Barack Obama had an even more consequential presidency. He halted the worst financial crisis since the Great Depression.
He did so in part by signing a stimulus bill full of spending on education, wind energy and other programs with lasting benefits.
He also put in place new regulations for Wall Street and extended health insurance to almost 20 million people.
Yet for all that both men accomplished, neither changed the fundamental direction of the U.S. economy.
By the end of Obama’s eight years, gross domestic product growth was still disappointing. Middle-class and poor families were still receiving less than their fair share of that growth. Median household wealth was lower than it had been two decades earlier. In the most shocking sign of struggle, average life expectancy has declined in recent years. Rich Americans, on the other hand, continue to thrive, amassing Gilded Age-level concentrations of wealth. The resulting frustration helped make possible the rise of Donald Trump.
This history suggests that the Democratic Party’s economic agenda needs to become more ambitious. Modest changes in the top marginal tax rate or in middle-class tax credits aren’t enough. The country needs an economic policy that measures up to the scale of our challenges.
So far, only one candidate among the 2020 contenders has an agenda with this level of ambition: Elizabeth Warren. Her platform aims to reform American capitalism so that it once again works well for most American families. The recent tradition in Democratic politics has been different. It has been largely to accept that big companies are going to get bigger and do everything they can to hold down workers’ pay. The government will then try to improve things through income taxes and benefit programs.
Warren is trying to treat not just the symptoms but the underlying disease. She has proposed a universal child-care and pre-K program that echoes the universal high school movement of the early 20th century. She favors not only a tougher approach to future mergers, as many Democrats do, but also a breakup of Facebook and other tech companies that have come to resemble monopolies. She wants to require corporations to include worker representatives on their boards — to end the era of “shareholder-value maximization,” in which companies care almost exclusively about the interests of their shareholders, often at the expense of their workers, their communities and their country.
Warren was also the first high-profile politician to call for an annual wealth tax, on fortunes greater than $50 million. This tax is the logical extension of research by economist Thomas Piketty and others, which has shown how extreme wealth perpetuates itself. Historically, such concentration has often led to the decline of powerful societies. Warren, unlike some Democrats, comfortably explains that she is not socialist. She is a capitalist and, like Franklin D. Roosevelt, is trying to save American capitalism from its own excesses.
“Sometimes, bigger ideas are more possible to accomplish,” Warren told me during a recent conversation about the economy at her Washington apartment. “Because you can inspire people.”
Before I go further, I want to offer two caveats. One, Warren’s grasp of the country’s problems does not necessarily mean that she should be the Democratic nominee for president. Politics is not an expertise competition. The nominee should be, and most likely will be, the candidate who best inspires voters. Maybe that will be Warren, or maybe it will be someone else.
Two, I don’t agree with all of Warren’s proposals. Her plan to break up the big technology companies seems too uniform, for example. Her plan to put workers on corporate boards may not be as practical as, say, a big federal push to increase workers’ bargaining power.
But whatever my — or your — specific objections, Warren is identifying the right problems and offering a coherent vision for a post-Obama Democratic agenda. “Clinton and Obama focused on boosting growth and redistribution,” Gabriel Zucman, a University of California, Berkeley, economist who has advised Warren, says. “Warren is focusing on how pretax income can be made more equal.”
She isn’t simply proposing larger versions of Obama’s (worthy) tax cut for middle-class and poor families, as several 2020 candidates have. Her plans are also much more detailed than those of Bernie Sanders (who, to his credit, pushed the party to become bolder). And she has avoided getting trapped in the health insurance wonkery that too often dominates progressive policy debates. The future of the republic does not actually depend on the relative sizes of Medicare, Medicaid and the private market.
It may, however, depend on whether Americans’ incomes and living standards are consistently rising.
In the months to come, I hope that every other 2020 candidate offers answers to the questions that Warren has taken on: How can corporate America again help create a prosperous, growing middle class, as it did from the 1940s through the 1970s? How can the power of giant corporations — over consumers, workers and smaller businesses — be constrained? How can the radical levels of wealth inequality be reversed? How can the yawning opportunity gaps for children of different backgrounds be reduced? How can the next president make changes that will endure, rather than be undone by a future president, as both Obama’s and Clinton’s top-end tax increases were?
It is not surprising that Warren has jumped out to an early lead in the ideas primary. The main theme in her life, both professional and personal, has been economic opportunity. Her father was a carpet salesman at Montgomery Ward in Oklahoma City in the 1960s, until he had a heart attack. He had to switch to lower-paying work as a janitor, and her mother got a minimum-wage job, answering phones at Sears.
Warren’s three older brothers all went into the military. “That was their chance to make it into the middle class,” she told me. Warren went to college and became a teacher, until the school chose not to renew her contract rather than give her maternity leave. She then went to a public law school — for $450 per semester — and became a bankruptcy expert, early on at the University of Houston and ultimately at Harvard.
“The way I see it is, I have lived opportunity,” she said. “I’ve lived the kind of opportunity that comes from a government that invests a little in its kids, a government that tries to keep the playing field a little bit level for folks like my family.”
Her theory of political change has been shaped by two experiences — one failure and one success. As a professor in the 1990s, she served on a federal bankruptcy commission and fought against legal changes that favored banks over borrowers. The fight went on for a decade, and Warren’s side lost. The defeat left her believing that a technocratic legislative debate — “the inside game,” as she calls it — almost always favors industry lobbyists.
The success came during the Obama administration, when she pushed for an agency to protect consumers against banks’ misbehavior. The idea was new. It was also simple enough for voters to understand. She hawked it on “The Daily Show With Jon Stewart.” This time, Warren’s side won. Trump has since constrained the agency, but it still exists and is still doing good.
Those experiences help explain why Warren thinks that bigger changes are sometimes more feasible than modest ones. Bigger changes — tangible, new ideas — can overcome voter cynicism. “A lot of people don’t believe you can actually make any change on economics,” Warren says. I would add another, even larger, example to the pattern: Obamacare. Trump has undone many of Obama’s more modest changes, on taxes, climate and other areas. But Obama’s grandest accomplishment endures. For all its flaws, it proved too popular to kill.
Warren’s agenda is a series of such bold ideas. She isn’t pushing for a byzantine system of tax credits for child care. She wants a universal program of pre-K and child care, administered locally, with higher pay for teachers and affordable tuition for families.
And to anyone who asks, “But how will you pay for that?” Warren has an answer. Her wealth tax would raise more than $250 billion a year, about four times the estimated cost of universal child care. She is, in her populist way, the fiscal conservative in the campaign.
The wealth-tax proposal has shifted the national debate more than any other 2020 proposal so far. It has made people realize the most middle-class families pay an annual tax on their largest asset — called the property tax. But the wealthy do not, because financial holdings aren’t taxed the way real estate is. Some center-left economists have criticized a wealth tax as too disruptive, potentially threatening some family-owned businesses, but many others have praised it. “This type of wealth tax,” Gene Sperling, the former top economic adviser to Obama and both Clintons, has said, “is essential.”
Perhaps the biggest reason to be hopeful about Warren’s larger agenda — separate from her fate as a candidate — is that it’s popular. Americans are deeply divided on social issues like abortion, religion and, to some extent, immigration and guns. But a clear majority favors a wealth tax. A clear majority favors universal child care. A clear majority favors aggressive government action to check corporate power and create decent-paying jobs. On economic issues, as Warren says, “The progressive agenda is America’s agenda.”
To other 2020 candidates, I’d say: Be ambitious. Tell the country how you would end the new Gilded Age and improve people’s lives. Presidential campaigns are the time for big ideas.