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Florida Gov. Ron DeSantis delivered an economics speech Monday, an event understandably overshadowed by the recent indictment of former President Donald Trump. The speech was an insightful mix of Trump and orthodox Republican politics, and DeSantis laid out where he might depart from both if he became president.
The speech began with a somber description of the state of the country. America, DeSantis said, is in decline — militarily, culturally, and economically. He found many culprits. China on the one hand, immigrants on the other, the elite on the third – the latter a group he has repeatedly attacked as a root cause. The business speech was a continuation of the general tone of his presidential campaign.
The populist us-versus-them rhetoric reflected Trump’s influence in the Republican Party. Trump likes to start arguments and express personal criticism. He shifts the terms of political talk and GOP politics. DeSantis adopted this approach as he runs against Trump for the Republican nomination.
The governor attacked a “failed ruling class” which he said had benefited at the expense of the country as a whole and the middle class in particular. “We must defeat the individuals and institutions that have caused our economic misery,” he said. “We cannot have policies that capitulate to the biggest corporations on Wall Street at the expense of small businesses and average Americans.”
Elsewhere he said: “The goal of our Declaration of Independence is simple. We, the American people, win, they lose.”
DeSantis attacked the elite from multiple directions, pursuing attendees at the World Economic Forum in Davos and residents of the Beltway. He pointed out that many of the country’s wealthiest counties are those surrounding the country’s capital. “They don’t produce anything worth mentioning except a lot of debt and a lot of hot air,” he said.
His critique of the income and wealth gap resonated with some on the left, for example when he pointed out that “the bottom half of households have less wealth than they had in 1989”. [while] The top 10 percent have added $29 trillion to their wealth,” suggesting that policies favored by the elite have contributed.
But DeSantis added his own contemporary take on the issue, arguing that economic lockdowns during the pandemic have widened the gap between the top 10 percent and the bottom half. “The coronavirus lockdowns and related measures represented the largest transfer of wealth from working people, small businesses to large corporations like Apple, Amazon and Facebook that we have ever seen in our country’s modern history,” he said.
By and large, Trump’s economic policies are anti-globalist, anti-elitist, and “America First.” It is inward-looking and suspicious of other nations that the former president has long believed exploited the United States. DeSantis shares some of the same views, particularly when he focuses on China. “The Chinese Communist Party continues to eat this country’s lunch every day,” he said.
Today it is popular across party lines to speak harshly about China. Trump began changing tone and policy when it became clear that China, despite its integration into the global economy, was becoming more politically autocratic and hostile. Tariffs were a key weapon of Trump’s. President Biden has made no real change of course during his tenure amid deteriorating US-China relations, which his administration is now trying to ease.
As for China policy, DeSantis, along with other Republican presidential candidates, has called for far more controversial approaches to issues such as trade, intellectual property, and human rights. Whether DeSantis would risk fulfilling its promise to revoke permanent normal trade status with China, given the disruptive consequences that would entail, is another question.
Trump’s influence on DeSantis and the Republican Party is clear. But then there’s basic Republican economic policy. Aside from the harsh rhetoric about the elite and immigrants and China-bashing, much of DeSantis’ economic thinking reflects traditional party orthodoxy, which economist Douglas Holtz-Eakin called the “meat and potato” solutions long advocated by Republican candidates become.
As outlined in the speech, these measures would include low taxes, a small regulatory state, controlling spending and reducing debt, cutting federal bureaucracy, improving the education system, and increasing oil and gas production. “There’s nothing in it that sounds unconventional in any way,” said Holtz-Eakin.
DeSantis’ speech left many questions unanswered. One of them is his call to control spending. He advocates amending the constitution with a balanced budget, although the likelihood of that happening is slim, but he did not identify any areas of the federal budget that would need to be cut. He said nothing in his speech about whether he would seek a restructuring of entitlement programs like Social Security or Medicare, a key issue for future federal spending. He has previously said he would not touch Social Security benefits for current recipients but was open to changes that would impact future generations. What is he up to?
Another area that needs elaboration is its pledge to achieve 3 percent annual gross domestic product growth, a goal that has proved out of reach for policymakers from both parties for much of the past three decades. Eight years ago, as he began his presidential campaign, former Republican Florida Governor Jeb Bush promised growth of 4 percent. Economists consistently dismissed Bush’s goal as overly optimistic. DeSantis has set a lower goal, but one that might still be difficult to achieve.
DeSantis appears to be moving beyond Trump’s tenure as president in his stance on big tech companies, big corporations, and the Federal Reserve. Here he is genuinely combative, and in Florida he has already shown a willingness to use state power to influence corporate behavior.
He began a falling out with the Walt Disney Co. when a Disney executive criticized new Florida legislation restricting discussion of gender and identity issues in elementary schools. He stripped investment firm BlackRock of managing around $2 billion in state funds under ESG (environmental, social and governance) investment guidelines. As President, he said: “We will put an end to the politicization of the economy by turning things like ESG on their head.”
DeSantis has drawn criticism from others in his party for this way of thinking. They see it as the opposite of conservatism. In their view, the government should let market forces work. When a company’s policies are objectionable, customers choose not to buy the products. DeSantis wants to use the government to dictate what companies should do.
He has also vigorously attacked the Federal Reserve. The Fed, he said, should not be a “central economic planner” or “indulge in social justice.” Her job is to keep prices stable, “and she’s deviated from that with what she’s been doing for the past few years.” But a president’s power over the Fed is limited. DeSantis said he will appoint a Fed chairman “who understands “the limited role it plays.”
He also firmly opposes any role for the Fed in the development of a digital currency, which he describes as yet another attempt by the elite to gain power and influence. “The central bank digital currency is a wolf coming like a wolf,” he said. This is a subject of minimal concern to most Americans, one that it is safe to say few know or understand. It has become a passion for DeSantis.
At this point in the campaign, there’s no reason to expect DeSantis to divulge all the details of his policies. If he is successful in his election campaign, he still has time for that. But as an opening statement, the speech underscored how the Republican Party has evolved under Trump — and where DeSantis would push to accelerate those changes.
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