The Republican Party’s Split on Economics

Why an argument over economic policy is roiling the party.

The Wall Street Journal’s editorial board has spent the last few months trying to boost Gov. Ron DeSantis’s presidential campaign. It has called his legislative record “as impressive as you’ll find,” while touting Florida’s population growth and noting that the state’s age-adjusted Covid death rate is well below the national average. As DeSantis’s campaign has sagged, The Journal’s editorialists have offered him tactical advice for confronting Donald Trump.

After DeSantis released his economic plan last week, however, The Journal took a different tone. Its headline called the plan “unstable.” The editorial praised some parts of DeSantis’s agenda while criticizing him for favoring less trade with China, less immigration and federal action to ease student debt.

Even if the DeSantis campaign ends with a whimper, this argument among American conservatives is an important one. It will shape the Republican Party in the post-Trump era — however far away that may be — and, by extension, influence the country’s economic policy.

Today’s newsletter explains the debate.

The Journal editorial page represents an outlook that dominated the Republican Party from Ronald Reagan’s presidency in the 1980s until Trump’s arrival in 2016. It favors an approach that’s variously described as laissez-faire, small-government and neoliberal. It includes light regulation, low taxes, cuts to government benefits and high levels of trade and immigration. Its patron saint is Milton Friedman, who argued that free-market capitalism is the best way to lift living standards.

The problem for the laissez-faire advocates is that many of their predictions have not come true.

Income growth for most Americans has been sluggish since the Reagan Revolution. Only the affluent have enjoyed healthy gains in income and wealth. Other measures of living standards look even worse. In 1980, life expectancy in the U.S. was typical for an industrialized country; today, it is lower than in Canada, Australia, Japan, South Korea or any large country in Western Europe.

By The New York Times | Source: T. Piketty, E. Saez and G. Zucman

Some laissez-faire advocates claim that these statistics are all misleading and that the past several decades have in fact been a glorious period of prosperity. But most Americans disagree, polls show. Even many Republican voters disagree.

This dissatisfaction created the opening for Trump to take over the Republican Party while calling for less trade and immigration and promising to protect Medicare and Social Security. His campaign was a sharp departure from the proposals of laissez-faire Republicans like Paul Ryan.

Each of the Republicans who hopes to lead the party after Trump faces a choice on economic populism: Return to Reagan’s neoliberalism? Or try to create a more coherent version of Trump’s populism?

A few, including Nikki Haley, have opted for Reaganism. Most high-profile younger Republican leaders have not. Josh Hawley, Marco Rubio and J.D. Vance are among the Republican senators who have called for trade restrictions or other government actions to lift incomes, as I’ve noted before.

DeSantis is a telling case study because his national record was thin enough that he could choose which path to take. And he did not choose Reaganism. He has embraced some parts of it, like low taxes, less bureaucracy and school choice, but the first item on his agenda is decidedly different: He has called for trade restrictions with China and the end of its “most favored nation” status. He rejects a core plank of the old Republicanism.

“We are a nation with an economy, not the other way around,” DeSantis said last week.

On immigration, he has called for restrictions — to protect wages and reduce the flow of fentanyl — and offered an explanation that sounds like a Bernie Sanders line: “The American immigration system will serve Americans, not multinational corporate elites.” On student debt, DeSantis supports a middle ground between the status quo and Biden’s attempts at cancellation: Helping borrowers to discharge debt through the bankruptcy process and holding colleges responsible for unpaid loans.

“It’s really notable that what he decided was that the pre-Trump Republican orthodoxy was not of interest to him,” said Oren Cass, a former aide to Mitt Romney and the founder of a reformist conservative think tank called American Compass. “He sees a need to go in a new direction. He thinks that’s what’s politically salable in the G.O.P.”

I don’t want to exaggerate the shift. Republicans like DeSantis, Rubio and Trump continue to support tax cuts for the wealthy and most deregulation. The Supreme Court is dominated by Reagan-style, laissez-faire justices. The Republican Party is still mostly the party of big business.

In the short term, these economic issues are also not the central ones for our political system. The central issue is whether the anti-democratic forces within the Republican Party, led by Trump, again take control of the federal government. DeSantis himself has shown some authoritarian tendencies, such as bullying skeptics and whitewashing history.

Still, the split over the Republican economic agenda matters. Already, it helps explain why Biden was able to attract Republican support for legislation to improve the country’s infrastructure and expand its semiconductor industry. “On the surface, American politics is deeply calcified, stuck and hyper-polarized,” Lee Drutman, a political scientist, wrote in his Substack newsletter last week. “Below the surface, American politics is rich with latent factions and repressed diversity.”

  • Kamala Harris has taken on a more visible role in the 2024 campaign: She has sparred with DeSantis and defended abortion rights in Iowa.

  • Nevada, a swing state, has the country’s highest unemployment rate. Its economy has struggled to recover after the pandemic.

Porcha WoodruffNic Antaya for The New York Times
  • A woman was falsely accused of robbery and carjacking after a facial recognition match and was arrested while eight months pregnant.

  • Yellow, the trucking firm that received a $700 million pandemic bailout, filed for bankruptcy.

Jane Coaston interviewed Jennifer Williams, a member of the Trenton City Council, about being a transgender Republican.

Gail Collins and Bret Stephens discussed Mike Pence and the latest Trump indictment.

Josip Petrsoric, known to celebrities and tourists as Joe.Lanna Apisukh for The New York Times

Fifty-five years: A bartender at Sardi’s, Broadway’s go-to saloon, is retiring. He knew everybody’s favorite drink.

“Hank the Tank”: A black bear responsible for at least 21 home break-ins near Lake Tahoe has been captured.

Metropolitan Diary: Boxers forever.

Lives Lived: Florence Berger was a tenured professor at Cornell who found a second calling as a matchmaker. Many of her pairings lasted. She died at 83.

Round of 16: England beat Nigeria in a penalty shootout. Australia’s game against Denmark starts soon.

Megan Rapinoe: A missed penalty kick ended the star’s World Cup career. But her influence was never just about soccer.

Lionel Messi: After two more spectacular goals last night, he now has seven goals in four matches since arriving in the U.S.

Women’s basketball: The New York Liberty beat the Las Vegas Aces.

Technology and talent: Why does every generation of athletes seem to be better than the last? Professional darts can explain.

The New York Times

A travel scam: If you’re looking for a guidebook for an upcoming trip, beware of the fakes. Shoddy travel books that appear to be compiled with the help of artificial intelligence have flooded Amazon in recent months. Fake reviews recommend the self-published books, bringing some to near the top of search results.

Nico Schinco for The New York Times

Sizzle mint for this zucchini salad.

Find the best backpacks for school.

Shop these end-of-summer sales.

Take our news quiz.

Here is today’s Spelling Bee. Yesterday’s pangrams were handling and highland.

And here are today’s Mini Crossword, Wordle and Sudoku.

Thanks for spending part of your morning with The Times. See you tomorrow. — David

P.S. Hollywood movie and television writers ended a five-month strike, their longest ever, 35 years ago today.

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