For at least 25 years, the Republican Party has been promoting policies damaging both to its own political standing and to the middle class. In the face of the growing radicalism of the Democrats, and the need—more crucial now than ever—for the GOP to assemble a majority coalition of voters, it must reexamine those policies.
Broadly speaking, the areas in need of reconsideration are tax policy, trade policy, foreign affairs, and antitrust policy.
Tax Policy. Supply side economists argue persuasively that tax cuts benefiting corporations and the upper classes have a more profound impact on the economy overall than tax cuts for the middle class. But whatever the correct answer to this broad economic question may be, the political consequences, as shown in exit poll data from the midterm elections, have not been to the GOP’s advantage.
It is also worth considering whether the broad economic consequences of sound policies on tax cuts actually do much to benefit those most in need of relief, at least in the near term. Getting the economic calculus right is not the same thing as getting the political calculus correct.
More than this, one guesses that the public’s opinion of the extraordinarily rich—billionaires like Tom Steyer, George Soros, Michael Bloomberg, Jeff Bezos, Bill Gates, Warren Buffett, and the Koch brothers—has taken a hit in recent years as their political activities and immense wealth are seen as frightening and no longer on a human scale.
It has been reported that President Trump is considering a middle class tax cut. How about combining it with a tax increase, perhaps through a wealth tax on, say, individuals with net assets of $100 million or more? It wouldn’t require such people to switch from vichyssoise to gruel, but it would disarm the Democrats’ criticism of GOP tax policy as “favoring the rich” and be deeply popular with the middle class.
Antitrust Policy. The technology companies that are referred to by investors as FAANG (Facebook, Amazon, Apple, Netflix and Google), have grown to such a size they now have a market cap of some $3 trillion and account for 11 percent of the value of the S&P 500.
But it’s not just their size that is gargantuan, so too is their impact on other industries. Take Google and Facebook, for instance. These two companies have decimated the advertising revenue of newspapers and magazines, to the point that their continued survival is in doubt, while Netflix is doing the same thing to the motion picture studios and theaters. The point here is not to lionize the Hollywood studios or newspaper publishers per se. As I am about to make clear, neither are friends of the GOP. What’s important, however, is that the motion picture and newspaper industries remain viable.
In 2012, the FTC wrapped up a years-long investigation of the competitive practices of Google. Despite a (leaked) staff report that recommended legal action against Google for tactics that harmed internet users, the agency let Google off with a slap of the wrist in August of that year.
Though it was little remarked at the time, in March 2012, just five months before that FTC decision, it was announced that Google CEO Eric Schmidt was under consideration for a cabinet position within the Obama Administration. Google and its employees had contributed millions of dollars to Obama’s reelection campaign and to other Democrats. Of course, there’s no chance at all (wink, wink) that then-FTC Chairman Jon Leibowitz, another Obama appointee, was aware of Google’s political heft within the administration as he overruled his staff’s recommendation.
Part of the problem for Republicans in embracing strong antitrust positions has been that many quasi-libertarians in the party see antitrust as just another government intrusion in the marketplace. But as with the continued existence of the Libertarian Party, it’s something the GOP is just going to have to deal with and get over.
Tariffs and Free Trade. President Trump’s decision to go after countries, and earlier trade deals, that work against the interests of American companies and workers is the correct policy but it is not currently embraced with enough enthusiasm by Republican legislators.
Their diffidence is largely explained by the lobbying of S&P 500 companies, many of whom are thought of as “American” largely just because they are domiciled here. A recent report in USA Today indicated more than 44 percent of total sales of these companies came from abroad, not to mention the large number of S&P products being made overseas. In other words, these companies are more concerned about their sales and manufacturing abroad than they are about the impact on American companies and workers—past, present, and future.
The hollowing out of the manufacturing capability of so many American towns and cities is the legacy of these “free trade” policies, that, and the canard that America could get by just on service companies.
Foreign Affairs. Easily the most disastrous policies pursued by earlier Republican administrations and congressmen are those connected to military activity abroad, either as part of America’s role as the world’s policeman or in pursuit, as the neocons put it, of “nation building.” The mess that is the Middle East today speaks volumes about the folly of such policies.
But there’s another dimension to this problem: It is impossibly blinkered in that it implies that our nation has the resources and relative strength among nations to engage in these wars. But we don’t.
Indeed, until just the last two years, China’s economy was growing at a rate that was at least double our own, and China is also expanding its military at light speed. Even Russia, though not in the same league economically, is itself expanding its military and teaming up with China in military exercises.
Going forward, the GOP should wholeheartedly embrace, as Trump is advocating, “nationalism” rather than “globalism,” and Main Street rather than Wall Street. And GOP legislators should resist the lobbying of corporations that despise them, like the entertainment industry and the legacy media. It isn’t enough that such companies are “corporations” for the GOP, the party of business, to support their policy positions in Congress or with the regulatory agencies. The political damage these companies do to the GOP is orders of magnitude worse than whatever minuscule gifts they can bestow on compliant GOP legislators.
In sum, the politics of a generation ago needs updating, even as the principles that animated the party remain constant. It is not enough to recur to position papers of 30 years ago to understand what we need to do today. In order to maintain those principles of freedom and self-government that we all should care about, we have to adapt our policy positions in order to meet current political realities.
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