Published April 13, 2016
Going into the 2016 election cycle, Republicans had a golden opportunity. The House and Senate are already under GOP control; a win in the presidential race would open up the possibility of passing the most ambitious pro-growth agenda since the Reagan landslide in 1980. All that was needed was general consensus within the party on the important features of a governing agenda for the future, and a strong, reform-minded presidential nominee who could ride that agenda to victory in November.
In early 2015, this didn’t seem so far-fetched. Now, we know better.
The two leading candidates for the GOP nomination for president — Donald Trump and Senator Ted Cruz — are unlikely to unite the party and set the stage for a successful legislative program next year. Trump has built his campaign around simplistic and populist appeals that resonate with a portion of the electorate but are so disconnected from reality, generally wrong in orientation, and counterproductive as to be useless as guideposts for policy. Cruz has, to some extent, followed suit. A year of this kind of messaging from the top candidates has left the Republican party utterly confused about what it stands for and where it is going.
Enter Paul Ryan. When he became speaker of the House late last year, he pledged to push forward a proactive agenda that would give the GOP something to run on in 2016. He is now in the process of making good on that pledge, setting in motion a number of internal task forces charged with developing policy positions in key areas, including health care, taxes, safety-net programs, and national-security policy. All of this has left the New York Times wondering if Ryan is positioning himself as a potential candidate for president should the party convene in Cleveland this summer without a clear nominee.
Ryan has made plain in every way possible that he isn’t running for president. Instead, he’s doing something just as important: attempting to fill the policy void left behind by a presidential nominating process that has been long on vacuous and impractical statements and short on actual plans for governing the country.
Ryan is absolutely right that the House GOP should not defer to the party’s eventual nominee when it comes time to set an agenda for 2017 and beyond, because the likely nominees have shown almost no capacity for advancing an agenda that has any hope of being enacted, much less of working to promote strong economic growth. Wresting away control of the agenda wouldn’t be easy in the best of circumstances, given the wide latitude traditionally afforded the party’s nominee in shaping its platform. But this year it will be particularly tough, because much of what has been said on the campaign trail by the leading candidates needs to be refuted and abandoned rather than adopted by the party.
This is especially true if Trump prevails and becomes the party’s nominee.
Among other things, Trump wants the United States to become protectionist. This is a terrible idea that will backfire. Since World War II, the United States has been the leading advocate for liberalizing global trade, to the great benefit of economic growth. The General Agreement on Tariffs and Trade (GATT) was ratified in 1947, and ushered in a period of profound and rapid economic growth among liberal democracies worldwide. Countless studies have documented that free trade speeds innovation and growth in productivity for the U.S. and other countries alike, thus boosting incomes and standards of living.
It would be a catastrophic mistake for the U.S. to reverse course and begin unilaterally imposing tariffs on imported goods. Trump seems to think he can rip up 70 years of international treaties and renegotiate their terms from scratch, all without consequence. He is dead wrong. Those treaties have been carefully and painstakingly constructed with the cooperation of scores of countries. By unilaterally imposing tariffs, Trump would violate the terms agreed upon by past presidents of both parties, thus inviting sanctions and tariffs on U.S. exports. The result would be a massive contraction in trade flows and a likely recession. The long-term damage to U.S. prestige and leadership would be devastating.
Both Trump and Cruz want the GOP to oppose the Trans Pacific Partnership (TPP) negotiated by the Obama administration. They are wrong about this free-trade agreement, too. Estimates show the agreement will boost U.S. GDP by more than 1 percent in the years ahead. The main effect of the agreement is to substantially lower trade barriers in many Asian countries, to the benefit of American companies. There is no good reason to oppose it, other than fear of a populist backlash. The GOP would do great damage to its integrity if it were to give in to the threat of such a backlash, against all evidence and contrary to its own long history of promoting sensible trade policy.
The dislocation that can sometimes occur with trade agreements is real. But it can be best addressed by helping those workers it affects, not by reversing course and imposing costs on all Americans. Workers should be supported during the transition periods of a new trade agreement, with wage support, training, and relocation assistance. But it would be shameful for the GOP to give in to protectionist impulses stoked by self-serving political opportunists.
On fiscal and tax policy, Trump is just as delusional. He claims he will cut taxes by $10 trillion over a decade, fully protect entitlement spending, and still eliminate the federal government’s entire debt. This is absurd. Trump has no plan to actually cut spending, and never will. The nation is heading toward a fiscal crisis driven by rapidly escalating entitlement spending. Trump would accelerate that crisis, and it would be disastrous for Republicans, after years of warning that a crisis was coming, to change positions and join him in making it worse.
It is true that Cruz’s fiscal- and tax-policy positions are less worrisome than Trump’s, but that isn’t saying much. To date, Cruz has offered very little by way of a practical policy agenda, and what he has said has been either completely farfetched or entirely irrelevant to what actually needs to be done. He touts a flat tax and a VAT to replace the income tax, and proposes eliminating the IRS. There is no prospect of replacing the entire progressive income tax with a single income-tax rate — 10 percent in Cruz’s plan — because of the large tax cut it would represent for the wealthiest Americans. And there’s even less prospect of eliminating the IRS without creating a replacement agency to assume its responsibilities.
Moreover, despite suggesting he is an ardent fiscal conservative, Cruz has proposed almost no real spending cuts. He backs a “Five for Freedom” plan: He says he wants to eliminate the Departments of Commerce, Education, Energy, and Housing and Urban Development, in addition to the IRS. But what he actually means to do is move most of their main functions to other departments, eliminating only a very small and inconsequential number of their programs. This plan would not come close to covering the revenue lost by his tax plan, much less to narrowing the large deficits that he has denounced so fervently since arriving in the Senate.
On health care, Trump and Cruz both say they want to repeal Obamacare, but neither man has offered anything close to a credible replacement plan. Among other things, their positions would leave the GOP vulnerable to the accusation that it cares nothing for people with expensive pre-existing conditions (despite Trump’s claims to the contrary). One of the most important aspects of Ryan’s effort is to articulate a practical and credible market-based plan to provide all Americans secure health insurance without Obamacare’s immense expense and bureaucracy.
The United States desperately needs an ambitious but practical pro-growth agenda. An agenda focused on tax and entitlement reforms that can pass in Congress, replacing Obamacare with a market-based alternative, rolling back costly regulations on businesses, scaling back long-term fiscal liabilities, and improving worker productivity through better education and training. Unfortunately, the leading GOP candidates for president have given no indication that they are up to the task of articulating such an agenda.
So it will be left to Paul Ryan and his House colleagues to fill the inevitable void. Better that than no realistic agenda at all.
— James C. Capretta is a senior fellow at the Ethics and Public Policy Center and a visiting fellow at the American Enterprise Institute.