When President Donald Trump won a second term, the question wasn’t whether his economic policy would be different from the first-term version, but how. Two factions have vied to steer the administration’s agenda: Conservative populists came with a plan to roll back globalization and empower the working class. And the tech right brought a vision of an accelerated future driven by innovation and disruption.
Vice President J. D. Vance announced in March that “as a proud member of both tribes,” he believed that “this idea that tech-forward people and the populists are somehow inevitably going to come to loggerheads is wrong.” Trump would blend the two visions into a new synthesis that would simultaneously lift up his downscale voting base and unleash technological progress.
Three months later, the product that has emerged is not a better iteration of the original Trumponomics, which consisted largely of conventional Republican policy, but a worse one, much worse. It has managed, amazingly, to abandon the two tribes’ most attractive proposals while retaining the least-appealing elements of each. It discards the futuristic ambition of the tech right while preserving its social Darwinism. It leans into the closed-off nostalgia of the populist right while ignoring populists’ impulse to help workers.
One measure of the dismal result of the administration’s agenda is the slew of projections about the fiscal and economic effects of its tariffs and the megabill racing through Congress. The policies, in combination, amount to an enormous transfer of resources from people at the bottom of the economic scale to those at the top. The Yale Budget Lab projects that the bottom four-fifths of the income distribution would be made poorer by the combined tariffs and megabill, while only the most affluent would come out ahead. That is an incredible result for an administration that is increasing the national debt.
Various economic models disagree as to whether the megabill would have no effect on economic growth or actually inhibit it. Again, this would be a normal outcome for a plan that would shrink the deficit, but it’s a difficult result to pull off when you are pumping stimulus into the economy. The perverse consequence of Trump’s plan to tariff foreign trade, cut taxes for the affluent, and take health insurance from some 10 million Americans is a smaller pie, divided less equally.
You might suspect that Republicans reject the assumptions behind such projections. Indeed they do. Yet it’s not as though Trump’s economic plan has satisfied the president’s own coalition. Elon Musk, the foremost spokesperson for the tech right, lambasted Trump for blowing out the deficit while cutting support for solar and battery technology (at least, he did before Trump bullied him into silence). Oren Cass, the chief economist at the right-wing think tank American Compass and a leading advocate for populist conservatism, denounced Trump’s legislation as “a death march through a series of choices that nobody really wanted to be making.”
Vance’s prediction that the populists and the tech right could come together turned out to be, in a way, correct. The two factions quietly agree that Trump’s plan is a failure.
The effort to change the Republican Party’s economic program has been going in fits and starts for the better part of two decades. Starting in George W. Bush’s second term, a clique of reform conservatives, or “reformicons,” critiqued the party’s attachment to tax cuts for the rich as a political drag that fit poorly with its growing share of working-class voters. They derided the tax-cut fetish as “Zombie Reaganism,” a mindless adherence to an obsolete program. Yet they failed to make headway, precisely because Republicans believed, with theological certainty, that Ronald Reagan had discovered the eternally correct set of economic policies in the late 1970s, and that questioning their efficacy amounted to heresy.
The internal debate seemed to die down—until Trump emerged with his claim that every previous Republican, including the sainted Reagan, had been a total loser. At times, Trump made populist rhetorical gestures that resembled elements of the reformicon plan (promising to raise taxes on the rich, rein in Wall Street, and give everybody terrific health insurance). When he took office in 2017, however, he fell back on the old formula.
After Trump’s first term ended in defeat, his supporters set out to ensure that they would not squander their next opportunity. Most of the intellectual energy went toward building up authoritarian power that would overwhelm the hated “deep state,” as well as the judiciary, the media, and other forces that Trump loyalists blamed for undermining him. At the same time, his partisans sought to supply a second Trump administration with authentically Trumpian policies.
The populist version is laid out in a new book edited by Cass, The New Conservatives: Restoring America’s Commitment to Family, Community, and Industry. The authors lament the squandered potential of Trump’s first term, which could boast only another regressive tax cut as its sole major domestic-policy accomplishment was. Rather than continue lavishing such gifts on the affluent, Cass and his colleagues argue, the new administration should tax the rich more heavily and give the working class a break. The policies they favor would combine protection of key domestic enterprises with an industrial policy to create good-paying jobs for blue-collar workers.
The alternative vision floated by the tech right is more amorphous, as you might expect from supremely confident billionaires unburdened by deep familiarity with public policy. The general thrust is a desire to cut the deficit by slashing social-insurance programs, while supercharging economic growth by encouraging high-skilled immigration and investing heavily in science.
Each tribe’s plan has its merits and drawbacks. The strength of the populist program is its emphasis on low-income workers and its willingness to tax the rich. Its weakness is its static impulse to restore a 20th-century economy. The reverse holds true for the tech right: Its strength is its emphasis on dynamism, and its weakness is its social-Darwinist-infused hostility to the safety net.
