How the Trump Tax Cuts Could Split the GOP

Construction worker.jpg

Oct 5 2017

Russians may have targeted the Democrats in 2016. But if they sought a GOP crack-up, they couldn't have done more than Republicans have done to themselves in 2017.

President Donald Trump opened his term blaming self-seeking predecessors, Republican and Democrat alike, for economic "carnage." On trade, immigration and race relations, he has offered policies and rhetoric that thrill his blue-collar base but alienate the pro-GOP business community and moderate suburbanites.

On repealing Obamacare, Trump gave in to plans by congressional Republicans to cut benefits for the working-class voters who backed him. When the effort collapsed amid public opposition and intra-party resistance, he ripped Republicans for their failure.

Now the GOP tax plan, which rewards wealthy Americans most of all, faces similar risks. After arguing vainly inside the White House for a higher top rate, ex-Trump strategist Steve Bannon threatens populist challenges to incumbent Republican senators. Vice President Mike Pence's top aide suggests a "purge" of Trump critics.

"The GOP is already fractured, but not yet fully broken," says Reed Galen, once a top aide in John McCain's 2008 presidential campaign. What's still unclear is whether Republicans face a complete break anytime soon.

The question sounds odd when Republicans control the White House and Congress. Yet their struggle for a governing consensus demonstrates long-term vulnerability in an economically complex, culturally diverse 21st century America.

Democratic divisions a half-century ago produced the current partisan alignment. After national Democratic leaders embraced the civil rights movement, conservative white Southerners drifted away from their ancestral partisan home toward the GOP.

Today the GOP's reliance on blue-collar conservatives, which Trump exploited, threatens to repel more college-educated whites, minorities and young voters. Between 2000 and 2016, election exit polls show, Republicans lost substantial ground with those groups.

As America grows less white, better-educated and more culturally tolerant, those defections pose increasing risks. Trump inflamed them with his "many sides" reaction to white supremacist protests in Charlottesville, Virginia; so did the Alabama Senate nomination of conservative Christian extremist Roy Moore, who has defied court orders on church-state separation and spoken of making gay sex illegal.

Senate Republican leader Mitch McConnell fiercely opposed Moore. But Bannon rallied Trump voters behind him anyway, disparaging McConnell as "corrupt and incompetent" while warning that populists don't need campaign cash from "the elites, the crony capitalists, from the fat cats in Washington, D.C., New York City and Silicon Valley."

That exposed more than the rift between the Trump White House and Congressional leaders. It demonstrated the gap between an affluent "establishment" and working-class Republicans angry over diminished economic prospects and cultural change.

Michael Steele, a former national GOP chairman, sees Bannon leading working-class voters toward a new party of economic populism. Meantime, he fears leaks at the other end of the Republican spectrum from moderates who decide "I can't take this crazy."

"The question is whether the so-called establishment is willing to engage in that fight," says Peter Wehner, a former aide to President George W. Bush and harsh Trump critic.

So far, the establishment has shown less appetite for battle than for a transactional approach. It embraces the power of a Republican president while ignoring as much as possible his inflammatory conduct and departures from conservative orthodoxy on issues such as free trade.

Yet 2017 has been a non-stop jackhammer on internal contradictions. The low-tax, small-government priorities of GOP leaders and donors collide with the interests of the blue-collar rank-and-file; the rank-and-file's raw resentments chafe the sensibilities of upscale Republicans and voters they need in the future.

"The GOP establishment has to decide who it is they represent," Galen said. The son of a top aide to past Republican luminaries Newt Gingrich and Dan Quayle, Galen has decided the party no longer represents him.

Ginny Wolfe, another erstwhile Republican operative, reached the same conclusion. Raised in Kentucky as a "yellow-dog Democrat," she once gravitated to the GOP for its stances on defense and free trade.

She landed a job in Ronald Reagan's White House. She became an ally of Lee Atwater, then a brass-knuckle practitioner of racial politics who she says "would be considered an angel" in today's GOP. During George W. Bush's presidency she headed communications for the Senate GOP campaign arm and advised Republican leader Bill Frist.

Later, Wolfe worked for the ONE campaign aligned with Bush's initiative to fight AIDS in Africa. She calls "social justice and racial equality" top-priority causes but says much of the present-day GOP doesn't even recognize they exist.

She no longer considers herself a Republican; nor does her 28-year-old son. "Most of my Republican friends don't either, whether they'll say it out loud or not," Wolfe added.

"There has to be a reckoning," she concluded. Republicans "need to fear the future."

This article originally appeared on CNBC. Read more from CNBC:

* David Stockman: Trump tax reform overhaul is a pipe dream, stocks are heading for 40-70% plunge

* NASA uses Black Marble tech in disaster response, and the images of Puerto Rico are amazing

* Tesla shares to plunge nearly 40% due to weak Model 3 production, Goldman predicts

TOP READS FROM THE FISCAL TIMES