Bernie Sanders accused Hillary Clinton of pandering to black voters in South Carolina the other day. And he’s right: Hillary and her campaign are definitely in the process of a widescale and undeniably effective crusade to pander to every likely Hillary supporter who’s eligible to vote. And so is the Sanders campaign. Welcome to February in a Democratic primary.
What really struck me, though, was hearing Sanders accusing someone else of pandering, as that’s precisely what he’s built his entire campaign on. I’m largely aligned with the goals of liberalism, but I’m also a person who knows that any time a politician tells you we can have everything we want without anyone having to make any real sacrifices, he or she is pretty clearly full of it.
And that’s where I agree with Bill Clinton, in that the current pro-Sanders movement has a lot in common with the Tea Party. Namely, it’s appealing to the most partisan and ideological voters in the party by telling them exactly what they want to hear - and that’s no better for liberalism in the long run than the Tea Party has been for conservatism.
The narrative to this point has been one of a pragmatic Clinton offering a compromised platform against an idealistic Sanders with the right ideas...even if they’re not realistic. I think it’s time to reset that. A lot of the ideas that Sanders is pushing only sound good. Dig deeper and it becomes clear that they drastically oversimplify complex issues.
So, on the eve of the all-important Nevada caucus, here’s a quick look at some of the ways the Sanders campaign has been floating a fundamentally flawed narrative about the issues that matter most.
Making College Tuition Free is Actually Somewhat Regressive
The American university system is the envy of the rest of the world. The best students the world over flock to our shores to attend our schools. However, those same institutions of higher learning remain out of reach for a large portion of the American population because of their great cost. Not to mention, the $1.2 trillion in student debt represents a weight on the economy, preventing many younger people from buying houses or cars.
However, eliminating tuition would mostly be a cost relief for the wealthy families that are currently the ones who actually pay full tuition. Not to mention, for every young person drowning in debt, there’s a yuppie doctor with a thriving practice pulling down six figures and having no trouble paying back student loans. Free tuition is as much a giveaway to the wealthiest Americans as it is anyone else.
Expanding access to a college education to every American, regardless of income level, is an important goal, but one that could also be accomplished by massively expanding Pell Grants and rebuilding a student loan program that’s low interest and featuring generous repayment terms.
That Health Care “Plan” Will Cost a LOT More Than He’s Suggesting
I’m not going to dig too deep into this one, as a lot of notable economists and analysts have already done so. However, expanding the number of people with access to health care by 30 million or so while also cutting costs by 40% is a pretty mean feat. One that will probably require a plan that’s longer than eight pages. This is not to say it’s impossible, but there’s clearly a wide range of cost reductions necessary to get there, and the Sanders campaign hasn’t said a word about what those might be.
Taxing Rich People Alone Won’t Pay for All of This
Actually, the health care “plan” from the Sanders campaign does outline something else important: the amount of money you can raise through soak the rich taxes is a lot less than Sanders seems to count on.
If you look at the tax proposals in the plan, raising the top tax rate to 52% would bring in $110 billion a year. That is, swinging the top rates back to pre-Reagan levels would increase federal tax revenues by 3.6%. Woohoo. And that’s the Sanders campaign’s projections, by the way. Throw in the changes to capital gains taxes, elimination of tax loopholes, and expansion of the estate tax and you’re still at $238 billion, or just $28 billion more than the $210 billion the plan anticipates raising from a 2.2% tax on all households.
Remaking the tax system to raise more revenue from the wealthiest Americans is good policy, but insisting that you’re going to expand the size of the federal government by more than a third and pay for it simply by increasing taxes on the wealthiest Americans is disingenuous at best.
Income Inequality is Different from Wealth Inequality
Speaking of progressive taxes, it’s worth noting that the inequality that Sanders harps on won’t be eliminated simply by boosting taxes on the wealthy. In Capital in the Twenty-First Century, French economist Thomas Piketty details how invested wealth frequently generates better returns than labor income.1 Basically, there’s more money to be made from having money than by working, and that’s why inequality keeps growing.
Why is this important? Well, because even if you completely remake the tax code, targeting people’s income alone will fall well short of correcting the tremendous gaps in wealth that exist in our society. Just take a page out of the Sanders playbook and take a look at Denmark. Denmark features a 60% tax rate on anyone earning more than 1.2 times the average income (so about $60,000) on top of a 25% value added tax, making the just-under 40% rate for top earners here in America look pretty meager.
The result? Denmark does have some of the lowest income inequality in the world. But it also has even more wealth inequality than we do here in the United States.
Free Trade Agreements Have Not Cost America Jobs, and Neither Will the TPP
This is a myth that simply won’t die. The idea that NAFTA was the driving force behind American manufacturing jobs leaving our shores is one that unions and Democrats have been pushing for years. It’s totally bogus, though. The reality is that the economic forces pushing American jobs overseas were way, way larger than the handful of tariffs eliminated by NAFTA. Not to mention, most of those jobs didn’t wind up in Mexico or Latin America. Most of them wound up in Asia - despite all those tariffs we’re now being told are so important.
