The discourse of the Trump era has been dominated by the conceit that the two major parties have exchanged economic identities. The Democratic Party has abandoned its historic role as the voice of the working class and is now purportedly representing the neoliberal global elite, while the Republican Party has transformed into a vulgar populist. On the left, an atmosphere of self-flagellation and bitterness prevails, despite the party's successive electoral victories. On the right, the Republican Party's populist credentials have reinforced long-standing paranoia that everything from the culture wars to Donald Trump's endless criminal activities is actually a conspiracy by those in power to control the Republican Party. “proof”.
Interestingly, however, both parties remain stubbornly attached to traditional distributional goals. Democrats still want to tax the wealthy and spend on the less wealthy. Republicans still strongly desire the opposite.
The Washington post Donald Trump's campaign brain trust is working on a new economic plan to anchor his campaign. The main idea is to pass yet another huge tax cut for the rich (a lower corporate tax rate), combined with higher taxes on the middle class (a 10% tariff).
President Trump's brain trust believes that current economic conditions demonstrate that the U.S. economy is being negatively affected by excessively progressive taxation. Indeed, they have believed this consistently for more than 30 years, through every conceivable combination of economic conditions: high inflation, low inflation, recession, boom, war and peace.
Supply-side economics is a religion masquerading as economic theory, and Trump's brain trust is, so to speak, a collection of high priests of the supply-side cult: Arthur Laffer (first started promoting supply-side economics in 1950) In the near future), Stephen Moore, Lawrence Kudrow, and Newt Gingrich.
The same gang infiltrated Trump's inner circle in 2016, likely because most sane Republican economists disliked him. Despite his intermittent promises to make the wealthy pay higher taxes, President Trump's accomplishments in his first term focused on passing tax cuts that unfairly benefited the wealthy.
The putative purpose of the tax cuts for business owners was to encourage them to put more money into domestic investment. That didn't happen. But the Trump tax cuts also came with no obvious or immediate costs. At the time, interest rates were very low and the labor market had not yet fully recovered from the 2008 recession. Deficit-driven tax cuts and general spending increases injected more demand into the economy, contributing to full employment and rising incomes until the pandemic hit.
The economic situation that President Trump will inherit in 2025 will be drastically different. Rising deficits and interest rates mean there is an immediate economic cost to borrowing to finance regressive tax cuts. That's why his advisers are planning to combine President Trump's next wealthy tax cut with a 10% tariff, perhaps using the revenue to offset costs.
The political problem with this plan is that it exposes, rather than hides, the trade-offs inherent in giving huge tax breaks to the wealthy. (Consumers will soon pay higher prices for many goods.) The long-standing Republican formula, adopted by Ronald Reagan, George W. The idea is to combine small-scale tax cuts. Everyone else. Democrats complain that the wealthy are getting a disproportionate share of the money, Republicans lie about that, and then make a fuss about other, more digestible wedge issues (the war on terror, same-sex marriage, caravans, etc.).
The supply side is not worried about this cost because they are taking this issue really seriously. For them, cutting taxes for the wealthy is the main objective of politics. They're not doing it to get elected. They are going to be elected to do this, and they are willing to bear whatever sacrifices may occur in pursuit of their core objectives. In some ways, the depth of their commitment is admirable, even if we overlook both the utter objective failure of their economic model and the indiscriminate dishonesty surrounding it.
But what that does for the rest of the party is another matter. The supply-side arm's strange dominance over the Republican policy-making apparatus is a historical marvel, and I studied it in my first book 20 years ago. The party's voters do not share this priority at all. An increasing number of intellectuals who support the Republican Party also reject this idea. Trump has allowed conservative intellectuals to develop deep fantasies that represent the movement of bare feet on the dirt. Many of them seem to wholeheartedly believe their pseudo-populist rhetoric. They are motivated by team loyalty rather than any particular policy, and usually pay little attention to that policy.
But Trump is a fraud, not an enemy of the rich. And the next Trump term, if that happens, will be even more oligarchic than the last.
