of domestically made goods.
Some Republicans are urging Trump to jettison Ryan’s complicated and untested cash-flow tax, and simply announce his own package of big cuts in personal and corporate income taxes. At some point, however, Trump would have to come up with another way to pay for the $5 trillion in tax relief he’s promised. Otherwise he risks running afoul of the same conservative fiscal hawks that tormented Obama with fiscal brinkmanship and government shutdowns.
In fact, the austerity caucus already has taken a dim view of another of Trump’s exuberant campaign promises—a $1 trillion upgrade of America’s run-down airports, roads, rail systems, waterways, and other critical infrastructure. Trump has touted it as a way to put Americans back to work in well-paying, blue-collar jobs. Yet this particular pledge finds more support among Democrats than Republicans, who apparently have lost the ability to distinguish between productivity-enhancing public investment and spending on consumption.
Apart from vague calls to tap private investment, however, Trump has yet to offer a plausible way for financing a program of this scale. GOP congressional leaders have quietly pushed the proposal off until next year.
There will be other issues where Trump’s populism collides with GOP ideology and the interests of powerful GOP interests. For example, it’s hard to imagine a more aggressive use of government power to abridge economic freedom than Trump’s decision to kill the Trans-Pacific Partnership and renegotiate NAFTA. GOP free traders and their business allies may acquiesce in Trump’s economic nationalism for a while. But if his protectionist moves provoke retaliation from our trading partners, it would threaten a U.S. economy that is finally producing jobs and rising incomes for working families. And that would drive a wedge between Trump’s blue collar base and college-educated and free market Republicans, who don’t see themselves as losers in global trade.
It’s too early to talk about divorce, but expect the relationship between Trump-style populists and conservatives likely to become rockier as Republicans complete the transition from scorched-earth opposition to governing. That requires tough choices, trade offs, compromise—things that don’t come naturally to either side of the politically fraught union that’s now running our country.