The Economic Limits of the Trump Coalition

It was only a few months ago that American politics was dominated by incessant chatter about a definitive MAGA realignment. Left and right, many concluded Trump’s comeback marked a tectonic shift in the party system that foretold yet more working-class defections from the Democratic camp, as evidenced by the strong uptick in registered Republican voters. But in the wake of the Epstein files vote, the 43-day government shutdown, and the Democrats’ November victories (bolstered further by evidence that Latinos returned to the fold), a new narrative is gaining traction that could soon saddle America’s most volatile and iconoclastic president with that most ordinary of political fates: the status of a lame duck.

It is striking how quickly the cracks in the new MAGA coalition have shown. Trump’s favorability on the economy has nosedived, independents irate over living costs are moving in the Democrats’ direction, a third or more of the country is on the cusp of recession, and congressional Republicans, alert to the number of Democratic insurgents laying the ground for an upset in red states, are panicking about the midterms. A handful of state-level GOP leaders have also signaled opposition to Trump’s redistricting scheme, arguably the most significant breach between Trump and local party branches since his attempts to overturn the 2020 election results in Georgia and Arizona.

More surprising still is the high-profile rupture within the MAGA elite. Unnerved by Representative Marjorie Taylor Greene’s break with Trump and her withering attacks on GOP priorities, the America First crowd has wondered aloud why this administration, after so much hype about being better prepared than the first Trump White House, seems so rudderless and unfocused. Even progressives horrified by the administration’s most aggressive actions—military strikes on “drug smugglers” in the Caribbean Sea and eastern Pacific Ocean, indiscriminate ICE raids, and cruel, extrajudicial deportation methods—sense that Trump’s penchant for bluster and provocation is once more cover for the lack of a consistent vision. Although three highly unpredictable years remain, there is a tentative feeling (many would say hope) that the sequel is about to fizzle out.

At this stage in history, of course, it is unwise to prognosticate with great confidence about Trump’s political fortunes. The rapid centralization of power within the executive branch shows Trump’s inner circle has been tirelessly at work in at least one respect, and it is far from unwarranted to fear Trump may indeed try to circumvent the Constitution and plot a third term. Yet it is increasingly evident Trump lacks the policies and momentum to consolidate and grow his unexpectedly broad 2024 coalition in the way transformative elections have traditionally allowed.

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Compare the political earthquake of Trump’s 2024 victory to the most consequential realignments since the Second Industrial Revolution—1896, 1932, and 1980. In each of these pivotal elections, the victorious party was able to cement a developmental coalition comprising elite and mass interests that set the nation’s course for a generation or more. In 1896, William McKinley’s GOP consolidated continued support for a program of industrial protectionism and an expansionist presence on the world stage that, while plainly tilted toward privileged and influential economic players, promised rising living standards, the shift toward a consumer-oriented “home market,” and national prestige. In 1932, Franklin Roosevelt fused together the interests of Northern urban workers, the slowly industrializing South, and those business sectors that recognized amid the worsening depression the opportunities that would follow from a more state-managed form of capitalism. And in 1980, Ronald Reagan picked off parts of the fading New Deal coalition to back a program that combined sweeping deregulation with not-so-tacit government support for the burgeoning tech revolution and finance-led urban renewal.

Trump lacks a similarly cohesive developmental coalition despite his strong performance with working-class voters. In fact, there is a widening divergence between Trump’s blue-collar and wealthier supporters over what he should prioritize beyond controlling the border. To an unusual degree, Trump’s ostensible mandate was contingent on “fixing” the missteps of the incumbent administration, which itself had promised to fix Trump’s first-term chaos. Joe Biden’s self-inflicted wounds on immigration, his administration’s perceived “DEI” overreach, and his passivity on inflation created a deeply ironic hunger among embittered swing voters and irregular voters for Trumpian “confidence” and “decisiveness.” In essence, these voters gave Trump a second chance because they were motivated to punish Democrats for failing to “return to normalcy.”

The shallowness of Trump’s mandate is underscored by how little Trump has done to convert it into something more lasting for his party. As a supplemental campaign strategy, Trump’s lofty outline of a new industrial “golden age” worked, just barely. There was a strange willingness in parts of the electorate previously averse to Trump to entertain the possibility that he could successfully amalgamate the prescriptions that helped propel McKinley and Reagan to office. Ignoring Biden’s own “post-neoliberal” experiments, they wagered that a revision of the global trade order and Trump’s rapprochement with Big Tech, combined with his hazy but alluring promise to simultaneously lower prices and cut interest rates, would somehow yield the dynamic, noninflationary growth that eluded Biden.

