Trump’s stimulus obstruction excites fiscal conservatives — and no one else

Trump seemingly advocated for economic populism in 2016. But that was then.

In a frenetic series of tweets sent on Tuesday afternoon, President Donald Trump shut down congressional negotiations over future stimulus relief in the wake of the Covid-19 pandemic.

He tweeted, “I have instructed my representatives to stop negotiating until after the election when, immediately after I win, we will pass a major Stimulus Bill that focuses on hardworking Americans and Small Business,” adding, “THE BEST IS YET TO COME.”

Economic hell broke loose. The stock market dropped in reaction to Trump’s tweets. And while Trump attempted to walk back his tweets and urge Congress to make a deal airline payroll support and stimulus checks — sort of — White House Chief of Staff Mark Meadows told Washington Post reporter Jeff Stein that negotiations were off for good, with White House adviser Larry Kudlow saying that it was “too close to the election” for talks.

A second stimulus package to help Americans and small businesses get through the economic recession caused by the pandemic is absurdly popular with voters. Trump, on the other hand, is not. But rather than help get a stimulus package deal done by urging Senate Republicans to support it, Trump walked away, perhaps for good.

And while fiscal conservatives with concerns about the growing deficit may be cheering, Trump’s populist supporters — and many other voters — are very much not.

What exactly is Trump doing?

As my colleague Li Zhou has detailed, stimulus negotiations between Republicans, Democrats, and administration officials have been “months of on-again, off-again” discussions. Talks between Pelosi and Treasury Secretary Steven Mnuchin had ramped up over recent weeks, but those conversations had stalled over specifics on state funding levels. Meanwhile, voters want a deal done, now.

When asked what the Senate should prioritize, 65 percent of survey respondents said the body should focus on passing legislation to address the economic and health impacts of Covid-19, compared to 22 percent who said the same about advancing a Supreme Court nominee. The survey included 827 adults and was fielded the week of September 22…

In a mid-September survey from Financial Times/Peterson Foundation of 750 battleground voters, 91 percent of respondents said Congress needs to pass another coronavirus stimulus and 41 percent of those surveyed blame both parties for the delay. Presently, the need for more stimulus is significant: More than 26 million people are still claiming some type of unemployment benefit, according to a weekly Labor Department report, and more than 100,000 small businesses so far are estimated to have closed permanently during the pandemic.

It’s no wonder, then, that some conservatives reacted to Trump’s decision to halt stimulus negotiations with confusion. Why, as Fox News’s Guy Benson asked on Twitter, was Trump deciding to take the blame for the end of negotiations for much-needed stimulus funds himself, rather than blame House Speaker Nancy Pelosi?

Other conservatives argued the same. If the deal is a giveaway to blue states as some assert, why not put the pressure on Democrats in red states and swing districts to come to the table on negotiations? Why not make this a story of Democrats refusing to compromise to the detriment of American voters? In short, why make this “mindbogglingly insane” decision as conservative writer Henry Olsen put it, instead of doing almost anything else?

But HotAir.com writer Allahpundit pointed to a wider theme, as exemplified by this decision and much of Trump’s recent rhetoric — since when did Donald Trump, who beat the “fiscally conservative” Republican candidates back in 2015 and 2016, give in to their rhetoric?

As others are noting in reacting to the news, what’s inexplicable about this is that Trump won the primaries four years ago partly because he wasn’t the sort of Republican who’d try to starve federal programs in the name of fiscal responsibility. President Ted Cruz might slash your Medicare but President Donald Trump didn’t even pretend to care about shrinking government. The fact that he’s trying to lowball Pelosi on financial aid to voters in dire need of it 28 days from an election, in the middle of a pandemic, is an invasion-of-the-body-snatchers moment — as if Cruz and the Republican establishment had secretly replaced him with an impostor more conducive to Paul Ryan Republicanism.

Trump gives in to Senate-style Republicanism

Trump lost interest in the populism he voiced back in 2016 soon after the election, choosing instead to favor Republican economic orthodoxy championed by GOP stalwarts (but largely unpopular with actual Republican voters).

Even before the pandemic, there was comparatively little Republican voter support for cutting federal spending on health care and education. Before “Infrastructure Week” became a long-running joke, it was a Trump campaign promise, one with high levels of support from Republican voters. And that hasn’t changed — according to Fox News polling conducted earlier this month, 57 percent of Americans want more assistance from the federal government, not less.

That clear shift is indicated by Trump’s economic advisers, including former Club for Growth president Stephen Moore and supply-side economics enthusiast Arthur Laffer (famous for the discredited Laffer curve, which posits tax cuts pay for themselves in growth).

According to the Washington Post, Laffer told Trump last week not to approve a stimulus, and Moore told White House officials that a stimulus would be unhelpful for Trump’s reelection prospects as results would likely not show until after November. Moore championed anti-shutdown protests early in the pandemic, believing that simply “reopening the economy” would boost Trump’s reelection chances.

I spoke to Moore back in July about stimulus negotiations, and he told me then that extending unemployment benefits would doom Trump’s campaign. But, I asked, what about the GOP’s short-term prospects? Couldn’t the party then say, “we stood with workers when they needed us?”

He responded that sending more money would induce people not to work, thus dooming the economy:

“First of all, sending money to people is not a way to stimulate the economy. … It’s very simple, you cannot get people back to work if you’re paying people more not to work than to work, period. And so that is why it’s pretty obvious that if Trump were to agree to extend those employment benefits through the end of the year, we don’t get an economic recovery. And under that case, how can Trump possibly win? He could win, but it makes it really difficult if the economy is in a severe recession in November.”

He added later, “We have to get the economy reopened. That’s obviously the single most important thing is we’ve got to get rid of all the lockdown orders. And then you’ve got to get rid of the unemployment benefits to get the people back on the job.”

This isn’t just Moore and Laffer. Fiscal conservatives have been arguing against additional stimulus for months. Back in July, Republican Sens. Rand Paul and Ben Sasse were hitting back at Mnuchin and “Trumpers” for supporting stimulus payments.

Republican economic orthodoxy may stand against additional stimulus payments — particularly to Democratic-leaning cities and states — but American voters, who include residents of those cities and states, do not. Job gains have slowed, and the number of permanent layoffs has risen, meaning that millions of Americans are facing down economic ruin while the Trump administration waffles on stimulus payments. That’s not simply an election issue, that’s an American problem.

I asked a conservative pundit what he thought Trump was doing on this issue. He replied, “losing.”

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