President Trump’s announcement Tuesday that he is pulling out of talks to pass another round of stimulus to combat the economic impacts of the pandemic is politically and economically mind-boggling. Along with the delay caused by some Senate Republicans’ desire to limit the package’s size in the name of fiscal prudence, the failure to provide a big jolt of relief to suffering Americans is shameful. Instead of this myopic and ideological foot-dragging, Trump and ultra-conservatives should look to Australia’s conservatives for an example of what they should be doing.
Australia’s coalition government, comprising the conservative Liberal and National parties, has traditionally valued fiscal prudence far more than Republicans in the United States. The coalition never fell prey to supply-side economics, which teaches that lower tax rates, especially for the well-to-do, are the key to goosing economic growth. As a result, budgets offered when the coalition is in power have traditionally prioritized limiting spending growth and bringing budgets into balance over cutting taxes. Coalition budgets have often been able to do both, and just last year the government projected budget surpluses for the foreseeable future, along with middle-class tax cuts and government shrinking as a share of the economy.
That’s what makes Australia’s latest budget so notable. Treasurer Josh Frydenberg on Tuesday offered up a package of spending increases and tax cuts that would dramatically increase expenditures and blow out the deficit to historic peacetime proportions. Increased spending on health and infrastructure in the package is designed to prepare for a vaccine for the novel coronavirus and increase employment while the country waits for it. Tax credits and other spending programs are designed to subsidize private-sector employment, especially for younger people who have been hit worst by Australia’s economic downturn. Frydenberg also proposes accelerating the middle-class tax cuts scheduled to be passed in future years, providing further cash stimulus. The result is mind-boggling: Spending would increase by more than 7 percent of gross domestic product, and the deficit will explode to 11 percent of GDP.
All this has occurred in a country that by all accounts has been less severely impacted by the pandemic than the United States. Unemployment there is only 6.8 percent, compared with 7.9 percent in the United States. Those figures don’t account for effective unemployment, including workers who are furloughed or have dropped out of the labor force, but that too is worse in the United States. Australia, a nation of roughly 25.6 million people, has suffered only 895 covid-related deaths. Almost all of those occurred in the state of Victoria, home to Melbourne, the second-largest city in Australia. Had the United States experienced a similar mortality rate, there would have been fewer than 12,000 American deaths to covid-19. The nation would be celebrating, and Trump would be strutting toward a reelection cakewalk.
This underscores, however, the severity of the crisis. Australian conservatives know that the people want safety first, and they are willing to pay the price in lost economic output to provide it. They are not letting ideological shibboleths get in the way of good, responsible government.
Trump and the ultra-conservative Senate Republicans need to pay attention. Conservatives and the president want a government for the long term that values enterprise, freedom and capitalism. But ignoring the current crisis in the name of short-term ideological purity or personal petulance reduces rather than increases those chances. Polls clearly show Democrats headed for a win, perhaps of landslide proportions, that could give Trump ther largest defeat for an incumbent since 1932 and set the Republican Party back for years to come. How, one must ask, is the more conservative response today appropriate if it makes bigger, more intrusive, less conservative government more likely tomorrow?
Ronald Reagan decried this type of behavior. His 1977 speech to the Conservative Political Action Conference argued that American conservatism is “free from the slavish adherence to abstraction.” Ideologues, he said, chop off inconvenient facts that don’t fit the ideological bed. Conservatism, he said, was based on “the common sense and common decency of ordinary men and women, working out their own lives in their own way,” instead of “abstract theorizing” or “ideological fanaticism.” It required compromise, both with facts on the ground and with the political situation of one’s time.
In the current crisis, government is not the problem, and it can be part of the solution. Barry Goldwater told his generation’s conservatives to “grow up” and act to reshape America. The president and today’s conservatives should heed the wisdom of their idols and get to work helping Americans now so they can save America tomorrow.
This column has been updated to reflect that Melbourne is Australia’s second-largest city.