“Hardworking people are up against a small
group that holds far too much power. Not just in our economy. But also in our Democracy.” Elizabeth Warren likes to say she’s a champion of the little guy. But she recently announced a major policy
proposal that would provide more than a trillion dollars in aid that would disproportionately
benefit the relatively well off and well connected. “We are going to roll back student loan debt
for about 95% of students who have debt.” The idea is to eliminate debt up to
$50,000 for people with household incomes under $100,000. And more limited debt cancellation for households making between $100,000 and $250,000 a year. By her own estimates, the full plan, which
also includes funds for Pell Grants and historically black colleges, would cost about $1.25 trillion. “This is about opportunity for everyone.” But the nature of college attendance and student
loans means that Warren’s loan forgiveness plan is actually a massive giveaway to the
relatively well-off. Only about a third of people over 25 have
a college degree, making them a comparatively elite group, whose elite status is reinforced
by, among other things, the connections they make while at college. College graduates earn about $1 million more
during their lifetimes than non-college graduates, according to a Georgetown University study. A separate study from Pew found college graduates
typically earn about $17,500 more annually than people who only had high school degrees. College graduates aren’t, for the most part,
super rich. But generally speaking, they are far more
comfortable than the majority who lack such degrees. And while many of the people who would benefit
from the plan currently have modest incomes, that’s partly because many of them are young people with relatively high future earnings potential. This is a plan that would spend taxpayer money
to benefit them. Warren’s defenders might respond that it’s still a downward transfer, since the whole thing will be paid for by a new tax on the super wealthy. There are, however, a few problems with using
a wealth tax as a financing mechanism. The first is that the tax might not be constitutional. Even if it is, another problem is that it’s
likely to raise far less money than projected. That’s why most countries that have tried
wealth taxes over the last two decades have abandoned them. The third, as the The Washington Examiner’s
Philip Klein points out that, is that Warren has also suggested that this same wealth tax could be used to help pay for a whole slew of other progressive policy ideas. Those include Medicare for All, the Green
New Deal, and subsidized child care, which, all together, would cost tens of trillions
of dollars—far more than even the most generous wealth tax would raise. “I’m tired of a Washington that works for
the rich and the powerful. I want a Washington that works for the rest
of America. That’s why I’m in this fight.” Ultimately, what Warren wants to do is tax
the wealthy to help the merely well off, rather than prioritize programs that help the truly needy. Warren isn’t helping the little guy—she’s
helping the folks already on top stay that way.