The One Big Beautiful Bill Act and the Putin Playbook for Managing Inequality
Or how to distract with cultural issues when living standards fall.
On July 4, U.S. President Donald Trump signed the One Big Beautiful Bill Act (OBBBA) into law. The law makes permanent Trump's 2017 tax cuts -- which primarily benefitted the wealthy -- while making steep cuts to Medicaid and food aid. It will exacerbate income inequality. According to the Penn Wharton Budget Lab, in 2033, U.S. households in the lowest 20 percent of income stand to lose an average of about $1,300 after OBBBA's changes in taxes and government spending, while households in the top 0.1 percent gain an average of about $83,000.
Given Trump's strong performance with low-income voters who traditionally voted Democratic in the 2024 election, many news analyses have focused on how the law will affect Republicans' chances in future elections. As the New York Times reported last month, "The G.O.P.’s courtship of low-income voters often lives in tension with traditional Republican economic policy." In an apparent nod to this possibility, many of the law's cuts to health programs do not take effect until after the 2026 midterm elections.
However, other populists have succeeded in managing widening inequality by distracting with cultural issues. A prime example of this phenomenon has been Russian leader Vladimir Putin. While living standards rose for ordinary Russians during his first decade in power, they subsequently declined because of Western sanctions imposed after he invaded and annexed Crimea in 2014 and launched a full-scale invasion of Ukraine in 2022. In 2021, the Boston Consulting Group found that the 500 wealthiest Russians controlled about 40 percent of the nation's wealth -- more than the bottom 99.8% of Russians. In 2024, Russian economists at the Higher School of Economics found that 66% of Russians made $415 a month or less, lower than the country's average monthly wage of $725.
Despite runaway inequality, Russia hasn't seen a revolution under Putin. Of course, part of the answer is that Putin has exiled, imprisoned, or killed the opposition in recent years. But the Russian system was less restrictive from 2012-2020, and Putin remained broadly popular while seizing on cultural issues. In 2013, Putin began a campaign for so-called traditional values, while demonizing the LGBTQ community as an import from the decadent West. The 2014 invasion and annexation of Crimea aroused patriotic feelings among Russians who were excited that the former Soviet territory was once again controlled by Moscow. In his speech announcing the full-scale invasion of Ukraine in February 2022, Putin framed it as a defense of Russian "traditional values" against "degradation and degeneration" imposed from the West.
The Russian and American systems are very different: Russians have no way to "throw the bums out" and elect a new slate of leaders, while Americans do. Yet, Trump has also seized on cultural issues. In the 2024 campaign, the Republican Party spent $17 million airing an ad that highlighted his opponent's 2019 support for gender reassignment surgery for prisoners with the tagline: "Kamala [Harris] is for they/them, President Trump is for you." In office, Trump has waged a campaign of withholding federal funding for elite universities like Harvard and Columbia while promising more money for trade schools. (He has actually cut job training programs for low-income individuals.)
In 2024, Democrats appeared indifferent to falling living standards among ordinary men and a critical slice of voters swung for Trump because of his relentless focus on cost-of-living issues. As the One Big Beautiful Bill Act raises the cost of living for many Americans, it's very unpopular: opinion polls show that nearly two-thirds of Americans oppose it. Yet, it seems conceivable that Trump could once again use the Putin playbook and distract with cultural issues as ordinary Americans' living standards fall. In the next election, it's up to his opponents to moderate on divisive cultural issues while making the very cost-of-living case that catapulted Trump to the presidency.
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helpful to have the comparison of what Putin has been doing in Russia...does seem like a lot of similarity with Trump strategy