Millennials are too young to remember Monty Hall’s original “Let’s Make a Deal” game show, unless they’ve seen reruns on cable. So it might not be immediately clear to these voters that baby boomers are asking them to play a version of that game right now. Or that this political version is rigged.
Behind door number 1: the “car” of $1.6 trillion in student-loan relief, plus free college for all. Behind door number 2: the “goat” of uncountable tens of trillions of dollars in unfunded Social Security and Medicare liabilities to benefit boomers.
This is the best way to understand the flamboyant debt-forgiveness proposals lately put forward by the likes of Bernie Sanders and Elizabeth Warren. These programs are presented—not least by the sponsors themselves—as a form of old-style, rich-versus-poor class warfare. Mr. Sanders says he can fund $2.2 trillion of debt forgiveness and free public-university degrees with a financial-transactions tax on “Wall Street speculators.” Ms. Warren says her relatively modest $1.25 trillion debt-and-tuition deal can be financed by a wealth tax.
Stipulate that what we’re talking about here, on student loans or any other issue in the resentment sweepstakes of the Democratic presidential primary, doesn’t really help the poor. The audience for the class-war rhetoric from Mr. Sanders and Ms. Warren is the middle class, which is the intended recipient of most of the redistribution they promise. Even with the income limits on eligibility Ms. Warren builds into her plan, 58% of the debt relief would flow to households with incomes between $42,000 and $111,000. Mr. Sanders imposes no limits at all—his proposal is a subsidy for doctors and lawyers more than anyone else.
No surprise here. Redistribution to the middle class is a conspicuous feature of the European social-welfare states American leftists admire. This is why it doesn’t matter that the student-debt fiasco is mainly a middle-income crisis. That’s a trenchant but not entirely relevant observation raised by some conservative critics befuddled that Mr. Sanders and Ms. Warren are investing so much political capital in a giveaway for the better-off. The middle-class nature of the new entitlement is the whole point. That’s where the votes are, and also where any sense of economic hardship lingers in developed economies that already have solved the worst problems of extreme poverty.
What these politicians aren’t telling millennials, though, is that the middle class always pays for its own benefits in some way. Financial-transaction taxes chronically underperform estimates of the revenue they’ll generate, and wealth taxes are so ineffective that even France scrapped its version in despair in 2017.
Much heavier middle-class taxation is what feeds European social-welfare states. The taxman takes well north of 30% of the total labor income of the average single-earner household in France, Germany, Sweden and Norway, compared with 19% in the U.S., according to the Organization of Economic Cooperation and Development.
And if you think middle-class boomers are lining up to pay their “fair share” toward student debt relief once all the wealth-taxation gimmicks have failed, think again.
The federal government is running a deficit today, and politicians of both parties show little willingness to balance the budget in the immediate future. Absent entitlement reform, the task will become impossible in the 2030s once the youngest boomers have retired and started drawing the Social Security and Medicare benefits they never bothered to fund. After wealth taxes fail to generate the expected revenue, the Bernies and Warrens will turn to borrowing to finance student-loan relief—those new government debts to be repaid, naturally, by the millennial taxpayers of the future.
What’s the point, then? A cynic would suggest the student-loan gimmick is primarily an inducement for younger voters who’ll unwittingly assent to assume the fiscal burdens of old-age entitlements.
Those programs might be at least partially reformed, and their fiscal drag on the young ameliorated, by rebalancing their benefits away from middle-class boomers, perhaps via means-testing. But boomers have always staunchly resisted such reforms, and no politicians have been as fearsome tribunes of that refusal as progressives of the Bernie Sanders and Elizabeth Warren variety.
So faux debt relief is likely on offer in order to induce millennials to elect either of two progressive presidential candidates who will absolutely never, under any circumstances, ease the fiscal burdens of the much larger old-age entitlements distributed to the elderly tranche of the middle class.
Think a student-debt write-down and free college is a great deal? Wait until you see what you’ll have to pay in return.
Presidential aspirants test waters on health care, environmental policy; ‘bring on the tension’
Looming over the intraparty debate is the question of how best to beat Mr. Trump. Former Delaware Gov. Jack Markell, an ally of Mr. Biden and several governors considering entering the race, said “the only way that Trump can win is if the nominee is too far to the left.” Asked his definition of “too far left,” Mr. Markell said it is “the giving-everything-away-for-free lane.”
The contest already is being framed by ideas to the left of those that Hillary Clinton campaigned on in 2016. The biggest names of the party’s opposition to Mr. Trump—Ms. Warren, Ms. Harris, Mr. Sanders and Sen. Kirsten Gillibrand of New York—all support a single-payer health care system, free college at public universities and the Green New Deal.
Mr. Biden and Ms. Klobuchar represent a continuation of the politics that elected Mr. Obama. Both have spoken of the need to either restore the former president’s policies dismantled by Mr. Trump or build upon them.
Sen. Cory Booker of New Jersey and Mr. O’Rourke are staking out space between the party’s two poles.
Ten of the 16 announced candidates have endorsed Mr. Sanders’s Medicare for All proposal, and six back his proposal for free public university tuition. Six co-sponsored legislation to provide federal paid family leave, and eight support the Green New Deal.
Some Democrats are endorsing multiple solutions without ruling out any. Several candidates who support Medicare for All also are calling for incremental health-care improvements. Ms. Warren also has called for a public option to buy into Medicare, and for simply improving the Affordable Care Act.
Mr. Booker, who has said he would work with Republicans when possible, has proposed a “baby bond” program in which the government would create savings accounts which would provide $1,000 at birth, and up to $2,000 annually, to every child in the U.S.
.. Enough hard feelings remain from that fight that one of the biggest applause lines for Mr. Booker on a recent swing through the state was his pledge not to attack fellow Democrats.
.. “The Democratic platform already leans progressive. Our candidate doesn’t necessarily have to blow that horn,” said Marjie Foster, the Decatur County Democratic chairwoman. “We need to allow the American people to catch up with the progressive mind-set. If we try to push too hard, we will lose those who are slowly working their way left.”
.. “The litmus test is we need a candidate who can build a coalition to win,” said Mr. Scholten, who is considering a Senate bid in 2020. “If Klobuchar can do it with her message, that’s great. If Bernie can do it with his message, that’s great too. I think it could be someone from either side.”
They seek to restore access to a middle-class life by providing decent, well-paying jobs, reestablishing a sense of financial security, and ensuring access to quality education – without the chokehold of student debt that so many graduates currently face – and decent health care, regardless of pre-existing medical conditions. They call for affordable housing and a secure retirement in which the elderly are not preyed on by an avaricious financial sector. And they seek a more dynamic, competitive, and fair-market economy by curbing the excesses of market power, financialization, and globalization, and by strengthening workers’ bargaining power.
These perquisites of a middle-class life are attainable. They were affordable a half-century ago, when the country was substantially poorer than it is today; and they are affordable now. In fact, neither America’s economy nor its democracy can afford not to bolster the middle class. Government policies and programs – including public options for health insurance, supplementary retirement benefits, or mortgages – are crucial to realizing this vision.
.. In a normal democracy, these ideas would, I am confident, prevail. But US politics has been corrupted by money, gerrymandering and massive attempts at disenfranchisement. The 2017 tax bill was nothing short of a bribe to corporations and the wealthy to pour their financial resources into the 2018 election. Statistics show that money matters enormously in American politics.