How Partisanship Killed Effective Economic Nationalism

Like Biden before him, Trump has lost the trust and patience of voters by pursuing a narrowly ideological economic agenda.

For decades now, populist forces in America and other western nations have been pining for the end of “neoliberalism.” What this means exactly is open to interpretation depending on your ideological persuasion.

For leftists here, it’s means breaking the power of Wall Street and multinational corporations through stricter regulation and anti-trust measures, higher taxes on the rich, “rebalancing” of international trade to meet labor and environmental standards, ending military interventions and cutting defense budgets, labor union rights, and far more government spending on things like health care, housing, education, and climate change. For those on the populist right, it means socking it to the “globalists” and “cultural elites” through some of these same measures on trade and overseas interventions with far less enthusiasm for taxation, spending, and regulation and much more fervor for immigration restrictions and non-traditional, anti-elite politics.

In the center, there are a dwindling number of pro-business neoliberal advocates and libertarians who ardently defend free markets and trade, globalization, wealth accumulation, deregulation, decentralized government, and open movement of people across borders. There are also more moderate Clinton-Blair “Third Way” types who are less strident neoliberals than in the past but still defend the U.S.-led international order they argue has yielded huge wealth and influence for America while reducing global poverty.

The animating concept linking both left- and right-populist opponents of neoliberalism, and splintering centrist factions, is concern about the effects of economic inequality on working-class Americans (both economically and culturally) and the unchecked rise of China and subsequent decline of traditional American manufacturing power with good-paying jobs for workers. Both groups of populists oppose these developments and want policies to counteract these trends, while centrists are divided on the importance of economic inequality as an issue and split on how, if at all, to respond to the rise of China and declining domestic production.

Various factions of the left, right, and center have been feuding intensely over the future of neoliberalism since the financial crisis of 2007-2008 and the election of Donald Trump in 2016.

Because of America’s two-party system, the political contours of this fight are mainly delineated within the voter coalitions and organized interest groups of Democrats and Republicans. Progressive, anti-neoliberal Democrats (and some independents) united within the Occupy Wall Street movement to oppose the “one percent” and later organized through the presidential candidacies of Bernie Sanders and Elizabeth Warren and their attendant policy institutions. On the other side, national populist, anti-neoliberal Republicans (and some independents) united within the MAGA movement and through Donald Trump’s presidential campaigns, his administrations, and supportive media operations.

The primary goal of these anti-neoliberal forces has been to dislodge or co-opt the perceived establishments in both parties—directly or indirectly. This played out differently for Democrats and Republicans. For example, progressives could not directly take over the Democratic Party through either the Sanders or Warren wings given a strong mainstream centrist faction among elected officials and voters, but they did manage to take control of much of the policy apparatus during Joe Biden’s presidency. In comparison, national populists under Trump completely took over the Republican Party and chased out all the establishment types or bludgeoned them into submission.

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The fight against neoliberalism has always been hampered by partisan politics. Despite a lot of talk in journals and philanthropic circles, there was never any serious effort to create a truly independent “post-neoliberal” movement that would work across party divides to advance a vision of resurgent economic nationalism and better represent American working-class interests regardless of party affiliation. Again, populist forces on the left and right were more interested in attacking the elite policy development and personnel infrastructures in their respective parties than they were in building a dynamic new movement with steadily growing public support and policy successes across presidential administrations—just as neoliberal forces developed during the 1980s and 1990s.

For a brief moment during the first Trump and Biden presidencies, there was a possibility of creating a genuinely bipartisan, cross-ideological movement in Congress to advance economic nationalism (with public backing) as an alternative to the perceived neoliberal consensus in both parties.

The focus of various economic nationalist policy groups and congressional committees was mainly on combatting China and restoring American economic might for the benefit of a hollowed out working-class and struggling towns and regions across America. There was bipartisan work to advance strategic tariffs on China to help protect key industries in tech and defense, as well as to advance tax incentives for new manufacturing and energy development in both red states and blue states. New investments in basic infrastructure and technological research and innovation also received broad endorsements, as did cross-party policies to bolster working-class families through income and child supports.

