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The GOP's economic confusion

The Week logo The Week 4/14/2021 James Pethokoukis
a dog jumping in the air: An elephant. © Illustrated | iStock An elephant.

The Republican Party has become a workers party. I know this because many leading Republicans are saying this. The GOP is now "the party of hardworking, blue-collar men and women," says Sen. Ted Cruz, for instance. Others concede the makeover is a work in progress, but agree it's a good direction to go. "We must become a patriotic, pro-worker party that fights for dignified work," says Sen. Marco Rubio.

As a marketing tactic, the effort is understandable. Working-class Americans have been turning out for the GOP in greater numbers since Donald Trump ran for president in 2016. So why not lean into that shift with an on-the-fly rebrand that stresses this growing constituency? The party wants these votes even when Trump isn't on the ballot, and he may never be on another ballot.

But if national Republicans and the broader conservative movement want to support political messaging with policy substance that targets the working class, they have a problem: Fighting for workers will often be in conflict with fighting for the culture, as they see it. In many cases, grievance politics will actually push them to oppose policies that might improve living standards and economic opportunity for those "hardworking, blue-collar men and women."

It's already happening. Take, for example, making housing more affordable by scaling back or eliminating land-use regulations that make it hard to build — including minimum lot sizes, mandatory parking requirements, and prohibitions on multifamily housing. It's basic economics: boost supply to meet rising demand. Admittedly, this sounds like some super-wonky local issue. But President Biden wants Washington to do something about it. In the $2.3 trillion American Jobs Plan, Biden proposes allocating $5 billion to a competitive grant program that would reward cities for reforming these rules.

Now here's what this affordable housing plan sounds like when turned into a right-wing culture war issue by Fox News host Tucker Carlson: "[Biden] also wants to 'eliminate exclusionary zoning' and 'needless barriers to producing affordable housing.' So your neighborhoods may have to make way for 'multi-family dwellings.' You don't want multi-family dwellings in your neighborhood? Doesn't matter. It's equity. Shut up, racist. And there's more where that came from." Similarly, frequent National Review contributor Stanley Kurtz sees the Biden plan as an effort to "kill suburban zoning and force leftist action civics and critical race theory on red-state schools."

Now, the Biden approach may or may not be an effective solution to the problem. But plenty of economists on the left and right agree that restrictions limiting the supply of housing is a big, big problem. For decades, these regulations have made it hard to build new housing, especially in some of the nation's most productive and high-wage job markets. But rapidly rising housing prices due to artificial supply constraints make too many of these cities unaffordable to working-class Americans. And those who do move find that high housing costs significantly eat into their wage gains. "The data show that many people, even those in the middle of the income distribution, have been excluded from these high-wage places because of rising housing prices," writes economist Daniel Shoag.

Democrats and progressives mock the GOP rebrand as superficial. They point out continued Republican support for Trump's corporate tax cuts. But that may be changing, too. Rising GOP political star J. D. Vance, author of the best-seller Hillbilly Elegy, took to Twitter earlier this week to attack the more-than-100 CEOs who took part in a weekend conference to discuss state voting laws: "Raise their taxes and do whatever else is necessary to fight these goons. We can have an American Republic or a global oligarchy, and it's time for choosing. … No more subsidies to the anti-American business class."

Of course, lots of American workers get a paycheck from what Vance calls a "global oligarchy." And those Trump corporate tax cuts would have raised worker wages had they not been undercut by Trump's trade wars, previously popular with right-wing populists. Likewise, most economists agree that workers bear at least some of the corporate tax burden, maybe even much of it. Raising taxes on companies also raises taxes on workers.

As it turns out, lots of things that populist culture warriors promote are bad for workers, such as immigration restrictions that make America less innovative and trade wars that make goods more expensive. A party that was seriously focused on worker welfare would not only broadly promote an open and dynamic economy, but also some specific pro-worker policies. Housing reform is a big one, but also jobless aid that would help the unemployed move to more vibrant regions. A true workers party would appeal to their aspirations and hopes rather than their fears.


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