Republicans are just over six months away from the 2018 midterm elections, and there’s plenty to worry about. Midterms almost always favor the party out of power, and Democratic voters are far more enthused about the coming elections than their Republican correlatives. And although one should never underestimate the present-day Democratic party’s ability to wreck an easy win, the likelihood is that Republicans will lose the House, and they may lose the Senate, too. Such an outcome could well mean Donald Trump’s being impeached.
The one thing going decisively in Republicans’ favor is the economy. The jobless rate has dropped to 4.1 percent and may drop further, GDP growth seems certain to remain at around 3 percent, and wages are rising across the board.
Republicans can legitimately take credit for some of this success. The dramatic drop in the corporate tax rate, denounced by Democrats as though it meant the end of the republic, has encouraged investment and infused the whole economy with a sense of optimism not seen since well before the 2008 recession. The Trump administration’s methodical unmaking of Barack Obama’s regulatory state has enabled small and large firms to expand in ways they couldn’t 18 months ago.
The president can take ownership of this success if he wants to, but he’ll have to keep from ruining it. First, the tariffs—the administration has imposed a 25 percent levy on imported steel and a 10 percent levy on imported aluminum. The question is not whether the tariffs will raise domestic prices, slow growth, and prompt layoffs: Tariffs always do that. The question is how much immediate damage the tariffs will do.
Second, the tweets. Although it would be a wild exaggeration to say the president’s torpedoing the U.S. economy with his Twitter account, he’s doing his best. Trump has long been in the practice of berating private companies for making decisions he in his wisdom would not have taken: “garbage,” “terrible,” “really stupid,” and “STUPID” are epithets Trump has hurled at companies as varied and successful as Coca-Cola, H&R Block, and Sony.
The practice continued, even intensified, when Trump was elected president. On December 6, 2016, before even taking office, he attacked Boeing, sending the airplane manufacturer’s shares downwards. His antics have hurt pharmaceutical companies such as Pfizer and Merck. When Merck’s CEO Ken Frazier resigned from Trump’s manufacturing council, for instance, the president retorted with an insult: “Now that Ken Frazier of Merck Pharma has resigned from President’s Manufacturing Council, he will have more time to LOWER RIPOFF DRUG PRICES!” Merck’s stock price took a tumble, and although it recovered quickly, the idea that a U.S. president would seek to injure a major corporation in a moment of irritation is, even at this late stage, mind-boggling.
The president did far more damage this week, when he trained his scope on Amazon, at least in part because Amazon’s founder Jeff Bezos owns the Washington Post. He tweeted a series of hostile remarks about the company—partly sensible if exaggerated criticisms, partly wild misinformation—and thus reduced the company’s market capitalization nearly $60 billion.
Amazon will recover quickly. We’re far from feeling sorry for the online retailing behemoth. Amazon, like many large corporations, seeks and gets favorable treatment from government—and thus unfair market advantage—all over the country.
But the president’s regular practice of lashing out at private-sector firms is both harmful to the economy and ugly. One consultant for large tech companies tells the New York Times the great majority of his firm’s clients “now have a presidential Twitter strategy in place.” In other words, the people running corporate America feel the president of the United States could lash out at their company at any moment, and they’ve planned for ways to contain the damage.
It’s hard to see how congressional Republicans can make the case for pro-growth economic policies when the leader of their party is famous for fulminating at private businesses: Those fulminations regularly pummel voters’ stock portfolios and 401(k) accounts. Should we expect affected shareholders—people who’ve lost money because the president was annoyed one morning—to go on supporting that president’s party? The GOP can’t be the party of free markets and the party of anti-corporate hectoring at the same time.
