Paul Ryan makes a speech.Eric Thayer / Reuters

There was a time when Charlie Baker, the popular Republican governor of Massachusetts who won his bid for reelection by a wider margin than did the stalwart progressive Senator Elizabeth Warren, might have been considered one of the GOP’s leading lights. As it stands, he is an oddity. Though the Republican Party still commands the allegiance of some secular, college-educated, upper-middle-income voters in the suburbs of big cities, such voters represent a shrinking share of its coalition.

Admittedly, this is not an entirely new development. Voters who describe themselves as socially liberal and fiscally conservative, or rather socially progressive and fiscally pragmatic, have been gravitating to the Democrats since the Clinton era. But the 2018 midterm elections really do feel like the culmination of this decades-long trend. Rockefeller Republicans have fully given way to Bloomberg Democrats, a shift that seems especially pronounced among younger elite-educated professionals, and it is hard to envision a reversal. Henceforth, the Republican Party will either win working-class voters or lose its grip on power.

In Grand New Party, published a decade ago, Ross Douthat and I argued that the Republican Party was evolving into the party of the white working class, and that its path forward would be to craft a more populist economic agenda that could secure the loyalty of working-class voters of all colors and creeds. We warned that if the party’s leadership failed to reflect the material interests and cultural sensibilities of its working-class base, Republicans would find themselves doomed to defeat. What we failed to anticipate is that the thermostatic rejection of congressional Democrats in 2010 and 2014 would delude at least some Republicans into believing that there was a large working-class constituency for shrinking the safety net and expanding temporary guest-worker programs, both pet causes of the party’s erstwhile rising stars. The rise of Donald Trump put those illusions to rest.

In some respects, Trump’s rise vindicated our thesis: Here was a candidate who spoke to the party’s working-class base, and who managed to breach the “blue wall” as a result. In others, though, it underscored the inability of the Republican policy-making apparatus to adapt to the new dispensation. As an undisciplined political outsider, who takes great pride in his improvisational approach to governing, Trump is singularly ill-equipped to drive the Republican agenda in new directions. In short, Trump has cronies, not cadres. That is, he has a small coterie of loyalists who aren’t especially experienced or knowledgeable when it comes to policy making, who’ve since been joined by Republican regulars who champion ideological nostrums that are always unpopular and often discredited. The GOP has yet to develop a cohort of policy professionals capable of reconciling egalitarian populism and market conservatism in an attractive program, and the result is that Trump’s taste for invective has filled a vacuum that might otherwise have been filled by a creative and unifying new nationalism.  

This is not to suggest that Democrats don’t face challenges of their own. To Democrats who came of age when memories of the New Deal were still fresh, the realization that the party of Franklin D. Roosevelt has become the party of the metropolitan rich has proved more than a little discomfiting. Shortly after the midterm elections, Mollie Hemingway of The Federalist published a column recounting conversations Representative Jerrold Nadler of New York had with various friends while traveling to Washington, D.C., on the Acela. Having pored over the results, Nadler, the incoming chair of the House Judiciary Committee, worried that the Democrats’ growing reliance on affluent voters made them “more vulnerable to the charge they are no longer the party of the working person.”

This is not entirely fair. Democrats fared well with a wide range of voters in the midterms. Indeed, one of the more striking patterns to have emerged is that, as the statistician Andrew Gelman recently observed, Democrats saw their biggest gains in strong Republican districts, where Democratic candidates received less than 40 percent of the vote in 2016. Nevertheless, Nadler had a point. Anti-elitism has a long and storied history in American life, and if politics is fundamentally about “knowing who hates who,” as the political strategist Kevin Phillips once said to Garry Wills, to be seen as the party of a smug and self-satisfied elite is a real vulnerability. Trump is only the latest in a long line of self-styled populists to have capitalized on the supposed elitism of his political rivals.