Trump might have chosen one approach or the other, or—per Vance—tried to blend their best features. Instead, he did the precise opposite: He made scientists leave the country and put in doubt the future of hundreds of high-tech factories while exploding the deficit, jacking up inequality, and taking medical care from millions.
Amazingly, in the most obvious area of overlap between the populists and the tech right—government support for a domestic battery industry, which would be vital for powering AI, drones, and other key products—Republicans have imposed deep rollbacks. The House version would cut battery production by three-quarters in coming years, eliminating manufacturing jobs and strangling this tech incubator. And by cutting funds for green energy, the House bill would raise energy prices by 7 to 9 percent, according to different projections. Trump’s determination to crush low-carbon energy sources at any price was exemplified by his recent order to reopen antiquated coal plants in Michigan, which forced consumers to pay higher electric bills simply to subsidize coal.
The perversity of this outcome is almost impressive. Trump is not even mortgaging the future for the benefit of cheap, dirty energy. He is combining short-term pain with even greater long-term pain.
The collapse of the attempt to reform Republican economic policy under Trump has been so swift and complete that we can already discern causes for the failure. I propose four.
First, Trump, flushed with victory, rashly attempted to speedrun versions of both reform visions via executive order. DOGE was the tech right’s turn at the wheel. Trump gave Musk virtual carte blanche to remake the federal government. Rather than pursue a coherent reform agenda, Musk appeared to fall for a series of conspiracy theories, alienated Trump’s Cabinet, and wound up kneecapping some of the federal government’s tiniest but most cost-effective functions. In the process, he failed to generate any meaningful fiscal savings or operational improvements. One could envision a tech right–driven government overhaul that accomplished something useful, but Musk’s blundering resulted in fiasco.
In tandem with all of that, Trump worked with his populist trade adviser Peter Navarro to impose a set of global tariffs, on the erroneous premise that the trade deficit amounted to per se evidence of unfair foreign-trade practices. The “Liberation Day” tariffs overreached, generating a stock-market blowback that Trump couldn’t tolerate, causing him to fall back on lower across-the-board tariffs that have served little strategic purpose. No really smart way to use trade to revive manufacturing, as the populists had hoped, may have been available to Trump—but there were less dumb ways.
In both cases, Trump opted for speed and unilateral authority instead of care and legislative consultation; ham-fisted management by his ill-chosen staff did the rest.
A second source of failure is that Trump prioritized political control above any other objective, including economic outcomes. His slashing attacks on the bureaucracy, including deep cuts to scientific and medical research, incapacitated agencies that play a vital role in the economy. After paying lip service to the tech right’s hope for more high-skilled immigration, Trump not only abandoned the goal but also created a brain drain with his war on universities. In every case where Trump could choose between building human capital and punishing his enemies, he selected the latter.
Third, the deliberations among Republicans in Congress and the White House have revealed the hold that Zombie Reaganism retains over the party. The fiscal gravity of Trump’s tax cuts is so huge that it has pulled every other aspect of the party’s economic program into its orbit. Republicans have taken politically toxic votes to cut Medicaid and SNAP benefits because those cuts were needed to offset the cost of making Trump’s tax breaks permanent. The same dynamic drove Republicans to pull spending on batteries and green-energy manufacturing.
Republicans have not so much embraced these trade-offs anew as assumed them to be self-evidently good. No senior Republican elected official has advocated for letting the Trump tax cuts expire. Although many of them complain about deficits, they’ve blamed spending, not tax cuts—despite the fact that the megabill is slated to reduce spending.
The final and most profound reason that Republicans failed to revise their economic program is the corrosive influence of the Trump personality cult.
However strongly the populist wing wants to expand the party’s appeal by jettisoning unpopular policy baggage, it is committed above all to elevating Trump. Although populists such as Steve Bannon and Josh Hawley might warn of the dangers of cutting Medicaid, or urge their party to raise taxes on the rich, they have neither the leverage nor any willingness to press their complaints. The source of their political authority is loyalty to MAGA before all else, and they know that dissenting from Trump on any policy matter is a ticket to political exile—as the tech right has already discovered. Ardent Trump supporters horrified by his trade war have had to couch their dismay in obsequious pleading. Even Musk, after briefly entertaining the notion that he was free to argue with Trump in the way that Trump argues with people, shrank into humiliating contrition, adopting the tone of a defrocked Soviet official apologizing at his show trial to Stalin.
Remaking an economic strategy is an intellectual endeavor, one that is inherently fraught in the atmosphere of conformity and obfuscation that Trump has cultivated. The Republican Party’s economic philosophy was long trapped in mindless dogma. But rather than escaping it, the GOP has exchanged one cult for another.
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