Democrats’ new agenda is to aid the affluent

Democratic presidential nominee Joe Biden speaks before embarking on a train campaign tour at Cleveland Amtrak Station Sept. 30 in Cleveland, Ohio. Alex Wong/Getty Images/TNS

As Joe Biden prepares to take office as president, the Democratic Party is pushing for an economic agenda that reflects the priorities of its new coalition: one that has more college degrees, and higher incomes, than past ones.

Based on the latest estimates, Biden got almost exactly the same percentage of votes for president that Barack Obama got in 2012. But the composition of the Democratic coalition changed. While a majority of college graduates voted against Obama’s reelection, Biden seems to have won a majority. Biden also expanded Obama’s majority among holders of postgraduate degrees. The Democrats have moved higher on the income scale, too. They had a big majority among voters making less than $50,000 a year in 2012, but a smaller one this year. They made up for those losses among higher-earners.

If Democrats were trying to cater to their new supporters, they would seek to relieve student-loan debt and expand tax breaks for the upper middle class while shielding all but the very highest-earning households from tax increases. That’s exactly what they’re talking about right now.

While there is debate about just how regressive it would be for the federal government to forgive hundreds of billions of dollars in student-loan debts, it would unquestionably benefit many Americans with high lifetime incomes while excluding a lot of people who cannot look forward to earning as much.

In the tax law they enacted at the end of 2017, Republicans capped the deduction for state and local taxes at $10,000 — a change they knew would mostly hurt affluent residents of high-tax jurisdictions politically dominated by Democrats. Ever since, Democrats have wanted to get rid of the cap. The Tax Policy Center has estimated that following that course would, on average, raise after-tax income for the top fifth of U.S. households by nearly 1% while having no detectable effect on the bottom three-fifths.

Biden would claw back some of these gains by raising taxes. But he has repeatedly vowed that tax increases would affect only those households making more than $400,000 a year, which is to say the top 1.8% of all households. Obama, by contrast, used $250,000 as his dividing line. Even after accounting for inflation, Biden would exempt more affluent households. If Democrats stuck with a static definition of “the rich,” it would expose more and more of their own voters to tax increases. So they are defining it upward.

Democratic politicians will rarely defend these policies on the ground that they are trying to make upper-middle-class professionals happy. But these priorities are hard to justify on any other basis. Sens. Chuck Schumer and Elizabeth Warren say that student-debt relief should be part of the federal government’s response to the COVID-19 pandemic, and House Democrats have sometimes tied the issues together. But owing money on student loans isn’t a good proxy for economic need, or for economic harm related to the pandemic. Many hospitality-industry workers who never attended college have been hit harder than doctors and lawyers with educational debts. In September, the Pew Research Center found, unsurprisingly, that people with the most years of schooling are having the least trouble paying their bills.

Relief from student debts isn’t a good means of economic stimulus, either. Take $10,000 off the debt someone owes over the next 10 years, and he or she might well spend more money now. Surely, though, their current spending wouldn’t rise as much as if they simply received a check for $10,000. Even if you grant that we need fiscal stimulus, the debt relief is too backloaded to work well.

Ending limits on the deduction for state and local taxes is even more obviously a sop to Democratic constituencies. House Democrats included this measure, too, in their COVID-relief legislation. If the virus and the resulting economic distress had taken a disproportionate toll on high earners in Connecticut and Illinois, then maybe it would make sense to target them for relief. But it hasn’t, and it doesn’t.

Political parties don’t run purely on cynicism. If Democratic politicians are becoming more solicitous of the interests of upper middle class degree-holders, it’s surely in part because more and more of them are in that group themselves, just like their friends, neighbors and donors. So student loans touch them in a way that, say, plant closures don’t.

Republican politicians are noticing. Since the election, a lot of them have started to refer to their party as the home of the working class. Based on the data we have so far, that’s a huge overstatement. But it’s one that is getting truer all the time, thanks in part to the Democrats’ agenda.

