Donald Trump is entering a moment of maximum political danger. His first address to a joint session of Congress went decently well, mostly because he came across as refreshingly conventional. But that won’t count for much if the president proceeds to outsource his entire domestic policy agenda to House Speaker Paul Ryan and Senate Majority Leader Mitch McConnell, who if left to their own devices will pave the way for a massive Democratic comeback.
The president is often portrayed as a wild man, and there’s no question that his first weeks in office have been chaotic. He’s flirted with abandoning the One China policy. He lightheartedly floated the idea of sending the U.S. armed forces to deal with “bad hombres” south of the border. He’s declared the news media to be the “enemy of the people.” What he hasn’t done is threatened to cut Medicare and Social Security, because even he’s not crazy enough to do that. The Trump administration has pledged to shield both programs from cuts in his forthcoming budget proposal. And Trump has at times gone further, expressing a desire to deliver “insurance for everybody.”
While the president’s instincts are to tread lightly when it comes to messing with the safety net, the same can’t be said of Ryan and McConnell. That means Trump has a decision to make: He can either let the House speaker and the Senate majority leader take the lead on overhauling the welfare state, including the Affordable Care Act, or he can hit the brakes and demand that his allies in Congress pursue a more centrist course.
Think back to 2005, shortly after President George W. Bush narrowly won re-election. How did Bush win a second term after the debacle that was the Iraq war and a weak economic recovery? By winning over large numbers of working- and middle-class voters in states like Ohio who were confident he would protect their economic interests. Imagine how they must have felt, then, when Bush’s top domestic policy priorities were to partially privatize Social Security and create a massive new guest-worker program.
Whether you approve of these ideas or not, it’s hard to argue that they fit the mood of voters living through years of sluggish wage growth and diminished expectations. Older voters in particular weren’t terribly enthusiastic about the prospect of drastic changes to Social Security, and this was before the 2008 financial crisis delivered a major blow to Americans’ retirement savings. There are many reasons Democrats won massive victories in the congressional elections of 2006, but one of them is surely that Bush and his allies in Congress failed to realize that real-world rank-and-file GOP voters were not hell-bent on dismantling the welfare state. Sensing an opportunity, Democrats ran pro-life, pro-gun immigration skeptics in conservative districts across the South and the Midwest, and their strategy paid off in spades.
A decade later, Donald Trump—who relied even more heavily on working-class voters than Bush did—is being told by various Republican wise men that he should stop banging on about trade agreements and border control and instead sign on to deep cuts in safety-net benefits. A few short weeks ago, Ryan and McConnell were working hand-in-glove on a “repeal and delay” plan that would have gutted Obamacare without actually replacing it. Only a revolt by Republican backbenchers prevented that disaster from coming to pass. Now, they’re reportedly planning to sharply reduce Medicaid spending while cutting the top marginal tax rate. If Trump goes along with these efforts, Democrats will surely accuse him of pulling off a bait-and-switch: First you run a populist presidential campaign, then you sign on to a plutocrat-friendly agenda.
Leaving aside the merits of marrying tax cuts for the rich with cutting safety-net programs, let’s zero in on the political case for going down this road. Are there voters for whom the federal deficit is as pressing an issue today as it was during President Obama’s first term, when the post-crisis collapse in tax revenues and increased safety-net spending sent deficits soaring? Certainly. It’s just that there aren’t very many of them, not least because most deficit hawks are partisans who worry most about deficits when a president of the opposing party is in office. Moreover, the most vociferous deficit hawks in Congress—the members of the House Freedom Caucus, who came within inches of sparking fiscal Armageddon over the debt limit—are among President Trump’s most enthusiastic supporters. If he tells them to go easy on the deficit hawkery, chances are they’ll follow his lead.
And consider the fate of Obamacare. The GOP leadership in the House is now devoting an enormous amount of effort to passing a replacement bill with a number of unpopular features that repel Democrats. Unless this legislation is going to leave Obamacare’s insurance regulations completely untouched, Senate Republicans will need to win over at least eight Senate Democrats to overcome a filibuster, and that’s assuming every Republican senator falls in line. It is hard to see that happening. The upshot is that House Republicans might break their backs passing an unpopular bill that will then die in the Senate, an effort that will accomplish absolutely nothing. Why exactly should President Trump sign on to such a futile exercise?
There is a simple way forward on Obamacare that would burnish his reputation as a dealmaker. Call it “if you like your Obamacare plan, you can keep it.” The Obamacare exchanges would be preserved as a safety net for people with expensive-to-treat illnesses. Plans purchased off the exchanges, however, would be freed from Obamacare regulations. Legislation along these lines would need Democratic votes to pass—but it would be far more likely to win over at least some red-state Democrats than Ryan’s more ambitious overhaul.
And Trump wouldn’t have to stop there. Take Social Security: I happen to believe that the program does need to be modernized. But until the economy is in stronger shape, there isn’t likely to be much support for a sweeping overhaul. A better approach would be to shore up Social Security’s finances by encouraging older Americans who can keep working to do so. One painless way to do that would be to eliminate the Social Security payroll tax for workers above the age of 62, a reform that would sacrifice a small amount of revenue for a significant boost in labor-force participation among the old and experienced.
Medicare poses a much bigger long-term fiscal challenge. Yet there are smart, nondraconian ways to start dealing with it, including leveling the playing field between traditional Medicare and Medicare Advantage plans, which are proving increasingly popular with retirees. Congressional Republicans are going to want Trump to sign on to a plan to shift more of the burden of Medicaid spending to state governments. This is a risky proposition as states are constrained by balanced budget requirements that make it difficult for them to finance safety-net spending during economic downturns. Trump could agree on the condition that Congress passes legislation that will help ensure that poor states—which tend to be red states—don’t get screwed in the process.
These ideas are just the tip of the iceberg. During his address, the president at one point lamented the fact that “we’ve financed and built one global project after another, but ignored the fates of our children in the inner cities of Chicago, Baltimore, Detroit, and so many other places throughout our land.” If Trump really wanted to transform the political landscape, he could get behind a reformed child tax credit that would both simplify the tax code and lift many poor families out of poverty.
I realize that this sounds like a reach. It’s worth noting, though, that nationalist politicians in Europe and in Japan have achieved great success by marrying patriotic rhetoric with support for the safety net. That’s a formula that can work for Trump, too, provided he’s willing to push back against more zealously ideological Republicans like Ryan and McConnell.