Nadler might have added that as HENRYs—Shawn Tully’s ingenious acronym for “high earners, not rich yet”—go from swing vote to core Democratic constituency, they might stymie efforts to greatly increase the scope and generosity of the safety net. While HENRYs might accept the creation of boutique social programs that leave their federal tax burdens untouched, there is reason to believe they’d resist more ambitious domestic-policy initiatives that threaten to eat into their disposable incomes. Recognizing that Democrats were poised to capitalize on suburban discontent with the Trump presidency, the historians Lily Geismer and Matthew Lassiter warned that “Democrats haven’t paid enough attention to the substantial policy costs of turning affluent suburbs blue.” Writing in The New York Times in June, they noted the tension between the political culture of upscale suburbs, which, in their words, “revolves around resource hoarding of children’s educational advantages, pervasive opposition to economic integration and affordable housing, and the consistent defense of homeowner privileges and taxpayer rights,” and the promotion of a more forthrightly egalitarian agenda, as championed by the party’s socialist wing.

Judging by past experience, this intra-party tension will be resolved in favor of the interests of tax-sensitive suburbanites. Democrats will surely make symbolic concessions to the priorities of socialists and environmentalists, who will continue to play an essential role in marketing centrist candidates to the young and the intelligentsia. But they seem most likely to rely on negative partisanship, which is to say deep-seated opposition to the Republican Party, to keep their coalition intact.

As HENRYs cement their central role in the Democratic Party, we can expect Republicans to be less solicitous of their wants and needs, and to go hunting for new voting blocs that might be more receptive to conservative cultural appeals. Doing so will be exceptionally difficult in the near term, as President Trump is an intensely polarizing figure about whom most voters and potential voters have long since made up their mind. For now, as I argued in the immediate aftermath of the midterms, the best Republicans can hope for is to win back some of the Obama-Trump voters of the industrial Midwest, many of whom have since returned to the Democratic fold.

Looking further out, though, Republicans will have no choice but to attract a far larger universe of working-class voters to address the upper-middle-class exodus. Regardless of the outcome of the next presidential election, younger members of the party need to start thinking about the post-Trump landscape, and what it will take to expand the Republican coalition. The loss of HENRYs could, in theory, free Republicans to pursue policies that might cut against the interests of affluent voters while serving the interests of other voters with more modest incomes. Again, skepticism is warranted as to whether the incumbent GOP political class is capable of adapting to this new political landscape. But as Trump demonstrated in his 2016 presidential campaign, political entrepreneurs are always lying in wait to exploit unrealized opportunities.

How should newly elected Republican senators position themselves for the political battles to come? How should Republican lawmakers reckon with the fact that the conservative bromides that served them so well in the days of Tom DeLay now fall on deaf ears? The short answer is that they need to recognize that Democrats have a growing advantage in economic policy, which is why they’ve made such significant gains in previously safe Republican districts. Short of a large and very visible shift to the center along these lines, Republicans might be shut out of winning the House for some years to come.

With the possible exception of the botched effort to repeal and replace Obamacare, the Tax Cuts and Jobs Act (TCJA) has proved the biggest missed opportunity of the Trump era so far. No one doubts that the capping of the state and local tax (SALT) deduction helped drive HENRYs into the arms of Democratic candidates in high-tax communities across the country. What Republicans failed to do, however, is channel some of the revenue raised as a result into providing more federal help for poor states that are badly in need of it, a policy advocated by the sociologist Joshua McCabe. Drawing on his work, I’ve made the case for a “fiscal equalization” program that would help ensure that states with low average incomes have the resources they need to provide their citizens with high-quality services, and that would have the added benefit of deepening support for the GOP in hitherto neglected regions of the country.

Then there is the fact that the TCJA’s tax cuts for low- and middle-income households were meager in comparison to its sizable corporate tax cuts, a decision that, regardless of its (debatable) substantive merits, amounted to political malpractice. Trump himself seemed to recognize that this was so when he confidently asserted that he would slash taxes for middle-income families on the campaign trail late last month, a promise that has yet to be borne out. So far, Republican proposals for Tax Reform 2.0 have played to type by centering on measures that would do precious little for most low- and middle-income households.

