When Treasury Secretary Steve Mnuchin said “now is not the time to worry about shrinking the deficit,” during fall negotiations with Congress over COVID-19 relief legislation, many Democrats predicted Republicans would claim that time had come again as soon as President Trump no longer occupied the White House.
Despite candidate Trump’s 2016 campaign promise to eliminate the national debt in eight years by growing the economy faster and eliminating wasteful spending, the nation’s borrowing increased by over $7 trillion during his term.
Just as congressional Republicans harnessed the fury of the Tea Party and forced spending caps on President Barack Obama after he spent trillions on economic stimulus measures and ObamaCare, they are now returning from their holiday from fiscal restraint to confront President-elect Joe Biden’s ambitious agenda. Yet, Biden faces a Republican Party transformed by Trump, giving the incoming Democratic president an opportunity to find common ground with the GOP’s populist branch.
In his first inaugural address, President Ronald Reagan famously articulated the guiding conservative philosophy that “government is not the solution to our problem, government is the problem.”
Anti-tax activist Grover Norquist stated he wanted to shrink government to the size where he could “drown it in the bathtub.”
Whatever their differences on social or foreign policy, Republicans have rallied around the core principle of smaller government, lower taxes and less regulation. Indeed, many party strategists believe it necessary to emphasize these core beliefs again to bring back swing suburban voters turned off by Trump’s crude behavior.
Conservatives have long believed individuals and businesses are better positioned to spend their own money and have fought the growth of government for many principled reasons.
These reasons include: opposition to the higher taxes and borrowing required to pay for spending; lower growth rates and opportunity costs incurred by removing resources from the private sector; inefficiency and corruption created by empowering politicians, unelected bureaucrats, and special interests to pick winners and losers and allocate resources; and decreased personal freedom and increased dependency that accompany a more powerful government.
Trump modified the traditional conservative argument that the problem was government was doing too much for too many — and instead argued it was not doing enough for the right people.
Trump expanded the definition of the deserving poor to include everyday working families whose wages had stagnated for years. Democrats have long used similar arguments to enact universal social welfare programs. President Obama cited the plight of working Americans to include both Medicaid expansion for the poor and exchange subsidies under ObamaCare for families earning up to 400% of the federal poverty level.
And Trump tapped into working-class anxiety by promising to pursue policies, like tighter immigration controls, tariffs, farm aid, and renegotiated trade deals, that would protect their jobs and incomes from unfair foreign competition.
Trump further promised to protect entitlement programs like Medicare and Social Security that benefited his base supporters, while railing against a corrupt Washington establishment that conspired to enrich the coastal elites and expand wasteful redistribution programs for favored liberal constituencies.
But Trump seemed more interested in adding spending he liked — such as military spending, his border wall, his long-promised infrastructure bill, and direct pandemic assistance — than in eliminating spending he did not like.
Liberals argue that persistently low interest rates mean the government can afford to borrow and spend more, and that such investments are justified by exceptional hardships like the Great Recession, the coronavirus pandemic, growing inequality, and the opportunity to stimulate future growth through investments in clean energy, infrastructure and education.
Populist Republicans continue to oppose wasteful government spending, but are more willing than traditional conservatives to embrace spending to help working families and their communities. They share traditional conservatives’ respect for independence, hard work, and the role of private entities, especially faith-based ones, but see a greater opportunity for government programs and spending to support these values.
And populist Republicans argue the choice is between putting money through the labyrinth that is government or eliminating the middle man and giving money directly to working families, especially when those families have been harmed by government policies like pandemic lockdowns and trade agreements that ship manufacturing jobs overseas.
The populist Republicans will not advocate austerity for the sake of austerity, and think it foolish for Republicans to be the party of accountants telling voters to eat their vegetables.
The populist Republicans think Washington elites in both parties prioritize the needs of large corporations and capital investors. They view the welfare of working families — not overall growth rates — as their top concern.
In addition, populist Republicans are more likely to find common ground with populist Democrats like Sen. Bernie Sanders, I-Vt., to increase spending on working families, just as moderate members of both parties have historically forged bipartisan agreements based on incremental discretionary spending increases, entitlement program cuts, and/or revenue increases to temper deficits.
Republicans like Sen. Rand Paul of Kentucky and House members in the Freedom Caucus continue their fight, following the path of former House Speaker Paul Ryan of Wisconsin, former Sen. Phil Gramm of Texas, and others before them to shrink government spending and curb its powers.
However, other Republicans are applying Trump’s populist brand of conservatism to argue for new government spending and powers. They are more comfortable using the powers of government to level the playing field and counter the influence of large corporations.
Republican Sen. Josh Hawley of Missouri teamed up with democratic socialist Sen. Sanders to add direct assistance to the latest coronavirus relief package, despite objections from Sen. Ron Johnson, R-Wis.; Rep. Dan Crenshaw, R-Texas; and others that payments should be targeted to those who had lost jobs or hours.
Sen. Marco Rubio, R-Fla., and Ivanka Trump have worked to expand paid family leave benefits. Sen. Ted Cruz, R-Texas, has proposed using the government’s power to rein in large technology companies from abusing their market dominance to discriminate against conservatives. Sen. Rick Scott, R-Fla., wants to rein in the ability of drug companies to charge American patients more than their foreign counterparts.
Soon-to-be President Biden will find a unified Republican opposition to his party’s more radical demands to eliminate private health insurance and fossil fuels and impose confiscatory tax increases. But Biden could find common ground with Republican populists on more mainstream ideas like infrastructure investment, confronting China over unfair trade policies, and protecting American families from rising health care bills.