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Monday, August 12, 2019

Warren Wants 'Big, Structural Change' That Goes Beyond Anything Previous Democratic Administrations Have Proposed

By Ira Stoll - August 12, 2019 at 04:00PM

"What if Washington stood up for the little guys (and gals) for a change?" asks the politician, proposing to "make it harder for the big banks and crooked CEOs to play games with our economy."

"What if we could close the loopholes that allow the very wealthiest Americans to skip out on paying their fair share in taxes?" the politician asks, proposing "real action to combat the climate crisis."

"Only by working together can we return our government to the people," the politician says.

It's a telling message, not so much because of the politician who signed it—Sen. Elizabeth Warren (D–Mass.)—but because of the year the direct-mail piece was sent, 2015. That was during the administration of President Obama.

Warren is campaigning for president now talking about the need for "big, structural change." Voters may interpret that as they see fit, but the 2015 direct mail piece is a sign that Warren doesn't merely want to turn back the clock to the pre-Trump era. She wants to raise taxes and regulations far beyond the levels of the late Obama-Biden administration.

Warren's presidential campaign is packed with policies that confirm that assessment. On health care, her "Medicare for All" plan would outlaw private health insurance, going beyond ObamaCare. On taxes, she has proposed an annual "wealth tax" of 2 percent per year on fortunes of more than $50 million, something Obama never publicly advocated.

The wealth tax is a particularly illuminating example because it is an attempt to solve a problem that isn't really a problem. Most large American fortunes have been created through hard work and risk-taking—not things government should seek to punish or deter. What do America's richest people do with their money once accumulated? Michael Bloomberg uses his money to advocate for causes, such as gun control, electing a Democratic Congress, and fighting climate change, that Warren generally supports. Other very rich Americans fight disease and poverty in Africa and Asia, or own companies that employ lots of Americans or provide products and services that many people voluntarily purchase. There isn't much evidence that Congress could deploy this capital better than the people who currently control it. It's not even as if having some large fortune guarantees happiness that eludes those of us who are less wealthy. Witness the sad ends of Jeffrey Epstein, Matthew Mellon, Kate Spade, and Saoirse Kennedy Hill.

The logical and factual flaws in Warren's argument are apparent from that 2015 direct-mail letter. "Middle-class economics really works—look at this!" is the label over a bar graph headlined "U.S. Economic Growth Reaches 11-Year High." Warren seems to want to credit the Obama administration and its policies for economic growth, but also to fault it for failing to stand up for little guys. Those two messages are in tension with each other.

The Warren fundraising letter bar graph showing economic growth portrays second quarter and third quarter 2014 economic growth at an annualized rate both exceeding 4 percent. But government records show real, seasonally adjusted quarterly growth at 2.7 percent in the second quarter of 2014 and 3.1% in the third quarter. If Warren is going to use growth numbers that are not inflation-adjusted or seasonally adjusted, she should have said so, because the most commonly used growth numbers do include those adjustments. And if she wants to allocate to politicians the credit for economic growth, some of it probably belongs not only to "the Obama administration" credited on the graph but to the Republican House of Representatives elected in 2010.

Former Vice President Joe Biden has started to challenge Senator Warren and her ideological allies such as Senator Bernie Sanders for running against President Obama. Conservatives and libertarians and Wall Street types might not have imagined the day when the Obama-Biden administration would be viewed as insufficiently aggressive in raising taxes and regulations. But here we are, with Obama's vice president, Joseph Biden, the main thing protecting the country from a Democratic Party formally committed to "big, structural change" of the sort Warren is pushing. If our most recent law-professor president wasn't quite left-wing enough for you, wait for the Elizabeth Warren administration.


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