But it’s not hard to imagine a simple swap that would prove a boon to millions of families. In short, Tax Reform 2.0 ought to hike taxes on HENRYs to finance tax cuts for those who were left out of Tax Reform 1.0. First, lower the threshold for the 37 percent tax bracket, which now sits at $500,000 for single adults and $600,000 for married couples filing joint tax returns, to $157,500 for singles and $315,000 for married couples, which is currently the threshold for the 32 percent bracket.

Though this tweak would increase marginal rates for a modest number of HENRYs, it is very unlikely to have a large aggregate economic effect, according to Kyle Pomerleau of the center-right Tax Foundation. Simply put, these workers have typically devoted their lives to building successful professional careers, and they’re not going to drastically reduce their work hours in response to a modest increase in their taxes. As for the highest-income workers, who might be somewhat more sensitive to marginal rates, their marginal rate would be left unchanged. The next step would be to use this revenue to defray the cost of doubling the maximum value of the earned-income tax credit (EITC) for childless workers, a policy that would do a great deal to incentivize work and reduce poverty, and to eliminate the Social Security payroll tax for workers over the age of 62, a reform that would come very close to paying for itself by encouraging delayed retirement.

Wouldn’t Democrats try to outbid Republicans bearing tax credits? Absolutely. But that’s to be expected. While Democrats might promise
more redistribution, Republicans can and should promise labor-market policies that actively promote work. The key is to be in the fight on economic policy while maintaining an edge on national security, gun rights, immigration control, and other issues where Republicans are generally on the right side of the enthusiasm gap.

In a similar vein, consider the GOP’s utterly ineffective response to the labor-backed push to increase the minimum wage, possibly the most successful policy campaign of the past decade. In state after state, minimum-wage referendums have attracted the support of liberal and conservative voters alike, most recently in Arkansas and Missouri. Democratic lawmakers are understandably eager to pass a large increase in the federal minimum wage, perhaps with the expectation that their efforts will be blocked by Republicans in the Senate.

There are good reasons to oppose a truly drastic increase in the federal minimum wage. For one, such a policy wouldn’t take into account differences in local wages and prices between, say, Massachusetts and Mississippi; a higher federal minimum wage would likely have a more deleterious effect in low-wage, low-productivity regions than in high-wage, high-productivity regions. Even so, Republicans ought to consider at least softening their opposition. In lieu of a sudden, sharp increase in the federal minimum wage to $15 an hour, savvy Republicans could back the establishment of a federal wage standard, which would yield higher minimum wages in rich regions than in poor ones. HENRYs in rich regions would have to pay somewhat higher prices for the labor-intensive services on which they depend, but low-wage service workers would enjoy (modest) wage increases.

Some conservatives might object that the federal wage standard would still be too much of a one-size-fits-all solution. To make it more flexible still, the standard could be understood as a default rather than as a floor, as the policy analyst Oren Cass suggests in a recent piece for the right-of-center Economics21. “In workplaces where workers have no collective representation and thus a limited ability to bargain, government rules are a necessity—though, of course, we should strive to improve their quality and reduce their cost wherever possible,” writes Cass. “But in workplaces where employees bargain collectively with management, the sides should be free to depart from this default when they find it mutually beneficial to do so.” Unions have been seeking exactly this sort of carve-out from minimum-wage laws in Los Angeles County and, more recently, in San Mateo County. Would adopting this approach suddenly cause pro-union workers to vote Republican en masse? Of course not. What it might do instead is soften the antagonism between organized labor and the GOP, and lay the groundwork for a partial rapprochement. Given rising support for organized labor, this would be an opportune time for such a shift.   

There is much more to be said about the sorry state of the Republican domestic-policy agenda and what might replace it. The truth is that the past two years of unified Republican control of Congress and the executive branch have been largely wasted, the remaking of the federal judiciary aside. The Paul Ryan generation is leaving the stage having accomplished far less than its members had hoped, and the HENRYs they courted so assiduously have left the GOP outright. A new coalition is forming, and it will need new ideas to rally around.  

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