But this promising moment for effective economic nationalism blew up entirely due to the internal logic of America’s tribal politics, particularly during short two-year periods of unified party control of the federal government.

Looking back at 2021-2022, it's obvious that Republicans would never fully commit to Democratic ideas about government investment as part of an economic nationalist agenda—and especially their mobilization to combat climate change and advance clean energy. This came to a head with Biden’s response to the Covid pandemic and his party’s multi-year struggle to pass expansive climate and social spending through reconciliation (with no Republican votes at all, although a smattering of House Republicans have recently argued against repeal). During this period, Biden did work with a pool of Republicans to pass smart bipartisan legislation on infrastructure, R&D spending, strategic checks on China, and energy production. But these efforts were overshadowed by the outcomes of his party’s massive Covid spending, the subsequent spike in household costs, and the deceptively named “Inflation Reduction Act” (IRA) that had more to do with climate than inflation—the most important issue on voters’ minds. Not surprisingly, President Trump now wants Republicans to repeal the semiconductor subsidies in the CHIPS Act and reverse or kill most of the clean energy components in the IRA.

In turn, looking at Trump’s first term and his early months in office a second time, it’s clear that Democrats did not and will likely never commit to his divide-and-conquer nationalist politics or to his tariff, tax cut, and deregulation agenda carried out through constitutionally dubious executive actions and through the same one-party reconciliation process used by Democrats under Biden. Any hope Trump had of building a larger public majority after his successful 2024 presidential campaign and popular early steps on immigration and cultural issues has all but evaporated within the first three months of his second term as he moved aggressively on the economy. Democrats blame Trump’s erratic behavior with allies and his unilateral steps on tariffs and DOGE cuts as reasons for opposing his agenda, while Republicans counter that it is blind “Trump Derangement Syndrome” that precludes Democrats from backing Trump’s MAGA economic approach. Either way, the prospect for bipartisanship in support of Trumps’s nationalist vision seems remote to nonexistent now.

So, both parties attempted to do economic nationalism primarily through their own party lenses thus ensuring that it would engender widespread opposition from the other side and elevate the worst aspects of each party’s agenda to center of political debate. For Democrats it was a monomaniacal focus on climate change and leftist social spending that ignored governmental bottlenecks and wasted money (see the “abundance” discussion for why this is the case). For Republicans it was Trump’s lifelong obsession with tariffs and his right-wing attacks on government bureaucracy, public investments, and international alliances that have limited appeal outside of his MAGA base.

The net result of this partisan standoff is that economic nationalism is now widely discredited and increasingly impossible to advance in a smart manner with bipartisan legislation and broad public support behind clearly articulated and well understood national goals. China and other nations hostile to the United States have surely taken note and adjusted their own approaches to take advantage of America’s political dysfunction.

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Neoliberalism won the ideological battle with its opponents by default. America’s partisan politics ensured that an effective, broadly backed approach to advancing national interests and rebuilding the working class would fail.

Huge government spending in areas unrelated to strategic industrial policy coupled with high inflation and a refusal to fix the regulations that prevent new building and manufacturing limited the appeal of the Biden and Democratic approach to economic nationalism with many voters. Chaotic, made-up “reciprocal tariffs” and attacks on America’s allies that threaten to raise prices, slow growth, decrease wealth, and harm U.S. interests over the long-term have likewise discredited the Trump and Republican approach with many Americans.

Neoliberalism didn’t win because it is popular. It won because the economic nationalist alternatives presented by partisans on both sides ended up looking far worse and more impractical than the status quo, while much of the neoliberal vision (warts and all) remained grounded in macroeconomic reality and voters’ desire for abundant goods and services, low prices, and economic stability—not partisan command-and-control revolution.