It is a comparison that many are making. Donald Trump, the presumptive Republican nominee for president, is very similar to Ronald Reagan, the 40th President of the United States and icon of modern conservatism. While these two men share some cosmetic similarities on the surface, in reality they are very different in many ways. Thus, those that are seeking to conclude that a Trump presidency might follow a similar course to that of Reagan’s are likely to discover a much different outcome than they might expect.
Before going any further, it is important to note that this is not an article about promoting or refuting a political view. Instead, this article is intended to be an exploration of facts and their associated implications for U.S. fiscal policy, which is executed by the President in through the legislation provided by Congress.
Surface Level Similarities
So what exactly is the source of the comparisons between Trump and Reagan. First, while Trump was first a businessman while Reagan was an actor, both were celebrities before they became Republican presidential candidates. Both Trump and Reagan were former Democrats that eventually converted to the Republican party. Both men also were also greeted with apprehension from some in the electorate and in the global community that thought they may be less than capable and potentially unpredictable upon entering office. And yes, both men shared the campaign slogan that it was time to “make America great again”.
But these are largely cosmetic comparisons. For one even begins to look under the surface, some notably vast differences quickly present themselves.
Prior Political Experience
The first aspect that makes Reagan meaningfully different than Trump was his prior political experience. Reagan first emerged on the political landscape in 1964 with his now legendary “A Time For Choosing” speech, which established the foundation of his conservative political philosophy that carried forward over the next several decades. Reagan went on to serve two terms as Governor of California from 1967 to 1975. Along the way he ran for the 1968 Republican nomination, losing to eventual nominee Richard Nixon despite winning a plurality of the national primary vote (37.93% for Reagan versus 37.54% for Nixon). Reagan contended for the Republican nomination once again in 1976, eventually losing to incumbent President Gerald Ford following what has recently been a frequently recalled contested convention. Reagan finally won the Republican nomination in 1980 on his third try. But by the time he won the presidency later that same year, he had been a major player on the Republican political scene for 16 years including two prior presidential runs and eight years of executive experience as Governor of California.
By comparison, Trump’s only prior political experience beyond two separate flirtations with the idea of running for the Republican nomination in 1988 and 2012 was his fleeting candidacy for the Reform Party nomination in 2000. Despite campaigning for a few months starting in October 1999, Trump never officially moved past the exploratory phase of his campaign and eventually ended his campaign in February 2000. The primary issues of the Trump campaign that year were promoting fair trade, eliminating the national debt and establishing universal healthcare. Of course, some of these prior platforms stand in stark contrast to his current campaign positioning.
Fiscal Policy Views Reagan’s fiscal policy views were well established and generally consistent throughout his several decades in politics. Reagan promoted the ideals of capitalism, free trade and immigration. And his policy objectives included the reduction of government spending, lowering taxes and reducing regulation. He was also an advocate of restrictive monetary policy and limiting money supply growth to combat the inflationary challenges at the time. Reagan’s success in achieving all of these goals once in office is certainly subject to debate, but his views were generally well known and fairly consistent in their conservatism for several decades.
In contrast, the details of Trump’s fiscal policy views remain rather uncertain despite the fact that he has been on the campaign trail for the better part of a year and is the presumptive Republican nominee for president. But what is generally known at this point is that he has more populist inclinations including increasing regulations, taking a more isolationist approach to international trade, and restricting immigration. While Trump’s fiscal policy views are likely to evolve and take a clearer form as we move closer to the general election in November, the fact that the substance of his views remain largely unknown stands in stark contrast to Reagan. Moreover, those Trump fiscal policy views that are known are vastly different than those of Reagan.
More Like Wendell Willkie Than Ronald Reagan
If anything, Trump bears a much greater resemblance to Wendell Willkie, the Republican nomination for president in the 1940 campaign, than Ronald Reagan. Willkie was also a Democrat that converted to the Republican party in 1939. He was a successful businessman who was politically active but had never run for public office prior to his presidential run in 1940. Willkie was also viewed as a fiscal policy moderate including his intent to keep many New Deal programs in place, but in contrast to Trump he was a supporter of global trade and taking a more interventionist approach overseas at least initially in his campaign. And much like Trump thus far, Willkie’s campaign faced opposition from conservatives, some of which considered turning to a third party candidate.
Bottom Line
Those that wish to draw similarities between Donald Trump and Ronald Reagan are likely looking too quickly past the many contrasts between these two men. In fact, Donald Trump bears little resemblance to Ronald Reagan when it comes to the key elements of political experience and core fiscal policy views. This is not to suggest that Trump’s policies will fail for this reason if he ascends to the presidency, as his policies if implemented may prove most successful at the end of the day. Only time will tell. But it should be noted at least to this point that his known fiscal policy views are far less established and decidedly different than Reagan’s. And such uncertainty has the potential to spark periods of volatility for the U.S. stock market as we draw closer to the election.
A Final Editorial Point
One final editorial point bears mentioning. The 2016 presidential election is one that screams for the entry of a third party candidate. Both the Republicans and Democrats have presumptive nominees that the public views with scorn. According to a recent Wall Street Journal/NBC News poll, 65% of registered voters have a negative views on Donald Trump, while 56% have a negative views on Hillary Clinton, and these negatives have the potential to get even worse once the general election campaign gets underway. Moreover, according to Gallup, only 25% or one in four Americans identify themselves as Republican while only 31% or less than one in three Americans view themselves as Democrat. Instead, a historically high 44% of Americans view themselves as Independent. Putting this all together, both political parties are headed toward nominating candidates that the broader American public simply do not like in a measurable way. And with nearly half of all Americans not identifying with either party (and a number of those that do identify with a political party vocally expressing their dissatisfaction with their candidates), this implies that the general election offers a gapingly wide open opportunity to a third party candidate that is sufficiently well known enough by the American public that they can hit the ground running with a national campaign, has a last name that is sufficiently easy to write in on a ballot if necessary (former California Governor George Deukmejian need not apply in this case), and has nothing to lose in their political future by striking out on their own with a presidential run outside of the two major parties (people such as Speaker Paul Ryan or Senator Marco Rubio would likely stay out of it on this measure). What is the best profile for a candidate that could succeed in this scenario? A more experienced and balanced, right leaning moderate most likely from the Republican party that can appeal to independent voters but also has the ability to win a vote in the House of Representatives if no candidate were to receive a majority of the votes from the Electoral College. A handful of people come to mind that might fit the bill in this regard, but I will leave out the mention of any individual names to avoid the risk of injecting any political bias into the discussion. While the idea of a viable third party candidate would be considered madness in most years, 2016 has been anything but ordinary and predictable. As a result, if there was ever a time to take a shot at a legitimate third party run, this is the year to do it. Disclosure: This article is for information purposes only. There are risks involved with investing including loss of principal. Gerring Capital Partners makes no explicit or implicit guarantee with respect to performance or the outcome of any investment or projections made. There is no guarantee that the goals of the strategies discussed by Gerring Capital Partners will be met.