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The debate centers on what lessons to draw from Donald Trump, who talked like a populist but governed with the exception of trade policy more like a Reaganite. The divide doesnt quite fall along pro- and anti-Trump lines. The pro-Trump former United Nations ambassador Nikki Haley, for example, has emerged as a leading champion of traditional free-market policies in opposition to other pro-Trumpers like Vance and Hawley. The battle is likely to play out in the 2024 presidential primary, and shape the future of Republican politics long after Trump exits stage left.

The emergence of the new economic counterculture is loosely connected to the two-year-old think tank, American Compass, whose founder, the Harvard-trained lawyer and former Bain consultant Oren Cass, routinely derides his adversaries as market fundamentalists peddling stale pieties from the 1980s. Cass left the free-market Manhattan Institute in 2019 to launch American Compass, the first right-of-center think tank dedicated to pushing the government to get more, rather than less, involved in national economic policy in order to help advance a certain set of social and cultural goals a view Cass and his ilk have termed common good capitalism. The groups mission: To restore an economic consensus that emphasizes the importance of family, community, and industry to the nations liberty and prosperity.

Oren Cass at a conference in New Orleans in 2017. | Stephen McCarthy/Collision/Sportsfile via Flickr

In order to become the party of the working class, Cass has argued, the GOP must abandon its doctrinaire attachment to free-market principles in favor of traditionally Democratic causes like organized labor, the minimum wage and an industrial policy in which the government boosts particular industries over others. He also favors a stricter immigration policy with an eye toward migrants impact on the wages of American workers, arguments echoed by Vance and Fox News host Tucker Carlson.

Its a very different set of things to put together and support, certainly from Republicans, Cass told me recently, describing his position as in all respects antithetical to the Chamber of Commerce view.

Cass critics say he is merely a more intellectual version of the crass political opportunists looking to capitalize on the Trump legacy. Why else would the 2012 Romney campaign adviser turn his back on the free-market principles he once championed? Why else would the populist agitators of the previous decade, including the Tea Party darling Marco Rubio and his chief of staff, the former Heritage Action enfant terrible Michael Needham, shift their focus from restraining government and controlling spending to finding new ways for the feds to meddle in the economy, or the onetime Trump critic Vance transform himself into an avatar of populist economics?

A lot of people have tried to assign meaning to the Trump phenomenon, and a lot of that meaning is self-serving, says Michael Strain, director of economic policy at the American Enterprise Institute. President Trump did not expose some deep problem in American society that requires a rethinking of the economic system, Strain adds, arguing that the 2008 financial crisis and the recession that followed led to the sorts of populist uprisings around the globe that have historically followed economic cataclysms.

Others, including the political scientist Richard Hanania, say Cass is drawing the wrong lessons from Trumps political success, which Hanania believes had more to do with culture than economics. In an essay published after the 2020 election and titled, unsubtly, The National Populist Illusion, Hanania called out Cass and Rubio by name, arguing that attitudes toward issues like political correctness and immigration were more closely linked to Trump votes than economic status.

Hedge funds, private equity firms and venture capitalists, many of them longtime Republican donors, have been on the receiving end of many of Cass barbs, and the titans of industry, broadly speaking, argue that Cass has no more business charting the countrys economic policy than any other Ivy League consultant. See last months nasty Twitter tangle between Cass and the hedge fund billionaire Clifford Asness, a top GOP donor, that began when Cass argued that Asness firm hasnt been good at delivering results for its own investors. Describing American Compass as a blood and soil organization, Asness urged his followers to familiarize themselves with Cass work: Its every populist piece of utter nonsense all in one place. Very convenient, he wrote.

Twitter battles notwithstanding, Cass cites as his chief intellectual adversaries Haley, the former U.N. ambassador, as well as the outgoing Pennsylvania senator Pat Toomey, a moderate Republican who has been a leading voice on economic policy, and the members of the Wall Street Journal editorial board.

Former U.N. Ambassador Nikki Haley is, along with Sen. Pat Toomey of Pennsylvania, one of the leading opponents of the emerging movement of Republican economic populism. | Chip Somodevilla/Getty Images

Toomey delivered a speech last year titled In Defense of Capitalism that took aim not at the old threat that comes from the left but rather at the hyphenated capitalism trending on the right. When I look at this and I look at where this is coming from, he said in the speech, it strikes me as maybe the most serious threat to economic freedom and prosperity in a long time, because its coming from our allies. It is meant to be a dagger thrust into the heart of the traditional center-right consensus that maximizing economic growth is all about.

Haley, a likely 2024 presidential candidate, made the debate the subject of her own remarks at the conservative Hudson Institute last February and later in a Wall Street Journal op-ed slamming those who are pushing a watered-down or hyphenated capitalism.

Other 2024 prospects among them, Mike Pompeo, Ron DeSantis, Ted Cruz and Rick Scott havent yet staked out strong positions on the GOPs intraparty economics debate, but they will inevitably need to do so. The one thing on which both groups agree is that an economic brawl on the right is likely to play out in the next Republican primary. Cass predicts a fight for the future of right of center between his allies, like Rubio and Hawley, and those he describes as pre-Trump, including Haley.

Just as Trump disrupted the political consensus on China, the outcome of this debate is likely to shape the consensus economic views of a party in tumult. One of the practical questions stemming from this debate is how voters respond to the rhetoric of a watered-down capitalism, and whether it produces results electorally. Opponents argue it might be good short-term politics, but that voters ultimately punish politicians who preside over periods of economic contraction precisely what those like Toomey say the populists are likely to produce.

Those of us who think as I do need to constantly remind people that capitalism serves the common good, Toomey said in an interview. This whole notion of common-good capitalism betrays the flawed premise on which its based, which is that capitalism somehow does not serve the common good.

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A Big Policy Fight Is Brewing on the Right. And Its Not All About Trump. - POLITICO