Imagine you were a close observer of American politics who fell asleep, say, 25 years ago and woke up last week. You discover the Republican Party’s leader is a wealthy heir who is broadly supported by CEOs and other rich people. He meets with congressional Republicans to plan their legislative agenda and floats a radical scheme to completely replace the income tax with a regressive levy.
There is nothing in this picture you’d find the least bit surprising. Perhaps things have gone a bit more crackpot than you might have predicted, but the direction in which the party’s economic agenda had gone would certainly be familiar.
Since Donald Trump began his golden escalator voyage nine years ago, the word populist has enveloped him like a protective cloak. His dangerous rhetoric gave him enough of an air of menace to help expand his party’s appeal to working-class voters without having to follow it up with any substantive moves that would alienate its healthy funding base.
The ruse was given just enough plausibility by Trump’s congenital ignorance of economic substance. His vague, contradictory rhetorical gestures created ambiguity, out of which pundits could discern the hazy outlines of an emerging workers’ party.
By this point, however, it should be abundantly clear that no such party is forthcoming. Trump has had nearly a decade to firm up his brand of economic populism, and he is farther away from anything coherent than he was when he started.
In its entirety, Trump’s economic agenda consists of a plan to jack up tariffs, possibly to 10 percent, or even (as he privately suggested last week) high enough to replace the income tax. He’s promising to cut the corporate income tax again, to 20 percent, or possibly down to 15 percent. Plus there’s the usual standing promise to install fossil-fuel lobbyists to handle environmental regulation, financiers to oversee Wall Street, and the like. Trump has also let it slip he might like to take another shot at repealing Obamacare and/or cutting retirement programs, but he shut down any discussion after his comments went public. That is it.
The protectionist aspect of Trump’s economic agenda does indeed represent a genuine break from party orthodoxy. But Trump has managed to integrate it into the Republican program by turning it into a vehicle for regressive tax cuts. In recent weeks, he has built momentum among Republican billionaires who responded queasily to January 6, even as he has pushed his tariff proposals in more radical directions. That is not a contradiction but a natural synthesis of Trump’s protectionist impulse and the party’s general mania for relieving the wealthy of their obligations to fund the government.
Tariffs raise the cost of goods, and poor and middle-class people pay a much higher percentage of their income on goods than do the rich, making a tariff hike deeply regressive. If Trump can sell tariffs as a “nationalist” plan to stick it to China and rebuild American industry, all the better for Republicans.
Seventy years ago, a conservative author wrote The Income Tax: Root of All Evil. That may sound hyperbolic, but the rejection of progressive taxation on moral grounds remains a foundational tenet of American conservative thought. Conservatives have never stopped devising proposals to roll back progressive taxation, employing a wide array of creative ideas with varying levels of plausibility, from the utopian (the flat tax, the “fair tax,” Herman Cain’s 9/9/9 tax) to more banal proposals to slash or eliminate taxes on estates, capital gains, dividends, or the top income tax bracket.
The distinction between Republican “populists” and Establishmentarians on this issue has generally been defined by the ambitions and plausibility of their plans. But the key thing is that they have all pushed in the same direction of shifting the tax burden from the rich to the non-rich, which has enabled the party’s radical wings to ultimately cooperate with its governing faction.
Trump was often seen as posing a revolutionary challenge to the party’s Establishment. In some ways, he has: Republicans initially disdained him as a crook who couldn’t be trusted to advance their policy goals, and only turned around when he proved he was a crook who could. His rhetoric has continued to give heart palpitations to party elites on the regular.
But the news media has continued to misinterpret these tensions around his communication style and governing competence as a deep philosophical schism. Five years ago, newspapers were hyperventilating about “Trump’s quest to shatter GOP economics.” They continue to run headlines like “Trump-allied Republicans are changing the GOP’s approach to labor, free markets and regulation.”
Republican donors do not think Trump can or will actually replace the income tax with a tariff. But they appreciate the signal of his commitment to shifting the tax burden from the rich to the non-rich. And they no doubt appreciate his unique ability to pitch this shift as a trade-policy dispute — one that makes him a “populist” threat to the global elite — rather than another kooky scheme to line their pockets.
