Trump upends GOP message on economy

Washington Post (Wonkblog)

By Jim Tankersley

August 31, 2015

Trump upends GOP message on economy 

After losing the 2012 presidential election, Republican Party leaders vowed to craft a message they thought would be more in tune with the middle class, promising to deliver faster economic growth and to help all workers, not just the very rich. The message was built on the bedrock GOP notion that the primary enemy of the American economy is an oversized and overreaching federal government.

But those careful plans have hit a large and brash-talking obstacle in the form of current Republican front-runner Donald J. Trump.

Trump’s surging campaign has pushed the party in a different direction, one that often clashes with free-market principles that have long underpinned GOP economic policy. Some establishment Republicans worry that the turn could damage the economy, and their party, for years to come.

Trump criticizes government, but he shot to the top of the GOP field by rallying voters against another enemy: immigrants from Mexico and low-wage workers in China, whom he blames for lost jobs and stagnant wages in America. He has proposed levying tariffs on imported goods, deporting millions of immigrants who entered America illegally and reducing the number of legal immigrants allowed in each year. In a further blow against conservative orthodoxy, he has said in recent interviews that he favors higher taxes on the rich and on investment income.

Critics, including many leading conservative economists in Washington, call Trump’s plans “nativist,” “protectionist” and incompatible with the party’s core pro-market beliefs. They also worry Trump’s ideas could spread to other GOP contenders.

“This is a very dangerous moment, I think, for the Republican Party,” said Stephen Moore, a conservative economist and co-founder of the Committee to Unleash Prosperity, which has been meeting with candidates to urge them to adopt low-tax, low-regulation policies to grow the economy.

“What Trump is saying about trade and immigration is a political and economic disaster,” Moore said. “He’s almost now making it cool and acceptable to be nativist on immigration and protectionist on trade. That’s destroying a lot of the progress we’ve made as a party in the last 30 years.”

Asked Monday to comment on the establishment concerns, Trump campaign spokesman Hope Hicks said only that “we will release our policy paper(s) in the coming weeks.”

Many Republican candidates beyond Trump have voiced opposition to new free-trade deals, including the proposed Trans-Pacific Partnership being negotiated by the Obama administration with several Asian countries. While every GOP candidate promises to secure the nation’s southern border and crack down on illegal immigration, some are now expressing an openness to reducing levels of legal immigration.

Free-market economists have long argued that trade and immigration are critical to growing the U.S. economy. Top Republicans have frequently adopted those beliefs.

But a growing portion of the conservative base -- and, to a lesser extent, the country as a whole -- now blames American workers’ economic woes on competition from illegal immigrants and from low-skilled foreign factory workers abroad.

In a 2014 Public Religion Research Institute survey, 57 percent of Republicans said immigrants mostly hurt the economy by driving down wages, compared with 33 percent who said they help by providing low-cost labor. The nation as a whole split evenly on the question.

This year, the Pew Research Center found Republicans were evenly split on whether trade agreements helped or hurt their families; Americans in general were slightly more likely to say they had helped. Majorities of Republicans -- and pluralities of all Americans -- said trade deals lowered American workers’ wages and led to job losses in the United States.

Appealing to those sentiments is one way for GOP candidates to deliver on a promise they’ve been collectively making since the start of the campaign: to offer relief to American workers who have not only struggled through the Great Recession and its aftermath, but have seen their incomes stagnate over the past quarter-century.

That appeal is one that many conservatives, increasingly angry at GOP leadership, have embraced, and that they believe is a political and economic winner.

“It just defies the common sense of any nonpolitical person in this country that importing large amounts of low-skilled, indigent people to this country is a road to prosperity,” said Daniel Horowitz, a senior editor at Conservative Review who writes frequently about immigration issues. Politically, he said, “I understand a tough issue when I see one -- maybe getting rid of Head Start, abolishing the minimum wage. This ain’t a tough issue.”

Rich Lowry, the editor of the conservative National Review, wrote in a recent Politico column: “It’s almost as if invoking the interests of America’s workers in the context of immigration is a faux pas that leads to a blackballing by whatever is the Chamber of Commerce’s equivalent of Skull and Bones. Trump has stomped all over this misbegotten piety, and good for him.”

Some of Trump’s rivals, such as Gov. Scott Walker of Wisconsin and Sen. Ted Cruz of Texas, have praised his immigration focus. In a recent radio interview, Cruz said Trump was drawing attention to “the enormous downward pressure on wages and employment that unrestrained illegal immigration is providing.”

Others, such as former Florida governor Jeb Bush, have simultaneously pushed for tighter border security and extolled the economic benefits of immigrants. In the party’s first official debate earlier this month in Cleveland, Bush pledged to fix the nation’s immigration system “once and for all so that we can turn this into a driver for high sustained economic growth.”

So-called Reform Conservatives have been pushing candidates to embrace targeted tax relief for working families and innovative, market-oriented solutions to problems such as the rising costs of health care and higher education.

Traditional supply-side thinkers, including Moore and the other founders of his group -- economist Arthur Laffer, former presidential candidate Steve Forbes and conservative commentator Larry Kudlow -- have urged candidates to flatten tax rates and reduce regulations to unleash faster economic growth.

Trump has won some praise from members of those groups; for example, Laffer said in an interview that he enjoys how Trump tells voters, “‘I’m rich and I love it!’ And he’s not ashamed of it!”

But Laffer and many other economists oppose Trump’s trade and immigration proposals, which they say would dampen economic growth. (They also oppose any moves to raise top income tax rates or taxes on investment). Moore notes that the last Republican president to erect large tariff barriers was Herbert Hoover, and that the results worsened the Great Depression.

Business groups, in particular, want GOP candidates to talk more about rolling back regulations, lowering tax rates, forging new trade agreements and reforming the immigration system to allow workers who arrived illegally to have a path to legal status.

“We aren’t hearing enough about policies that are going to grow the economy,” said Chad Moutray, the chief economist at the National Association of Manufacturers. “We need policies that really ... allow manufacturers to grow in new markets, hire more people, and we aren’t hearing all these things right now.”

Some conservative thinkers say they’re convinced the candidates will eventually work their way back to debating tax, regulatory and other economic issues, before Iowans caucus and New Hampshire voters go to the polls.

“It has temporarily deferred the serious debates that are going to come on other issues,” said Doug Holtz-Eakin, an economist who was chief policy adviser to 2008 GOP nominee John McCain. Laffer said he doesn’t worry too much about candidates shifting focus: “I cool my jets,” he said. “I just take a deep breath.”

Arthur Brooks, president of the conservative American Enterprise Institute think tank, said he was impressed thus far that “the Republican field is sounding less like tax accountants for billionaires and more like leaders who are chomping at the bit to fight for ordinary people and their families.”

Asked about Trump, he said it was only natural that “early in the campaign, candidates are seeking to capture attention by channeling the worries of their most intense supporters.” But he predicted that voters would ultimately gravitate toward a more optimistic economic message. “Any candidate on either side who gets sucked into an arms race of competing pessimisms,” he said, “will be hurting themselves and their party.”

For more information, go to:  www.beverlyhillsimmigrationlaw.com