A New American Deal?

mattstoller |  Since 2016, the Republicans, long a party supportive of free trade with China, began changing their relationship to both China and big finance. Trump is a protectionist who loves tariffs and closing down borders. But behind him, there is a notable new thought collective of populists who pay attention to China, which includes figures like White House advisor Peter Navarro, Fox News anchor Tucker Carlson, Senators Josh Hawley, Marco Rubio, and Tom Cotton, American Compass founder Oren Cass, Rising anchor Saagar Enjeti and United States Trade Representative Robert Lighthizer. The shift is not party-wide by any means, but it is substantial enough to massively influence policy.

This new populist thought collective includes some of the first major political figures to really get the impact of the Coronavirus, and it also includes some of the more assertive influencers of the policy debate. There is a deep streak of raw nationalism here, with Tom Cotton almost seeking great power conflict and acting reflexively hostile to multilateral institutions. But the nationalist rhetoric and jingoism of Trump can obscure a more sophisticated recognition by some people in this new populist world that the core dynamic of the China-US relationship isn’t two nation-states opposed to one another, it is an authoritarian government in China that is deeply aligned with Wall Street, against the public in both nations.

One way Rubio has tried to deal with Chinese control in the American economy is through industrial policy, meaning the explicit shaping of industrial enterprises by state financing and control. One of Rubio’s initial goals was to meet the security threat from Huawei, the Chinese telecom giant that is threatening to take over the global communications apparatus. But he’s also gone more broadly into manufacturing in general, and small business, which is a more Brandeis-style frame.

Regardless, the intellectual ferment on the right is real, and fascinating. The first fruits of this philosophical discourse is the massive SBA Paycheck Protection Program, which is a $349 billion lending program to small business negotiated with Democratic Senators. So far, the program excludes private equity-controlled corporations, and though that may change, such legislative design implies genuine skepticism of the role of high finance. That’s a significant shift from traditional Republican orthodoxy.

Operationally speaking the PPP is a mess, and Republican populists will have to confront the many institutional challenges involved in trying to get large amounts of money through the ‘rusty pipes’ of our banking system. But it’s still a remarkable achievement.