Donald Trump’s presidency has been a mix of establishment and populist politics. In terms of policy, the president has combined standard Republican tax cuts and deregulation, with more restrictionist policies in trade and immigration. And while the president’s rhetoric has often been anti-elite norm-violating and sometimes inflammatory, he’s also won the support of the mainstream Republican Party lawmakers and voters alike. So, what are we to make of his presidency? Have President Trump’s economic policies been successful? If so, to what degree does populism deserve the credit? Going forward, what lessons should policymakers learn from this recent rise of populism on both the left and right? Casey Mulligan and Michael Strain recently discussed these questions, and many more, with me at an AEI web event, which has been adapted into an episode of Political Economy.

Casey Mulligan is a professor of economics at the University of Chicago, and he served as chief economist for the Council of Economic Advisers in the Trump Administration from September 2018 to August 2019. He is also the author of the recently released book, You’re Hired! Untold Successes and Failures of a Populist President. Michael Strain is the Arthur F. Burns Scholar in Political Economy and director of economic policy studies at AEI. He is the author of The American Dream Is Not Dead: (But Populism Could Kill It), released in February of this year.

What follows is a lightly edited transcript of our conversation, including brief portions that were cut from the original podcast. 

Pethokoukis: To start out, Casey will speak for about 10 minutes, and then Mike will offer a 10-minute response. And after that, we’ll have a panel discussion for a while. With that, please proceed, Professor Mulligan.

Mulligan: Good morning. I really appreciate AEI organizing this. I have some slides to share during my presentation. I’m going to economize your time today, but you can find a lot more in my new book. Readers have been having fun but also coming away, agreeing at least somewhat that populism has some real substance.

Let’s start with a definition of populism. In his book, Michael refers to, “Pitting the ‘people’ against the ‘elites.’” And the “people” and the “elites” are in scare quotes, so I take that to mean that he and others might be skeptical whether these groups actually exist. And as I explained in my book, the elites really do exist as a group and prove that it’s only a slight exaggeration to say that we all know each other. There’s one piece of data: Even in the Trump White House, the incidence of Harvard graduates is 100 times what it is in the general population.

Second, the word “pitting,” I think, suggests that the conflict is imagined or only manufactured by politicians. On the contrary, this is a real conflict. People have been suffering from significant policy mistakes, which the elites do not acknowledge, let alone fix. In a short time today, I’ll give you a couple of examples.

Drug overdoses tripled over about 10 years, but as various metrics in my book show, Washington remained as oblivious as ever. Federal policy was unwittingly fueling this epidemic, for example, subsidies up and down the prescription drug supply chain, but — at least in the years I showed you — illegal fentanyl did not loom large. During these years, and decades before, fentanyl would momentarily come into the US market, and at the time, people would say our drug supply was getting poisoned, but the Department of Justice every time would beat it back. Then, in 2013, without any acknowledgment of what was going on with opioids, the Attorney General did this [plays video]:

Eric Holder: I had these mandatory minimum sentences that I had to impose on people who had drug problems, and who were selling relatively small amounts of drugs in a non-violent way to support a drug habit that they had, and who had to go to jail for a five-year mandatory minimum or a ten-year mandatory minimum and I didn’t feel comfortable doing that.

Video Narrator: As Attorney General, Holder announced that he would no longer support mandatory minimums for a low-level drug crime.

Mulligan: Immediately, here comes the fentanyl. Immediately, surveys showed record increases in the number of people using illicitly manufactured opioids. The Trump campaign called out the opioid epidemic. This was a major part of the American carnage that Trump cited in his inaugural address, which of course, deeply offended the elites. I’ll go easy on Michael on this point. Let’s instead take Susan Rice’s new book, which she begins by talking about when she heard Trump say “American carnage” in his address. She says that was evidence “of his unthinkable cynicism and ugliness and how our president was saying farewell to the moral universe,” I quote her. She has 534 pages in that book, but not one of them has room to mention the opioid epidemic, drug overdoses, or any real substance behind populism.

Let’s look closer at the address and at the monthly data. What did the president say in his inaugural address? “The crime and the gangs and drugs that have stolen too many lives and robbed our country of so much potential. This American carnage stops right here and right now.” Very clearly, once we go back and look at what he actually said, he’s referring to the drugs and the crime that have stolen too many lives early before the natural death.

Now, I admit that the monthly data are noisy, but it sure looks like the carnage did stop exactly when our president said it would. The deaths did not go down to zero — and I’ll have more to say about that — but part of what happened in January 2017 is the new attorney general that the president put in rescinded the Holder memo. However, I am concerned that some US attorneys out there are still following the Holder approach.

Trump also campaigned loudly against Obamacare’s individual mandate specifically and excessive regulation generally. The individual mandate is a classic case where regular people had to suffer under a fundamentally flawed theory from the so-called experts. Another thing they tried to do is to force people with beer budgets to have wine tastes. I give many examples in the book, but let’s take small-dollar loans. As JD Vance explains in his best-selling book about flyover country, small loans can be a convenient and valuable product for poor people. They can pay $40 or $50 to get a small short-term loan that allows them to avoid hundreds of dollars in late fees and penalties from banks, landlords, collectors, etc. But the so-called Consumer Finance Protection Bureau puts that $40 in their annual percentage rate formula and concludes that nobody should be allowed to purchase such a service. Never mind that 600,000 consumers who wrote to CFPB begging to keep the loans that helped them pay, and I quote, “for rent, childcare, food, vacation, school supplies, car payments, power utility bills, cell phone bills, credit card bills, groceries, medical bills, insurance premiums and student educational costs.”

The last thing that I want to show you with the little time that I have is how FDA regulations protected generic drug manufacturers from competition. This is not a question of safety and efficacy, because the formula in any generic drug has been in use for many years. The companies rig the system so that they can charge brand name prices for generic products. President Trump ended that, beginning in 2017. This really hurt Chinese and other foreign companies who had previously secured themselves special favors. Israeli manufacturers stock crashed, and the analysts readily acknowledged that there was more competition in the market for generic drugs stemming from what the FDA began doing in 2017. Most importantly, consumers saw it too, as the consumer price index for prescription drugs became negative for the first time in 46 years.

Now, I understand that deregulation is a dirty word in certain circles that call themselves populists, and also that Jim called deregulation the standard Republican fare. Well, by itself, Trump’s FDA deregulation translates into ongoing savings of about 11 percent on prescription drugs, generally, which is a big deal, especially for low-income families. I don’t understand why any populist would want to reverse these savings and return to companies the privileges that excessive regulation created for them.

Trump’s many regulatory changes add up to real savings. These are my estimates of what it would cost to go back to running the regulatory state, the way President Bush and Obama were. I have broken consumers down into five income groups, and you can see that the lowest income group would face lower wages and higher expenses, such as the prescription drugs, that total 15 percent of their income. That would be like doubling their taxes. The way I see it, Trump has been a political entrepreneur who figured out how to ride populism into winning the world’s biggest elected position — and then achieving historic policy successes pursuant to some of his campaign promises.