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 election than their Republican correlatives. And although one should never underestimate the present-day Democratic Party to wreck an easy win, the likelihood is that Republicans will lose the House and may lose the Senate. That, in turn, could well mean Donald Trump will be 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—perhaps most important—wages are rising across the board.
Republicans can legitimately take credit for at least the outlines of that 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 we haven’t seen since well before the 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 may take ownership of these successes if he wants to, but first 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 damage these tariffs will do in the short term.
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. Of course, 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 became president. On December 5, 2016, before even taking office, he attacked Boeing, sending the airplane manufacturer’s shares downward. His antics have hurt pharmaceutical companies such as Pfizer and Merck, causing underperformance in the index relative to the market. 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-blowing.
The president did far more damage this week, when he trained his scope on Amazon, at least in part because Amazon owns the Washington Post. He tweeted a series of hostile remarks about the company—partly sensible though exaggerated criticisms, partly wild misinformation—and thus reduced the company’s market capitalization nearly $60 billion.
Granted, Amazon will recover quickly. And we’re far from feeling sorry for the online retailing behemoth: Amazon seeks and gets favorable treatment from government—and thus unfair market advantage—all over the country.
But the president has made a regular practice of lashing out at private sector firms, and it’s both harmful to the economy and an ugly look. One consultant for large tech companies tells the New York Times that 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 and Republican candidates 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 that morning—to go on supporting that president’s party?
The GOP can’t be the part of free markets and the party of anti-corporate hectoring at the same time.
