You, middle America, are the battlefield for the top Democrats chasing the 2020 presidential nomination.
All major Democratic candidates want to reverse Trump administration policies such as cutting taxes on businesses and the wealthy and trying to kill the Affordable Care Act. But there are two distinctly different approaches among Democrats for (re)building America’s middle class.
Senators Elizabeth Warren and Bernie Sanders want to transfer money from the 1% to the masses through new taxes on corporate profits, financial transactions and personal fortunes that would fund huge new benefit programs. They’re willing to tear down existing institutions, such as private health insurance and the current student-loan system, and replace them with government-run programs they claim would be better.
Former Vice President Joe Biden favors incremental changes that would cost far less and generally leave existing institutions in place. He wants to fix what’s broken instead of tearing it all down and starting over. Biden even claims some of his competitors’ plans would harm the middle class by eliminating generous health coverage unions have negotiated and Affordable Care Act insurance that covers some 12 million people. South Bend Indiana Mayor Pete Buttigieg, running a competitive fourth place in the race, generally aligns with Biden.
Political implausibility of Medicare for all
Warren and Sanders risk going too far. Biden and Buttigieg risk not going far enough. For now, the Biden approach seems to have the advantage, because it would cost far less, require fewer new taxes, generate less uncertainty and confusion, and be less disruptive if some of the policies actually became law.
Health care illustrates the defining difference between the Warren-Sanders leftists and the Bidenesque centrists. Warren and Sanders want to replace all private health insurance with Medicare for all, a single government program that would cover everybody. They argue such a single-payer program would be more efficient than the patchwork system we have now, and they may be right. But they glide over the transition to Medicare for all, which would be rocky at best and undoubtedly leave some Americans worse off, making the whole concept politically implausible.
Part of Warren’s plan to pay for Medicare is a new tax on employers similar to what they pay now for employee health care. Warren argues this leaves the middle class off the hook. But the middle class could end up bearing the cost indirectly and end up worse off, according to Douglas Holtz-Eakin of the right-leaning American Action Forum. “If employers have to make a Medicare contribution for every employee, they will turn around and reduce wages to offset that cost,” he writes. Companies might even reduce wages and employment levels if the tax to fund Medicare for all is based on head count or payroll.
Fewer risks for the middle class
Warren and Sanders both say wages ought to rise if employers no longer have to pay for ever-rising insurance as part of employee compensation. But that’s theoretical, and unintended consequences almost always accompany big changes in social-welfare programs. Some economists say a broader funding source, such as a value-added tax on products most people buy, would be a more reliable way to fund Medicare for all, with less chance of the plan backfiring.
Biden’s plan carriers fewer risks for the middle class, because it would change less and require fewer tax hikes. Biden would keep the ACA and the private insurance system in place, while adding a new public insurance plan similar to Medicare for people who can’t get good coverage anywhere else. It would cost the government about 96% less than Medicare for all, making it far easier to finance. Biden would pay for it by repealing the 2017 Trump tax cut for top earners, and raising the tax rate on capital gains. There’s far less chance of such tax hikes hitting the middle class. The Buttigieg plan is similar.
There’s a similar divergence between the Warren left and the Biden center on climate policy, education reform and other issues. Warren pushes bold new plans that would be expensive and disruptive. Biden backs moderate change with more predictable consequences. A verbal war between Warren and Biden is escalating, with each claiming they’re the one true champion of the middle class, while opposing candidates would harm ordinary Americans.
On the issues, voters are with Biden. In one recent poll, support for a Biden-style public health care option was 22 percentage points higher than support for Medicare for all. Among voters in four swing states that will help determine the winner in 2020—Michigan, Minnesota, Pennsylvania and Wisconsin—62% think Medicare for all is a bad idea while only 36% say it’s a good idea. Voters become less enthusiastic about big new government programs when they learn the scope of costs and tradeoffs.
But that doesn’t make Biden a shoo-in for the Democratic nomination. Warren is running a sharper campaign and raising more money. She’s also six years younger than Biden, and eight years younger than Sanders. While national polls tend to show Biden in the lead, Warren is ahead in the key early voting state of Iowa, with Buttigieg behind her in second place. And many voters haven’t chosen a candidate yet. That makes the fight for middle-class hearts and minds a crucial battle that’s just getting started.
Rick Newman is the author of four books, including “Rebounders: How Winners Pivot from Setback to Success.” Follow him on Twitter: @rickjnewman. Confidential tip line: email@example.com. Encrypted communication available. Click here to get Rick’s stories by email.