For example, imagine you are an avid observer of American politics who went to sleep 25 years ago and woke up last week. You find that the leader of the Republican Party is a wealthy heir with widespread support from CEOs and other wealthy individuals. He meets with Republicans in Congress to plan his legislative agenda, advocating for a radical plan to replace income taxes with a completely regressive tax.
There is nothing surprising in this picture. Perhaps things have gone a little stranger than expected, but the direction in which the party's economic policy has headed is certainly familiar.
Since Donald Trump began his journey up the golden escalator nine years ago, Populist Trump's dangerous rhetoric creates an air of intimidation sufficient to expand the party's support among working-class voters without taking any substantive action that would alienate the party's healthy financial base.
This ploy was made all the more convincing by Trump’s inherent ignorance of economic realities: his vague and contradictory rhetorical gestures created an ambiguity from which pundits could discern the hazy contours of a workers’ party’s rise.
But by this point it should be clear that no such party will emerge. Trump has spent nearly a decade cementing his own brand of economic populism, but it is far less coherent than when he started.
Overall, Trump's economic plan consists of a plan to raise tariffs, perhaps to 10%, or even to replace income taxes (as he privately suggested last week). He has promised to lower corporate taxes again to 20%, or perhaps 15%. Plus the usual promises to appoint fossil fuel lobbyists to handle environmental regulations and financiers to act as watchdogs over Wall Street. Trump has also hinted that he might want to try again to repeal Obamacare and cut retirement benefits, but has dropped any discussion of doing so since his comments were made public. That's it.
The protectionist dimension of Trump's economic policies is certainly a genuine departure from party orthodoxy. But he managed to embed it in Republican politics by transforming it into a vehicle for regressive tax cuts. In recent weeks, Trump has gained momentum among the Republican billionaires who made their displeasure known on January 6th, while pushing his tariff proposals in a more radical direction. This is not a contradiction, but a natural fusion of Trump's protectionist impulses and the party-wide enthusiasm for exempting the wealthy from their obligations to fund the government.
Tariffs make goods more expensive, and because poor and middle-class people buy goods with a much higher share of their income than the wealthy, higher tariffs are highly regressive. If Trump can pitch the tariffs as a “nationalist” plan to hit China and rebuild American industry, that's all the more to Republican advantage.
Written 70 years ago by a conservative author Income Tax: The Root of All EvilIt may sound far-fetched, but rejecting progressive taxation on moral grounds remains a fundamental tenet of American conservative thought. Conservatives have never stopped coming up with proposals to repeal progressive taxation, employing ingenious ideas with varying levels of plausibility, ranging from the utopian (a flat tax, a “Fair Tax,” Herman Cain's 9/9/9 tax) to more mundane proposals to significantly reduce or eliminate taxes on inheritances, capital gains, dividends, or the top income tax rate.
The differences between Republican “populists” and establishment figures on this issue have generally been defined by the ambition and relevance of their plans, but crucially, they all pushed in the same direction: shifting the tax burden from the wealthy to the less wealthy, which ultimately allowed the party's radicals to work with the ruling coalition.
Trump has often been seen as posing a revolutionary challenge to the party establishment. In some ways, that's true. Republicans initially despised him as a con man who couldn't be trusted to advance their policy goals, but then changed their tune when he proved himself a capable con man. Trump's rhetoric continues to unsettle party elites.
But the media continues to mistake these tensions over Trump's communications style and ability to govern for a deeper philosophical divide. Five years ago, newspapers were clamoring for “Trump is trying to destroy the Republican economy,” and today they run headlines like “Trump's Republican allies are changing the GOP's approach to labor, free markets and regulation.”
Republican donors don't believe Trump can or will actually replace income taxes with tariffs, but they do appreciate his demonstrated commitment to shifting the tax burden from the wealthy to the non-wealthy. And they certainly appreciate Trump's unique ability to sell this tax shift as a trade policy issue — positioning him as a “populist” threat to global elites rather than as yet another bizarre scheme to line his own pockets.
