Redburn Reads (Nov. 9, 2024)

A working class hero is something to be

Friends,

Governing is hard. It involves making choices that require tradeoffs between gains and losses. And the benefits, which are often diffuse and take years to show up, are rarely as clear as the drawbacks, which fall on individuals in ways that are easy to blame on feckless politicians.

Credit...Photo illustration by Tam Stockton for The New York Times; source photograph by Hiroko Masuike/The New York Times

We’re being told by Bernie Sanders and many others that Democrats lost because they ignored the concerns of the working class that was once their base. And there’s truth to that, from Bill Clinton’s support for globalization by backing NAFTA and inviting China into the World Trade Organization (which continued the erosion of the Rust Belt that started under Ronald Reagan’s strong dollar policy) to Barak Obama’s support for bailouts for the banks without providing any equally substantive help for those who lost their homes in the Great Recession.

Joe Biden actually tried to change that dynamic, focusing his economic policy almost entirely on improving the prospects of working class people and communities. But the fatal flaw of his successful effort to keep the economy growing robustly coming out of the pandemic – helping create nearly full employment that provided jobs for millions of Americans at the bottom half of the income ladder – was a strong dose of inflation that was (temporarily) painful for many more Americans across the middle class. 

Biden’s instinct was correct, but the American Recovery Act provided too much extra stimulus to the economy in 2021 and 2022, putting Americans through a painful bout of inflation that is now largely over. What’s worse, his other admirable efforts to rebuild the industrial base of the nation (which has led to the biggest surge in investment in decades) and recast our energy systems around renewable power rather than fossil fuels is just beginning to deliver on its promises. 

And now that gasoline prices are once again under $3 a gallon and the price of milk and eggs is falling, who will seek to take credit for all this hard work? Why, Donald Trump, of course. 

I doubt Trump really thinks the United States is the hellscape he conjured up during the election campaign but sometime next year I expect Trump to be celebrating an American economy that will still look a lot like the one we’re experiencing now as heaven on earth. 

In the Washington Post, Catherine Rampell, my former colleague at the NYT, has a nice take on how President-elect Trump would be smart to do almost nothing to implement his so-called economic agenda.

How could Donald Trump deliver on his promise to fix the U.S. economy? On Day 1, the president-elect should simply proclaim he’s already fixed it — and go play golf.

By which I mean: Declare victory but do absolutely nothing else. Execute none of the economic policies he’s promised and appoint no one to carry them out. Because right now, the U.S. economy is already pretty damn good, and mostly just needs a hype man. Not a global trade war, or any of Trump’s other destructive, economy-crashing ideas. . .

Whether or not Americans recognize it, grocery inflation is already way down. Wage growth has already been outpacing inflation for more than a year. And the economy is already growing at a healthy pace. As a result, the U.S. economy is the envy of the world.

Americans nonetheless rate the economy quite poorly, perhaps because they’re still recovering from the 2022-2023 inflationary shock. But if current trends continue, and wages continue to rise, at some point they’ll notice their incomes are outrunning price growth. Who better to draw attention to this — while of course taking credit — than Trump?

Unfortunately for him – and for us – Donald Trump is not very smart. He may be canny and he certainly has his finger on the pulse of a large segment of American voters, but I don’t think he will be able to resist the temptation to muck up the economy with his plans to impose across-the-board tariffs on imports, try to deport millions of people living and working here illegally, and bust the budget by giving away trillions of dollars in tax cuts and special favors to the billionaire oligarchs like Elon Musk and Howard Lutnik who he will be turning to for advice.

Some of those who share Trump’s views more than I do are urging him to take another path. Oren Cass, for example, is a conservative intellectual who has long been recommending to Republicans that they not only seek support from the working class, but actually try to carry out policies that benefit them. I don’t agree with everything Cass recommends (and I imagine most of you won’t either), but he is definitely worth paying attention to.

In an op-ed for the New York Times, Cass warns that Trump is most likely to fall under the sway of the corporate interests of his donors.

As happens every time a new president is elected, Donald Trump is experiencing a sudden role reversal. His campaign to earn support from voters has ended abruptly and a new one has begun among donors and activists to earn his support for their priorities. The election was about tax cuts, or maybe cryptocurrency, the arguments go. What Americans really want, sir, is fewer protections on the job and a weaker safety net.

This is the first moment when presidencies go wrong. Rather than prepare to govern on behalf of the electorate that put them in power — especially the independent swing voters who by definition provide the margin of victory in a two-party system — new presidents, themselves typically members of the donor and activist communities, convince themselves that their personal preferences are the people’s as well. Two years later, their political capital expended and their agendas in shambles, their parties often suffer crushing defeats in midterm elections. . .

Take immigration. A promise to secure the border has long been a central aspect of Mr. Trump’s appeal, and Democrats are now clambering to get on his side of the issue. A Trump administration serving American voters would stanch the flow of migrants with tough border enforcement and asylum restrictions, reverse the Biden administration’s lawlessness by removing recent arrivals and protect American workers and businesses by mandating that employers use the E-Verify program to confirm the legal status of the people who work for them. That program, which strikes at the harm that illegal immigration does to American workers, is wildly urvey of 2,000 adults conducted by my organization, American Compass, in partnership with YouGov, found 78 percent support overall and 68 percent support even among Democrats. Law-abiding businesses tend to like it, too — they’re tired of getting undercut by competitors that get away with breaking the rules.

That’s the path to solving the problem. Mr. Trump will hear a lot of counterarguments from the affluent and influential class that builds its business model on underpaid, undocumented labor, especially in industries such as construction and hospitality, where he has personal experience, as well as in agriculture. Those voices are likely to suggest that instead he condescend to the masses with border theater and hostile rhetoric, while expanding temporary worker programs. To this end, Representative Thomas Massie of Kentucky, who opposes the E-Verify program on libertarian grounds, has already been mentioned as a potential candidate for secretary of agriculture. Moves like that will keep the guests at Mr. Trump’s golf clubs happy but ensure growing frustration and disillusion elsewhere. . .

The White House will face such trade-offs wherever it looks. Government efficiency became a major hobbyhorse of Mr. Trump’s campaign, but he will need to distinguish between making government work better and trying to get rid of it. Another American Compass poll conducted this year with YouGov casts the distinction in sharp relief. Republicans as well as independents express overwhelmingly negative views of the federal government. But ask what they want the government to do, and the answer by huge margins is always more or the same — even when it comes to “support for the poor, disabled, needy” and “medical care for those who need help affording insurance.” . . .

Focus on making it easier to speculate in cryptocurrency or on providing non-college pathways to building a decent life? Focus on whatever harebrained scheme Robert Kennedy Jr. or Vivek Ramaswamy might mention over lunch or on creating a more generous benefit for working families raising kids, as JD Vance and others have proposed? Any president finds himself surrounded by advisers pushing their personal and ideological agendas. There is a reason most lose sight of what matters to the people outside that bubble. But Mr. Trump has built his political career on taking the road less traveled. Returning to office, he has a last best first chance to get it right.

As I said, governing is hard. I don’t think Trump and the narrow Republican majority that will soon control Congress will get it right. And all of us — particularly working class Americans who have put their trust in Trump — will pay the price for that.

Take care,

Tom