Donald Trump’s Washington is compelling TV. Every day, Beltway sub-plots take new twists. What comes next with the Russia investigation? Tariff wars? North Korean rapprochement? Deep state intrigue? New mistress payoffs? What cabinet member or presidential adviser is taking a shiv to the back today? News junkies around the country have been overdosing on this show for more than two years. It’s a hard habit to kick.
Is it any wonder, then, that Republicans’ single biggest policy achievement—tax reform—receives such scant attention? An internal Republican National Committee poll earlier this month concluded that Republicans “lost the messaging battle” on tax cuts. The survey, conducted by right-leaning Public Opinion Strategies, found that by a two-to-one margin, Americans believe that the tax cuts benefited large corporations and the rich more than middle-class families.
Americans are also failing to see the connection between the new tax law and the booming economy. By slashing corporate taxes and increasing incentives for investment, the Republican tax plan was intended to untrammel the economy, which grew steadily but slowly in the latter Obama years. The results of Republican economic policy, led by the tax overhaul and sweeping deregulation, are manifest. Growth is accelerating. Unemployment is at a two-decade low. The stock market last week hit an all-time high. Even wages are now growing, shooting up in August at their fastest rate in nine years. Business confidence, business investment, consumer confidence, corporate profits—all point upward.
That so many economic indicators suddenly register strength is astounding—especially given so many uncertainties: the future of international trade, swelling national debt, and rising interest rates. We’re concerned about these things. As James Capretta and Yuval Levin write in our current issue, Trump “promised voters big tax cuts, no changes to entitlement spending, and a significant reinvestment in the military. With that combination of commitments, he signaled that restraining deficits and debt would not be a priority for his administration.” Spending on entitlements is the primary driver of this debt. The unwillingness to address this growing crisis is one of the president’s biggest failures, even if he deserves some credit for our current economic growth.
Businesses deserve credit, too, of course. They are responding to the incentives by investing and hiring, which is making a tight job market even tighter and pushing wages higher.
Economic growth and nearly full employment isn’t what Democrats and progressives predicted. New York Times columnist Paul Krugman on election night predicted: “We are very probably looking at a global recession, with no end in sight” because of a “regime that will be ignorant of economic policy.” Senate Minority Leader Chuck Schumer said in late 2017 that the effect of the tax law was a big mystery: “If the economy grows or shrinks, if it creates jobs or loses them, who knows? Certainly no one here.” Certainly not Schumer. Nancy Pelosi called the tax bill “Armageddon” and “the worst bill in the history of the United States Congress.”
In ordinary times, such strong economic performance would be a political help to the party in power. But these are not ordinary times. Democrats are heavy favorites to retake control of the House and have a shot to command a majority in the Senate, even as economic worries have plunged to record lows. People see evidence of a solid economy all around them—in their neighborhoods, at work, and in their retirement accounts. But they don’t hear a lot about that evidence when they follow the news.
It’s true that the news media are generally reluctant to credit positive economic news when Republicans are in charge, but that doesn’t explain everything. A more compelling explanation is lack of message discipline, and that comes from the top. The president is too easily baited, his attention span is too short, to let a robust economy tell its own story. He talks about the positive economic news. The trouble is that he talks about everything else, all the time. Trump has an unfailing ability to keep the media discussing and debating things other than the economy. As soon as there’s evidence of solid wage growth or record investment numbers, he can be counted on to attack his own attorney general on Twitter or pick a fight with the NFL.
Almost nobody knows, for example, that next week the House plans to vote on a second round of tax reform designed to lock in last year’s tax cuts, aid retirement savings, and spur innovation. Everybody knows, by contrast, about the latest tweetstorms and ludicrous White House melodrama.
What’s needed instead is relentless message discipline that draws a straight line between economic policies and boom times. In the 1990s, even Bill Clinton’s wandering eye could focus like a laser on the economy. The campaign’s internal motto—“It’s the economy, stupid”—might easily apply to the present White House. Clinton’s success overseeing the country’s longest economic expansion rightly belongs to the Congressional Republicans who alternately forced and enabled him to scuttle left-liberal conventional wisdom. Still, credit the 42nd president—he understood what kept him in office.
After tax cuts passed last year with zero Democratic votes, Senate Majority Leader Mitch McConnell said, “If we can’t sell this to the American people, we ought to go into another line of work.” Come next year, some Republicans will likely have to do just that. The good news? A lot of companies are hiring.
