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Roula Khalaf, editor of the FT, selects her favorite stories in this weekly newsletter.
The writer is a contributing editor at the FT and executive editor of American Compass
The era in which “the era of big government is over” may also be over. The realignment in American politics has already transformed debates about free trade and free markets, unions, and family policy, but its impact on fiscal issues is only beginning to emerge.
Many of the professional class Republicans who identify as “socially liberal, but fiscally conservative” have defected to the Democratic Party. Meanwhile, a diverse group of traditionally working-class Democratic voters, who often have more positive views of government and have benefited from its programs, now side with the GOP. The budget cut advocated by former House of Representatives Speaker Paul Ryan no longer has an obvious constituency.
It’s not a big loss. When Ryan retired in early 2019, after two years of unified Republican control of Congress and the White House, at the height of the longest economic expansion on record, he left a deficit for the current fiscal year that would approach 1 trillion dollars. .
But as in many areas where decades-old conservative orthodoxy has finally collapsed, the question of what comes next remains open. Some conservative leaders have now adopted the position that Medicare and Social Security should not be cut at all.
Former President Donald Trump sometimes echoes this position. At other times he calls for aggressive reforms. Budget proposals from both the Republican Study Committee and the Heritage Foundation call for steep cuts in entitlements along with further tax cuts, while the Republican chairman of the House Budget Committee recently stated that “it is right to have both revenue and spending on the table” . This is a position supported by leading free market think tanks such as the American Enterprise Institute and the Manhattan Institute.
A new poll conducted by American Compass in collaboration with YouGov further highlights the confusion on the right. Yes, 61% of Republican voters say they would “rather pay less in taxes and have the government do less.” But that is less than two-thirds of support for a position previously deemed mandatory for membership in the Conservative coalition.
Even more surprising is the fact that when it comes to major areas of federal government spending, the appetite for cuts vanishes, and not just in areas like pension security or defense. Only one in five Republicans say they would like to see the government do less to provide “medical care to those who need help paying for insurance,” or to support “the poor, the disabled, the needy,” or “families who raise children.” In any case, they are about twice as likely to say they want to see the government do more, not less.
It would probably be a mistake, however, to conclude that a larger administration is once again called for today. Many conservatives still place great emphasis on a conception of freedom that involves being left alone to do what they want. They tend to believe that when government takes action, it can do so more effectively with market-based solutions than with direct programs and services. And they have much more trust in local governments, and even state government, than in the federal government. What they seem to want, however, is a better government, focused on doing more efficiently and effectively what only it can do.
Of course, budgeting is an exercise in compromise. When doing more also means paying more taxes, the cuts become more evident. But analysts need to revisit the long-held assumption that conservative voters prefer smaller government and lower spending as ends in themselves. And even conservative politicians need to start considering, as their voters surely have, who will pay the money.
There’s a reason Barack Obama made Bush-era tax cuts permanent for upper-middle-class families earning up to $250,000, while Joe Biden has now drawn his line against no tax increases on earnings up to $400,000. Families with incomes in this range – made up par excellence of highly educated professionals – are precisely those who must bear the inevitable burden of financing a more generous welfare state. They are also the nucleus of the Democratic Party’s new electoral coalition.
The advent of Republicans eager to preserve social programs and therefore open to raising new tax revenues will represent a fascinating turning point in American politics. Trump himself may not have a clear plan, but future leaders of his party are already laying the groundwork to build on the coalition he has assembled. The real fun will come when Democrats start calling for a tax cut and suggesting cutting those same programs to finance it.