Republican Economic Policy: A New Agenda

Conservatives need to rethink economic policy if they want to build a viable political coalition.

The Donald Trump who ran for president in 2016 was a populist. And, as president, Donald Trump used tariffs and slowed immigration, just like you’d expect a populist would. But when it came to tax policy, President Trump might as well have been George W. Bush.

While Bush cut the top tax rate for the highest earners from 39.6 percent to 35 percent, Trump cut it from 39.6 percent to 37 percent; while Bush cut the tax on dividends from 39.6 percent to 20 percent, Trump cut the tax on corporate profits from 35 percent to 21 percent. Six of one, half a dozen of another.

And yet opposition to Republicans in general and Trump in particular was largely led by the people and companies for whom Trump cut taxes the most. A recent analysis by Bloomberg News shows that the employees of law firms and Big Tech companies, among other Fortune 500 businesses, all tilted their donations heavily toward Biden. Just look at the companies that boycotted Facebook earlier this year because it wasn’t being aggressive enough about muting President Trump and his supporters: Chipotle, Coca-Cola, CVS, Levis, Microsoft, Patagonia, Starbucks, Target, Verizon…the list goes on and on.

Cutting taxes was the prime goal of the economic wing of the GOP led by Larry Kudlow, Stephen Moore, and The Wall Street Journal editorial page. But why? For what? The result, we now know, was a few years of slightly faster economic growth while the managerial class supported cultural leftism at every turn.

It’s not 1980 anymore: Political capital is a limited and valuable resource and the GOP needs to stop using it to cut taxes for people who hate conservatives. Next time these companies want a tax cut, tell them to call their Democratic friends. Instead, Republicans need a policy agenda that encourages family formation, weakens public-school monopolies, stops academia from abusing its subsides, and fights cronyism in Corporate America. The goal would be to nurture an emerging multi-ethnic Republican coalition of middle-class and working-class families that respect our nation and its history.

Helping Parents

The biggest bias in fiscal policy isn’t against capital formation; it’s the perverse anti-natal incentive built into Social Security and Medicare. Those programs require every generation of adults to perform two tasks: (1) work and pay taxes so the previous generation gets to retire and (2) raise children so there are future taxpayers to pay for benefits. But your retirement benefits have almost everything to do with your work career and almost nothing to do with how many children you raise.

Don’t think this matters? Imagine living before these government programs existed, when your ability to retire at all depended on raising children, amassing sufficient personal savings, or relying on charity. Or imagine a Social Security program with benefits determined by your own kids’ earnings. No kids, no Social Security: If you want to retire, you better had raised an investment…