In recent months, the Republican Party has toyed with a new electoral strategy heading into 2020: accuse Democrats of becoming radical leftists opposed to free markets and democratic institutions, and argue that they want to transform the country into something similar to the Maduro regime in Venezuela. In February, for example, Trump delivered a speech in Miami accusing his political opponents of wanting to impose Venezuelan-style socialism on the United States, while Press Secretary Sarah Sanders in March said that “Democrats are harassing the President to distract from their radical agenda of making America a socialist country.” The strange dynamic of this argument, however, is that the picture it paints of Democrats’ supposed economic unorthodoxy and disdain for the rule of law is far more reminiscent of Trump himself. More so than any US President in the modern era, Trump has derided the American market-based economic system as robbing Americans and destroying US jobs, all the while trampling on the rule of law and seeking to intimidate his political opponents.
Let’s drill down a bit on the ways Trump is more like Maduro than any Democrat here in the US:
Anti-Market Economic Policies, Picking Winners and Losers — Trump has overseen what has become the most anti-market economic policy of any President in the postwar period. First, his unprecedented attacks on the global trading system have directly weakened the competitiveness of innovative American firms in an attempt to prop up his favored industries. The steel and aluminum tariffs have increased costs to automakers like Ford and GM by over $1 billion, and have led to aggregate job losses of over 400,000 net jobs. And have the tariffs led to the end of unfair trading practices against American steel and aluminum manufacturers? No, because the vast majority of those US imports come from Canada, the EU, and Mexico, all of whom haven’t engaged in dumping or subsidies to their domestic steel and aluminum producers. Trump’s tariff strategy is no different from if he enforced punitive taxes on American automakers and then gave government handouts to the steel and aluminum industries. Indeed, as a result of his tariffs, much of the agricultural industry is now reliant on government subsidies to stay afloat as their export markets have dried up.
Second, in his Miami speech Trump derided the Venezuelan government for its “power to decide who wins and who loses.” And yet Trump consistently interferes in the market and attempts to leverage government power to intimidate firms that he doesn’t like and help companies that he does like. Trump attacked GM’s decision to scale back US production as a result of elevated raw resource costs, and threatened to cut off GM’s access to completely unrelated electric car tax credits that are available to all US automakers. He threatened to unilaterally increase the shipping rates that the US Postal Service charges to Amazon, in an attempt to harm Amazon and Washington Post owner Jeff Bezos. Furthermore, Trump attempted to force electrical grids across the country to buy coal- and nuclear-generated electricity, even if the grids didn’t want to use those sources because they were more expensive. And just last month, he tried to pressure the Tennessee Valley Authority into buying more expensively priced coal-generated electricity from several firms that were owned by friends of the President. Time and again, Trump has refused to allow competitive markets to function, and instead has turned to the socialist strategy of using state power to advantage his allies and harm his enemies.
Third, Trump has overseen the most fiscally irresponsible budget in the modern era, at a time when the strong US economy requires the least fiscal stimulus. Orthodox economics says that debt-financed stimulus should be done during economic downturns and then deficits reduced during subsequent economic booms, so as to maximize the efficiency of borrowed money and reduce the debt burden on future generations. Trump has done the opposite of this. With unemployment under 5%, his tax cut and increased spending have sent deficits surging from 3.1% of GDP in 2016 to a projected 4.2% this year, negating much of the progress that Obama made in reducing it from 9.8% in 2009 to 3.1% in 2016. This level of budget deficit during good economic times is unprecedented in the United States. Indeed, since the end of the Second World War, the three largest budget deficits as a % of GDP while unemployment has been under 6% have been Trump’s deficits in 2017, 2018, and 2019 (projected). Similarly, disregarding fiscal sustainability has been a hallmark of the Maduro regime, which ran budget deficits of 20% of GDP and 15% of GDP in 2015 and 2014 that have played a major role in the country’s current hyperinflation.
Repudiation of Democratic Institutions — The area in which Trump might resemble Maduro the most is in his contempt for the rule of law and democratic checks and balances. Maduro and his predecessor Hugo Chavez gained absolute power in Venezuela through state take-over of the free press, packing the independent judiciary with their own loyalists, transferring the power of the elected legislature to the executive, and imprisoning their political opponents. If those authoritarian actions sound familiar, it is because they are similar to the steps Trump has tried to take to consolidate his own power (albeit in a system with far greater checks to such abuses). Trump has attempted to delegitimize the free press as the “enemy of the people” in the eyes of Americans, applauded criminal assaults against journalists, threatened to disband specific courts that have made rulings he opposes, threatens almost weekly to lock up his political opponents, and used a blatantly made up national security emergency to bypass the elected Congress to build his border wall. In each of these ways, the actions of the Maduro regime to consolidate power are echoed by Trump in his attempted actions and rhetoric, while it is the Democratic Party that has taken the mantle of defending democratic institutions in the United States.
Furthermore, the President has attacked the independent governmental institutions that help manage the economy when they take actions that Trump doesn’t like. When the Federal Reserve was raising interest rates in a way that Trump thought would hurt his approval rating, he launched the most vocal attacks on the Fed of any President in decades. Meanwhile, Trump’s newest appointee to the Fed, Stephen Moore, is likely the most blatantly political figure appointed to the central bank in recent memory. In December 2018, Moore wrote an op-ed titled simply “Fire the Fed”, and he has consistently called for Fed Chair Jerome Powell to resign. Finally, Trump and his advisors have constantly attacked the Congressional Budget Office for supposedly making up economic data to hurt Trump, even though there is no evidence whatsoever of this activity. Major elements of Maduro’s economic policy in Venezuela have included a takeover of the central bank to dramatically increase monetary stimulus for political gain (leading to hyperinflation) and the packing of the independent statistical agencies with loyalists who doctored data to increase Maduro’s popularity. Here, Maduro seems much closer to Trump than to the Democratic Party.
As the 2020 election approaches, Republican attacks on the Democratic Party and its candidates as socialists and Venezuela-lite will undoubtedly escalate. But for all of their condemnation of anti-market and authoritarian impulses in Venezuela, their man in the White House is the greatest embodiment of such sentiments in modern American history. As is so common with Trump, this new line of attack is simply an attempt at misdirection from the real economic achievements of Democrats and Republicans over the past generation. Contrary to the arguments portraying Democrats as scary socialists, the Democratic economic approach has actually produced far better results than that of Republicans. Since 1989, four times as many jobs have been created annually while Democrats have been in the White House than when Republicans have been. Similarly, median income has on average fallen under Republican Presidents while it has risen under Democrats, and the budget deficit and uninsured rate have on average increased under Republicans while they have declined under Democrats. If Republicans want to find a party that has mismanaged the economy and adopted increasingly authoritarian ideas, they should look in the mirror.