Trump's Republicans are shifting the Republican Party's approach to labor, free markets and regulation

Republican presidential candidate and former US President Donald Trump shouts during a campaign event in Freeland, Michigan, USA, May 1, 2024.

Brendan Mcdermid | Reuters

This column is part one of Eamon Javers' two-part series on the new conservative economic populism gaining ground among Republicans close to former President Donald Trump.

Come back Wednesday for part two, on the key figures leading this broad shift in the way conservatives approach labor, free markets and regulation.

WASHINGTON — Trump's first presidency has shattered conservative economic ideology over the Republican Party's approach to free markets and tariffs.

A second Trump presidency could destroy it in every other area of ​​economic policy.

That's because the 2024 presidential election is playing out in a dramatically different economic and political landscape than previous Trump campaigns.

Conservative economic thinkers have now had at least eight years to construct an intellectual and policy framework around Trump's instinctive economic populist message.

What they have come up with is a series of policy proposals that target workers and corporate elites, and are increasingly popular within Trump's party and economic circles.

Taken together, the plans amount to a very different approach to the economy than the Reaganomic consensus on taxes, regulations and trade that dominated the Republican Party from the late 1970s until Trump's first election in 2016.

If Trump is re-elected president in November, these proposals could be central to a second-term economic agenda.

I spoke with Sohrab Ahmari, former Wall Street Journal editorial writer and one of the architects of this new populism, to get his insight into the direction conservative economics could take.

The vision that Ahmari laid out for me was of a Republican Party that is worker-centered and much more pro-union than it is today.

At one point, Ahmari paused and I said, “I can almost hear the CEOs of Amazon and Starbucks having a heart attack listening to this.”

“Leave them alone,” Ahmari shot back. “Let them choke on it.”

Trumpian neo-populism

Contempt for America's corporate giants is a key element of the new conservative, populist approach to economics.

Steeped in the culture wars of the Trump era, these neo-populists do not see corporate CEOs as the Republican Party's natural allies in a broader war against big government. Instead, they view C Suite executives as woke elitists trying to push their liberal cultural values ​​onto Middle America.

They argue that the Reaganite ideology of low taxes, few regulations, and free markets has not worked out very well for American workers, but has been extremely good for corporate elites.

The argument goes that this affluent class does not live in the same places and share the same values ​​as most social conservatives.

The new thinking is urging conservatives to reject the kind of traditional, Republican economic dogma championed for decades in Washington by groups like the U.S. Chamber of Commerce and The Business Roundtable.

Instead, the new populists want to bring together conservatives to create a broader coalition, a kind of capitalist workers' party of America. They also have a specific list of objectives.

Policy proposals for a second Trump administration

  • Introduce a 10% global tariff on all imports.
  • Block American companies from investing in China.
  • Block Chinese companies from accessing US capital markets.
  • impose strict penalties on workers who do not comply with immigration laws.
  • Eliminate the H-2A and H-2B programs for seasonal and agricultural workers.
  • Award H1-B visas to the highest paying employers.
  • Create a $100 billion National Development Bank for critical infrastructure.
  • Repeal of the National Environmental Policy Act of 1970.
  • Corporate bankruptcy reform to mandate six months of severance pay for all employees and one year of tax liability for local communities.
  • Require private companies hired by public pension funds to publish annual performance data.
  • Imposing a financial transaction tax of 10 basis points on the sale of stocks, bonds and derivatives on the secondary market.
  • Ban stock buybacks and eliminate tax deductibility of interest.

Source: AmericanCompass.org

To be clear, this is not yet the dominant direction of Republican economic thinking in Washington. But it is undeniably on the rise.

Buoyed by Trump's success in reshaping the Republican Party in his own image, the new populism aims to capture the political energy of Bud Light-raising Kid Rock and inject it into the dusty corners of the macroeconomic thinking about injecting.

If Trump wins the November election, this new thinking could be felt in every economic decision his second administration makes. It could also upend old alliances, seeking to return economic power to workers over employers, and to local communities over national elites.

Even if Trump is defeated in November, this new approach to the economy is likely to shape next year's policy battles over unionization, tariffs and whether to keep the 2017 corporate tax cut.

Recognizing 'work matters'

The neo-populist ideas emerging from the political right are refined and promoted in Washington by an embryonic network of institutions. Chief among these is the nonprofit think tank American Compass, founded in 2020 by Oren Cass.

Cass argues that Republican economic policies are focused on the wrong goals: lowering prices and increasing consumption.

Instead, he says, Republicans should focus on production and value creation. “The conceptual shift is the recognition that work matters and production matters,” Cass told me.

“It was absolutely a black-letter economic doctrine that the goal of economic policy was to consume as much as possible. But not all markets are productive markets. And there is nothing that guarantees that the things that optimize profits are things that are socially beneficial.”

As Cass puts it, most of the damage to the American social fabric has been caused by decades of offshoring in the American manufacturing sector. To solve this problem, he and others like him want to see blanket rates.

Bronco SUVs in production at Ford's Michigan assembly plant, June 14, 2021.

Michael Wayland | CNBC

Cass is also sharply critical of Wall Street: “The private equity and hedge fund industries are not generating value,” he said in our recent interview. “They get value out of the economy.”

“$300 billion in fees for the hedge fund industry is not a $300 billion value,” he added.

What Cass and the other new conservative economists have in mind is the use of muscular state power – something conservative politicians once completely opposed – to push companies toward more socially beneficial ways of working.

“The goal is to make productive activities more attractive and unproductive activities less attractive,” Cass said.

Cass's approach to economics could have major implications for Wall Street. He proposes a tax on financial transactions, aimed at making trading assets more expensive and reducing what he sees as the financialization of the economy.

Biden also favors a tax on financial transactions, as he explained on CNBC during his 2020 campaign.

“Turning assets around in circles creates nothing of value, and in fact creates the opposite of value,” Cass said. He would also force public pension funds to invest their entire portfolios in U.S. domestic investments.

For Cass, tax cuts — traditionally the top Republican priority — are simply not on the list. “There are times when tax cuts are needed, like in the 1970s, for sure,” Cass said.

“But to dogma these things and say this is always the answer and more is always better is not conservative at all. The old 'thou shalt not raise taxes' is a thing of the past.”

A 'serious threat' to the Republican Party

None of these ideas are the kind of economic thinking that executives on Wall Street or Silicon Valley would expect to hear if there were a new Republican administration.

“The most charitable thing to call this would be economic populism,” said former Republican Sen. Pat Toomey of Pennsylvania, who left office last year.

There's no need to change the world's most successful economy, says US Senator Toomey

“But realistically this is left-wing collectivism and statist central planning.” Toomey said it is unclear how much of this new thinking Trump would adopt if he were re-elected president.

“I think this is a very serious threat to the Republican Party,” Toomey told me. “There will be a lot of people who will leave the Republican Party if it looks like it's becoming a party that has more in common with the left.”

Next Wednesday: part two of Eamon Javers' column on the new conservative populism. This time, Javers looks at the key figures leading the shift in Republicans' approach to labor, free markets and regulation.

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