Hillary Clinton’s no-tax pledge is Republican policy sprinkled with Third Way politics

Saturday night’s Democratic debate included a brief foray into what is arguably the most substantive policy debate in American politics. Too bad practically no one was watching.

When asked about her plan to make college more affordable, Hillary Clinton briefly explained her plan before stopping to take a dig at Bernie Sanders from the right:

But I want to quickly say, one of the areas that Senator Sanders touched on in talking about education and certainly talking about health care is his commitment to really changing the systems. Free college, a single payer system for health, and it’s been estimated were looking at 18 to $20 trillion, about a 40 percent in the federal budget.

That “18 to $20 trillion” figure, originally attached to Sanders’s policy agenda by the Wall Street Journal, has been shown to be disingenuous at best and bogus at worst. The figure comes from estimating the cost of free college and single-payer healthcare (which accounts for 15 of the $18 trillion) over a ten-year period while deliberately ignoring the money Americans would no longer have to spend on the current versions of those things. Healthcare is already on track to cost the American people and their government $42 trillion over the next ten years. Replacing that $42 trillion system with a different $15 trillion system may include a big line item in the federal budget, but college freshmen know better than to end their analysis there and conclude that the line item, by itself, is the net cost of the program overall.

Sanders was quick to point this out in response to Clinton’s attack, noting that at the end of the day “the middle class will be paying substantially less for health care on the single payer than on Secretary Clinton’s proposal.”

The real sticking point here isn’t the budgetary stresses of single payer in and of itself, though. The real point of diversion for Sanders and Clinton is over the more general question of whether taxes are generally good, or whether they’re generally bad. Moderator David Muir highlighted this divide when he moved on to the next question, asking Clinton if she would repeat her pledge from 2008 to not raise taxes on families making less than $250,000 per year.

She did.

That’s a winning strategy for the general election — people don’t like giving the government money — but it will severely limit her ability to do much in office by way of social programs, which cost money. And Sanders was quick to point this out:

FDR, screenshot via YouTube

FDR, tax raiser (screenshot via YouTube)

Now, when Secretary Clinton says, “I’m not going raise taxes on the middle class,” let me tell you what she is saying. She is disagreeing with FDR on Social Security, LBJ on Medicare and with the vast majority of progressive Democrats in the House and the Senate, who today are fighting to end the disgrace of the United States being the only major country on Earth that doesn’t provide paid family and medical leave.

What the legislation is is $1.61 a week. Now, you can say that’s a tax on the middle class. It will provide three months paid family and medical leave for the working families of this country. I think, Secretary Clinton, $1.61 a week is a pretty good investment.

Clinton’s no-tax pledge is Republican “starve the beast” policy infused with Third Way politics. It doubles down on the premise that taxes are bad, and insists that they should only ever be raised on other people — no matter what higher taxes on the broader tax base could pay for. By promising to only raise taxes on incomes in the top one or two percent, Clinton is writing off most potential new revenue, and is therefore writing off the possibility of any semblance of a progressive economic agenda. However, by only foreclosing on the possibility of tax increases for 98 percent of Americans, as opposed to the full 100, she feels safe calling herself a progressive because Fox News will call her a class warrior. Sanders, rightly, thinks this claim is ridiculous.

It’s ridiculous because Clinton’s pledge boxes her into policy corners that leave her with no choice but to use creative and regressive tweaks on otherwise good ideas in order to keep her price tags down. Take, for example, her proposed tax credit for caregivers. Clinton’s policy would provide a tax credit of up to $6,000 for families that are taking care of an elderly family member. However, the only way to keep the budgetary costs of such a program down — $1 billion per year, by all available estimates — is by making the credit non-refundable (you can only claim it against existing tax liability, as opposed to a refundable credit, which allows you to have negative liability). Making the credit non-refundable may make it less expensive, but it also makes it useless. As Demos analyst Matt Bruenig explained:

The basic problem with having a nonrefundable caregiving credit is that you can only claim the credit if your family’s income is sufficiently high. This means that poor and working class families will be prevented from claiming the credit: their tax liability simply isn’t high enough to grab much, if any, of the $6,000 credit. This is the basic problem with all nonrefundable credits, including Marco Rubio’s child tax credit, which also would miss the poor and working class.

The less basic problem with having such a credit is that it’s nonresponsive to the fact that missing work to care for elderly relatives makes your income lower. When done well, caregiving assistance benefits are specifically designed to help families who have seen their labor market earnings collapse because one of the families’ workers has had to leave the labor force to care for a loved one. A nonrefundable credit does not do that because having your labor market earnings collapse causes you to be ineligible for the benefit. Specifically, becoming a caregiver makes your family’s income much lower and because your family’s income is much lower, you are much less likely to have enough tax liability to claim the nonrefundable caregiving credit.

The only families that could reliably claim this kind of caregiving credit are those whose incomes are so high that, even when one of their workers drops out of the labor force to be a caregiver, they still have a high enough income to claim the credit. Thus, a nonrefundable caregiving credit is even more rigged to favor high-earning families than normal nonrefundable tax credits are.

Were Clinton not hamstrung by her no-tax pledge, she, like Sanders, could propose assertive, progressive policies that paid for themselves with modest, progressive tax increases. Sure, a family making $50,000 per year might send more money to the IRS, but they’d send less, if anything, to their health insurance company and their kid’s college, among other money vacuums. However, by sticking to the Third Way principle that new taxes are bad, pretty much regardless as to what they pay for, Clinton is, in her words, taking a backseat to Sanders when it comes to championing progressive values. Instead, she’s borrowing her economic agenda (and her foreign policy consultants, but that’s a subject for another post) from Marco Rubio.

And giving Sanders a chance to do his best FDR impression:

Taxes are good when they pay for good things. That there’s only one candidate in either party willing to say so is reason enough for that candidate to stay in this race for as long as they can.

Jon Green graduated from Kenyon College with a B.A. in Political Science and high honors in Political Cognition. He worked as a field organizer for Congressman Tom Perriello in 2010 and a Regional Field Director for President Obama's re-election campaign in 2012. Jon writes on a number of topics, but pays especially close attention to elections, religion and political cognition. Follow him on Twitter at @_Jon_Green, and on Google+. .

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