Banker Puts Old School GOP Fiscal Policy on the Wisconsin Ballot

Eric Hovde was speaking with a bipartisan gathering of business and civic leaders at Milwaukee’s Rotary Club earlier this month when he did something unusual: break with the leader of his party.

“If there’s going to be an issue that I will have differences with President Donald Trump, it will, without question, probably deal with the debt issue,” Hovde said.

Hovde, the multi-millionaire chairman and CEO of Utah-based Sunwest Bank, is pushing for a shift in how the party addresses fiscal policy that would prioritize cutting the debt and federal spending over expanding tax breaks or funding even popular federal programs like Social Security.

The economic messaging is meant to showcase Hovde as a Washington outsider and draw a contrasts with his opponent, Sen. Tammy Baldwin (D-Wis.), an appropriator with a long track record of favoring increased domestic spending and bringing home earmarks to the Badger State. The Wisconsin Senate race in recent weeks has grown close, and stark differences between the candidates on fiscal issues could help tilt the race that may be decisive in determining control of the Senate.

“Consolidation of parties is one of the main factors leading to a close race,” said Charles Franklin, who conducts the Marquette Law School Poll.

Democrats currently hold a one-seat edge, but Republicans have at least an even chance of a takeover next year with Democrats having far more seats to defend this cycle.

Hovde, who has campaigned with Trump, would be at the vanguard of a generation of lawmakers pushing for changes in the party’s spending priorities and would have Trump’s ear if he reclaimed the White House. It would align him with a group of hard-right Senate Republicans, including Wisconsin Sen. Ron Johnson, who have antagonized party leaders with calls for deep spending cuts,

Sparring Over Spending

Sen. Tammy Baldwin (D-Wisc.) has highlighted her ability to steer billions of dollars to the state as an appropriator.

Photo by Zach C. Cohen

Baldwin has shown how she has leveraged her role as an appropriator to deliver a raft of projects for her state. If Baldwin’s upcoming fiscal 2025 earmarks are enacted, she will have brought back more than $900 million in the four years since Congress ended a ban on lawmakers funding specific local projects.

“We’ve been very successful in helping communities that are struggling to do things like meet the needs of the community’s public safety, public health,” said Baldwin, whose projects have ranged from $4 million for building a Boy and Girls Club to $200,000 for literacy programs.

Hovde by contrast proposed returning spending to 2019 levels. Such a move would require billions in cuts, but he argues those cuts could come out of money no longer needed for the pandemic response.

“Our population didn’t grow by 40 to 50 percent. So why are we spending that much more?” Hovde said.

In an interview after rallying students at the University of Wisconsin’s Eau Claire campus, Baldwin pointed out those cuts would slash Pell Grants that help students afford higher education.

Hovde however is doubling down. He recently rallied activists with the Koch-founded Americans for Prosperity preparing to distribute door hangars in the GOP-leaning Milwaukee suburbs of Waukesha County vowing he would “stop reckless Washington spending that drives record-high inflation.”

Hovde supports extending current Trump-era tax cuts but questioned Trump’s expensive proposals, to expand them.

In an interview at a party office in Milwaukee, Hovde said he opposed Trump’s plan to cut the tax rate on corporations that he said already pay less because their “fleet of tax attorneys and tax accountants” help them “play the tax code very effectively” to the point that some pay little to no taxes, disadvantaging smaller businesses.

“How does that make sense?” Hovde asked.

Hovde said he would have voted against bipartisan subsidies for domestic semiconductor manufacturing and federal requirements championed by Baldwin that the federal government buy supplies from the US. She says those requirements have created more domestic jobs.

Entitlement Changes

Social Security is also a major topic in a state with 1.3 million beneficiaries who make up a higher-than-average share of the state’s population.

Hovde has proposed raising the retirement age for younger workers and entertained eliminating those benefits for high-income earners to reduce governmental obligations that makes up the bulk of federal spending every year.

Baldwin estimated slashing cost-of-living adjustments would cut seniors’ benefits by $6,000 a year. Baldwin instead proposed taxing wages above the current federal threshold in order to better fund the program’s benefits.

“Social Security could be solvent for years — well, decades — to come ... if people like Eric Hovde paid into it beyond the income cap,” Baldwin said.

Personal Finance

The candidates’ personal finances have increasingly dominated the race in Wisconsin.

Hovde has loaned his campaign $20 million to run ads that link an influx of migration to housing shortages, showcase his foundation’s work overseas, and defend his Wisconsin roots.

Baldwin and her allies have nevertheless far out-spent Hovde’s, in part by maligning the banker’s record. Baldwin’s campaign has raised $51.3 million compared to Hovde’s $9.4 million as of Oct. 16.

WinSenate, a super PAC wholly funded by a group run by a former top aide to Senate Majority Leader Chuck Schumer (D-N.Y.), has run ads blasting the “multi-millionaire California banker” for supporting “cuts to Social Security and Medicare.”

Republicans in response attack Baldwin as “the Third Senator from New York” by highlighting her partner, Maria Brisbane, a New York City wealth manager for ultra-wealthy clients. Baldwin is the first openly gay senator.

A super PAC largely funded by Citadel CEO Ken Griffin, Uline Inc. President Elizabeth Uihlein, and Hovde’s brother Steven Hovde have aired ads contending Brisbane’s clients “get rich off industries that Tammy regulates.”

“I started off focusing on issues, and then I just watched this whole campaign just devolve into one nonstop attack ad,” Hovde said. “Finally I said, ‘fine.’”