Thursday, December 8, 2022

If Trump loses, does GOP establishment lose its working-class base?

By on August 12, 2016


Vicente Feliciano, president of Advantage Business Consulting

Editor’s note: The following was written for The Hill by Vicente Feliciano, president of Advantage Business Consulting, which provides consulting services to the government of Puerto Rico on economic and tax policies, but not debt policy.

Since the days of President Ronald Reagan, the GOP has included as two of its main components businesspeople and working class voters. The business class provided the economic policies for the party (free markets, free trade, fiscal responsibility, low taxes, small government) and the working class provided voting muscle as well as the commitment to some social issues (gun rights, anti-abortion, among other issues). The coalition worked well as long as the economy grew and lifted all boats, making everybody better off.

This has ceased to be the case as a result of globalization and technological changes. According to the Pew Research Center, from 1991 to 2012, household incomes for those with at least a bachelor’s degree increased 9 percent after adjusting for inflation. However, household incomes for those with only a high-school education declined by some 5 percent.

Republicans can offer attractive economic policies to their working-class constituency at the state level. Wisconsin Gov. Scott Walker challenged public-sector unions. The working class could support Walker’s tough stance because they perceived the unions as privileged consumers of working-class sales tax dollars. However, the same does not hold true at the federal level.

Can the GOP offer jobs? Actually, the Republican working class has jobs. Nationwide, the unemployment rate is hovering at 5 percent. The working class has jobs as retail attendants at megastores, cooks in hospital cafeterias, trolley drivers in historic tourist districts, maintenance workers in universities, security guards in office buildings and there are even some who are non-union workers in factories. Their problem is not jobs, but stagnant wages.

Can the GOP offer lower income taxes? Actually, the Republican working class pays no federal income taxes. According to the Tax Policy Center, a family of four with an annual income of $45,000 pays no income taxes. This is partly the result of the Earned Income Tax Credit program, which supplements the income of low-income groups like working-class Republicans.

During his presidential bid, 2012 GOP nominee Mitt Romney expressed frustration that 47 percent of U.S. households paid no federal income taxes and were thus less amenable to his candidacy. This was ironic. What the working class needs, and is willing to support, are better-paying jobs and fringe benefits. The irony is that Romney, as the governor of Massachusetts, implemented a health reform that guaranteed access to health insurance for the working class and was a stepping stone for the ObamaCare program.

During the 2012 Republican primaries, the party establishment forced Romney to veer to the right. In the same vein that “Prussian field marshals do not mutiny,” Romney was unwilling to stake a claim on the working class over the party establishment. However, Republican nominee Donald Trump has appealed to this group and won its support with a populist message and empathy for their causes. It is unclear if Trump’s economic proposals address the issues of the working class, but it is clear these proposals represent a break from the free trade, free markets and fiscal responsibility advocated by the Republican establishment.

If Trump wins, he would have unmoored the working class from the Republican establishment. If — when? — Trump loses, it is far from certain that the working class would come back to the fold. Republicans are offering very little in economic terms for the working class, while Democrats are waving at them the prospects of a higher minimum wage, permanency and perhaps expansion of ObamaCare, and better access to college education for their children.

As with the case of the Earned Income Tax Credit, the Republican establishment needs to search for market-friendly policies that advance the interest of the working class, although these policies could represent a larger government. For example, a voucher program so that working mothers with infants could pay for childcare would help the working class, increase jobs in the private sector and yes, lead to a larger government. Doing nothing will not only leave this real society need to be filled by Democrats, but also erode Republican support among the working class.

In the end, the Republican business establishment must start by accepting that Karl Marx was not completely off the mark: that it was policies of government intervention in the economy such as child labor laws that saved capitalism from itself. Two generations ago, the Republican leadership accepted that President Franklin Roosevelt’s Social Security program and unemployment insurance, which were initially fiercely resisted, were here to stay. Some years later something similar occurred with President Lyndon Johnson’s Medicare initiative. Now ObamaCare should be, however grudgingly, accepted.

And the Republican business establishment should accept that it is time to climb down from their high horse of unfettered free-market policies and get on with the dirty task of advocating market-friendly government interventions that advance the interests of the working class. Otherwise, the “blue wall” of 18 states and the District of Columbia — which provides Democrats with 242 of the 270 electoral votes required to win the presidency, and which Democrats have won in each of the last six presidential elections — will reach the 270 mark. And rightly so.

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