Since taking office, however, Trump has yet to pursue a program likely to create a harmony of normally disparate interests. His sweeping protective tariffs, premised on replicating the industrial expansion of McKinley’s era, have spiked costs for small businesses and many domestic manufacturers, thereby stifling the reinvestment necessary to repair and re-diversify the industrial base. The tariffs have also inhibited a more dovish turn at the Federal Reserve, thus undermining whatever incentives businesses might have had to borrow and commit to major fixed investments. Meanwhile, Trump’s push for “energy dominance,” purportedly meant to lower costs across supply chains, has been recklessly diverted to meet the vast energy needs of the AI bubble. The results so far disprove Trump’s far-fetched claim he would rapidly bring down essential costs for businesses and consumers, draining the public’s already low confidence in the post-Covid recovery.

The more neo-Reaganite aspects of Trump’s agenda are similarly failing to do the trick. Unsurprisingly, the GOP tax cuts have stoked a frenzy of stock buybacks, further boosting the assets of higher earners. Yet, more so than in previous bubbles, soaring valuations and the exorbitant spending power of the very wealthy are increasingly divorced from how regular working families experience the real-world economy.

This gulf, while reminiscent of the Reagan-era economy, lacks precedent due to how much the wealthiest account for—and thus shape—new consumer spending. Arguably, that spending power, previously confined to how luxuries were priced, now contributes to price increases for basic goods and services and the elevated interest rates meant to tame said inflation. This perpetuates a nasty spiral in which major players across supply chains ignore signs of household financial distress. Conglomerates and oligopolies, sensing they can mop up yet more earnings in an otherwise sputtering business cycle, behave as if paycheck-to-paycheck America can absorb the prices the very wealthy are willing to pay. Consequently, the norms that used to restrain pricing power have withered—and probably won’t see a revival until a recession (or an epiphany) compels business leaders to reevaluate what the average consumer can bear.

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Trump’s critics would say the public’s souring mood (along with his crony capitalism) was all-too predictable. Still, it is notable that Trump’s economic agenda, including the federal government’s highly atypical equity stakes in nine companies, has done little to inspire hope about the future. The sole sector demonstrating serious growth this year, which has commanded billions in venture capital at the expense of other kinds of startups, is feared by many for its potential to vaporize middle-class incomes, while the tariff regime threatens to make smaller enterprises that had adapted to globalization uncompetitive.

The anxiety that pervades the economy illustrates the fundamental difference between Trump and the GOP statesmen his sympathizers invoke. Unlike McKinley and Reagan, who convinced ordinary Americans they had a material stake in the evolution of corporate capitalism, innovation, and advanced technology more generally, Trump can offer no such assurances about the surge in AI adoption and AI data centers. Instead, his de facto industrial strategy, now overwhelmingly oriented to accelerating the AI “arms race,” has no broad-based constituency anchored in expectations of high-wage jobs and new opportunities and is even more ad hoc than Biden’s patchwork incentives to spur the clean energy transition. In fact, the reasons for non-college-educated Americans to embrace AI development have become increasingly dubious the more events on the ground belie sanguine predictions that the industry would be a boon to long-neglected districts.

The paucity of public optimism about Trump’s agenda raises the question of whether the developmental coalitions of previous magnitude are still feasible. The GOP of McKinley’s time and Reagan’s, respectively, succeeded because its leaders were aware that building a durable cross-class coalition hinged on establishing a clear buy-in for different constituencies. They appealed baldly to voters’ aspirations for national greatness while minimizing the social costs of rising inequality, occupational displacement, and greed. Yet the sense of opportunity, of new frontiers being reached, was sufficiently palpable to persuade enough Americans that the middle class would continue to expand—and that the fruits of technological progress would dwarf the prosperity known to previous generations.

That spirit of possibility and momentum is unmistakably crumpling under the weight of Trump’s unfathomable strategy. Democrats thus have a chance to tell a different story about America’s future—one that speaks to the dreams of all who wish not for ostentatious wealth, but the freedom and resources to live a life of meaning, connection, and belonging. Should Democrats at last recover their true register, the makings of a transformative developmental coalition based on collective progress may yet gather force.