So, the idea that the Trans-Pacific Partnership (TPP) would actually result in millions of American jobs going overseas is a massive stretch. If nothing else, the idea that there are all that many manufacturing jobs left in the United States that were waiting on tariffs coming down is pretty misguided. At the end of the day, the fact that you can live on $100 a month in Bangladesh means a lot more than taxes on imports. Of course, no Democrat is ever going to tell their union constituents that the flight of American manufacturing was an inevitable consequence of a changing economy. Even Hillary’s caved on this one, opposing the TPP, but it doesn’t change the fact that this issue is just a political football.
The Keystone XL Pipeline is a Largely Irrelevant Political Football
Speaking of political games…
The State Department review found that the tar sands oil from Alberta would be getting to terminals in New Orleans with or without the pipeline. At least, they would be at $90 a barrel. At $30 a barrel, it probably isn’t heading south anyway.
Either way, the pipeline doesn’t really make much of a difference from an environmental standpoint. In fact, sending that oil across the country on trains would actually be more likely to result in major spills than a pipeline would. I’m all for using this issue as a bargaining chip to secure other important environmental reforms from Republicans, but this is not the hill to die on. It’s worth noting, though, that Clinton’s shown herself to be willing to pander to liberal voters on this one as well.
Rolling Back Glass-Steagall did NOT Cause the Housing Crisis
Glass-Steagall was put in place to separate investment and commercial banking. However, the idea that it was the comingling of investment and commercial banking that led to the housing market collapse is just wrong.
Mortgage brokers like Countrywide that wrote thousands of sub-prime mortgages at rates the signees couldn’t afford were operating entirely within the realm of commercial banking. Investment banks like Goldman Sachs (GS), Bear Stearns, and Lehman Brothers who bought up those mortgages and repacked them into mortgage-backed securities were operating entirely within the realm of investment banking. Rating agencies like Moody’s and Standard and Poor’s that rubber-stamped toxic debt as AAA-rated securities, not to mention insurance companies like AIG (AIG) which dramatically overextended itself with credit default swaps that made investment banks overconfident, weren’t even banks.
Speculative bubbles happen. To believe that the big banks caused this one just by virtue of being big is to completely misunderstand the cause and effect of this particular crisis...and cause and effect in general. Just take a look at the Savings and Loan Crisis of the mid-1980s. In that case, there were thousands of small, community lenders that got wrapped up in risky speculation that led to a massive bailout.
There are plenty of good arguments for breaking up the largest banks, but coming at the debate with little more than the “let’s break up the big banks” catchphrase is underestimating their value. Left unregulated, they have had a deeply negative impact on the American economy. But they are also a pretty essential piece of the credit markets that are that same economy’s lifeblood. Understanding both is important when crafting policy with the sort of strong, smart regulatory framework we need.
Hillary or Bernie: Who’s the Real Cynic?
In the event that Sanders does become the nominee, the crucible awaiting him this fall is considerable. Republicans have spent years painting whoever the Democratic nominee was at the time as a tax-and-spend liberal who would raise taxes on the middle class. Enter Bernie Sanders.
I am well aware that Sanders supporters have taken to believing that they can make the Vermont Senator electable simply by repeating that he is over and over again like it’s a point of fact, but the reality is that simply ignoring decades of historical and polling evidence just because you want to believe otherwise could be more than a little imprudent.
I firmly believe in expanding the size of the Federal Government to build a stronger social safety net and create greater equality of opportunity. That’s exactly why Sanders is a very real concern for me: I think his success actually hurts those goals in the long run. Too many of the policies he has espoused are not, to my eye, carefully considered. Instead, they mostly seem rooted in frivolous campaign rhetoric. The very same rhetoric that his most ardent supporters claim to despise.
If I’m going to fight hard for expanding access to healthcare or a college education, I don’t want to do it over plans that are poorly crafted. In the event that Sanders wins the nomination, Republican Super PACs are going to be running wall-to-wall attack ads calling Sanders’ single-payer plan an expensive boondoggle that isn’t paid for. And this time, they’ll be right.
If you’re the sort of person capable of such skepticism that you think Hillary Clinton accepting a big check to do a grip and grin for an investment bank permanently stains her credibility, I would suggest turning that same critical eye on the candidate claiming he’s going to eliminate tuition at public universities and reduce healthcare spending by 40%. Perhaps if we all stop looking at sweet ole Uncle Bernie with rose-colored glasses, he’ll start looking like what he is: a politician stumping for votes.
1 I would be remiss if I didn’t mention here that Piketty appears to be a supporter of Sanders and his policies.
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