Ramesh Ponnuru is a Bloomberg Opinion columnist. He is a senior editor at National Review, visiting fellow at the American Enterprise Institute and contributor to CBS News.

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(10) comments

rdsouth

A few cherry picked actions and policies are not an entire platform. Case not made. That aside, the sort of right way to do student loan debt is to make it possible for it to be discharged in bankruptcy. That way only those who really did pay a fortune for a worthless degree get a break. The better way is to simply have the government get its money back as part of your taxes. The more you make, the more (above your regular taxes) you also owe to pay off your loan. How would magic wanding all the debt away even work? The government isn't holding that debt, it's been sold. Are the debt collectors going to take a haircut like all the people holding cash instead of stocks?

hermit thrush

i don't share ponnuru's politics but i usually find his columns to be pretty good. however, it's really not great that he fails to mention perhaps the biggest reason why student debt relief has gotten so much chatter recently: it's something that biden happens to have the legal authority to do unilaterally (i.e. without going through congress). if democrats had healthy majorities in congress, then i think you'd see democrats pushing in very different directions, but you play the hand you're dealt.

Pitbull

Sure, just do SOMETHING because its the only thing you can do. Even if its the wrong thing! And forgiving student debt is the wrong thing on many levels. It encourages irresponsible behavior, for one. You know, get an education in some pursuit with which you won't be able to make a living, take out loans, then whine, then watch as Daddy Warbucks (Uncle Sam) wipes the debt away. People who paid their loans off last month and thought they were doing a good thing were what? Suckers? Then there's the encouragement of these private schools charging a fortune knowing these guaranteed loans are out there bringing them new meat every year. This is rotten, feel good politics at its worst.

hermit thrush

no, forgiving some amount of student debt is good. i don't favor a blanket forgiveness of all debt now and continuing into the future, as you ridiculously seem to be suggesting. fortunately no actual democrats (as opposed to the ones living in pb's imagination) do either. a lot of young people are being crushed by their debt (the situation is vastly, vastly than when pb was young, but good luck trying to get him to engage with that reality), and helping them would be good. we could do so much more if republicans in congress were up to the task.

Pitbull

Republicans don't agree with the task you describe. You don't reward people for bad decisions. That brings more bad decisions (and rewards expensive private schools as well). Let me tell you what is different from when I was young, h. I worked 30 hours a week while taking 16-19 credit hours. Then I worked 85 hours a week in the summer and on breaks, all at a restaurant. I ate 3 meals a day at that same restaurant. I took out loans as well. I was emancipated and did it on my own. I got a degree I could use, not a fuzzball, feelgood, identity degree. I never expected anybody to pay for anything of mine. That would have made me weaker. Your thinking is flawed and WILL weaken America further. Honestly, this once proud and strong people can not take any more weakening.

Hoosier

The Democrats stated desire is to increase family income, bring more folks into the middle class. Their vehicle appears to be policy, more renewable energy etc.. Not a bad thing, quite contrary, a great ideal. The GOP prefers poor and stupid, stupid enough to have you believe the election was a fraud, that COVID is a joke and Trump is a genius.

Pitbull

You must not have read the article. It clearly states that the Democrats are focused on policies that will benefit wealthier Americans. They have chaafed at the SALT limit for years because it costs the residents of Marin County, CA, and Westchester, NY alot of not so hard earned cash. Meanwhile, they pretend to be for the little guy. The Dems are fakers and hypocrites.

Eagle24

Faker is "we've turned the corner on Covid regardless of the vaccine".... or Rudi and his star witness Mellissa Carrone..... another seriously cringeworthy moment... a three ring circus ...

Drmgoulet

The article clearly states this, but does the policy state it? of course is doesn’t, and I disagree the article made the case.

Newsjunkie39a

If that's your ludicrously broad-brush description of Democrats, what about one for the Republicans? "The Party of Voter Suppression?"

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