Elizabeth Warren’s Terrible Plans

Elizabeth Warren is being lauded as the serious candidate in the race. Her motto, “I have a plan for that,” is accepted as proof that she is thoughtful and conscientious. That’s too generous.

One should expect a grown-up to evaluate costs and benefits, to understand tradeoffs, and to pay for what they propose. By that standard, Senator Warren’s big plans fail spectacularly. What Warren has done is engage in magic-wand politics. Wouldn’t it be great if college were free and everyone got subsidized child care? ) (No.) Wouldn’t life be grand if everyone’s rent were reduced by 10 percent? If wishes were horses . . .

Others have noted that her assumptions about how much revenue can be raised through a wealth tax are wildly over-optimistic. Ten European countries experimented with wealth taxes. Seven abandoned them after discovering that they don’t work. And there are constitutional impediments in the U.S. Further, as my friend Josh Taifer, a California physician and day trader, points out, the level of government intrusion necessary to police a wealth tax would be unlike anything we’ve seen. Our incomes and dividends are reported to the IRS. But a yearly 2 percent wealth tax would be a levy on everything.  It would encourage the rich to put their assets into less traceable forms such as gold, jewels, and art. Would IRS agents be rapping at their doors, demanding to see the contents of the home safe or, on a tip from a neighbor, hiring a backhoe to dig up gold bars buried in the backyard? And what about fluctuations in value? How much is that Andy Warhol painting worth? Can we really know until we go to sell it? There’s no Kelly Blue Book for paintings.

Warren breezes past these and other objections with indignant slogans about billionaire “freeloaders.” That’s an odd term. In 2016, the top 1 percent of earners took home 19.7 percent of national income. They also paid 37.3 percent of all taxes, which was more than the bottom 90 percent combined. If you want to raise (income) taxes on the rich, go ahead, but you will never extract enough to fund the spending Warren fondly imagines. The only way to achieve a Scandinavian-style welfare state is to do what the Scandinavians do — tax the heck out of the middle class.

Elizabeth Warren’s approach is 1960s Great Society stuff. She would build public housing, throw money at the opioid epidemic, break up big tech companies, break up agribusiness firms, introduce a new corporate profits tax, and on and on. Implicit in every plan is the notion that the government is competent to spend money and run things for everyone’s benefit. That worked so well the last time. As another friend, Sarah Longwell, observed recently, “Confidence in government is at its lowest ebb in years, and yet so many Democrats and Republicans want to give it more responsibility.”