Hillary Clintons MiddleClass Tax Pledge Divides Democrats
Among the various policy ideas and position papers put out by Hillary Clinton so far in the Democratic primary, one stands out for its bumper-sticker simplicity If your family makes less than 250,000 a year, your taxes won't go up. It's a line Clinton has repeatedly emphasized in the last week and a half in places as varied as a dusty agricultural center in Ames, Iowa a rally in Memphis and a Democratic meeting in South Carolina. "I was actually the only one on that debate stage who will commit to raising your wages, and not your taxes," she said last Tuesday at a campaign event in Dallas. "I don't see how you can be serious about raising working and middle-class families' incomes if you also want to slap new taxes on themno matter what the taxes will pay for.", , But behind that simple promise is a roiling debate within Democratic circles about the future of the party's domestic agenda. The no-new-taxes pledge is emblematic of the broader concerns about a Clinton presidency raised by the progressive side of the party. Critics say it is a crafty political move that would limit the ambition of proposals on everything from expanding Social Security to healthcare reform. It reinforces a long-running Republican argument that some would prefer to defeat head on. And, to put it simply, it makes it hard to pay for things Democrats want. Read More Clinton and Sanders Offer Competing Visions of Health Care, At the heart of the debate, critics of Clinton's pledge say, is how committed the Democratic Party will be to a progressive agenda in the coming years. "There are situations where the middle class would clearly benefit by paying for government program rather than the private sector," said Jim Dean, the chair of Democracy for America and brother of 2004 presidential candidate Howard Dean. "As Democrats, we can't get into this discussion of, I'm not going to raise taxes, and the others are tax-and-spend liberals.'", Clinton's campaign counters that she'd still be able to pay for her ambitious domestic policy proposals by raising taxes on the wealthy. And they reject the idea that it's a political move, arguing that the pledge fits squarely within her campaign's objective of raising take-home pay for the middle class, a goal that has guided many of her major policy announcements, from debt-free public college to new middle-class tax credits. "Given rising income inequality, it makes sense now more than ever to ask the wealthiest Americans to pay their fair share rather than reduce the take-home pay of middle-class workers," said Brian Fallon, Clinton's press secretary. "Hillary Clinton's planwhich calls for major new investments in higher education, infrastructure, and universal pre-Kproves it is completely possible to propose bold, ambitious ideas and pay for them without resorting to tax hikes on working families.", Clinton has also proposed two major middle class tax cuts in the past week, including one on Friday for an individual credit on health care costs valued at up to 2,500, and a credit for families of up to 5,000. On Sunday she called for a 6,000 tax credit for families to cover caregiving costs. , "You deserve a raise, not a tax increase, and I'm not going to stand for that," Clinton said in Memphis on Friday. Read More Clinton Calls for Middle Class Tax Cuts, For Clinton, the pledge has been more than a guiding fiscal policy. It has been a wedge issue in the Democratic primary, and her campaign has used it in the past week to repeatedly attack Sanders for endorsing policies that they say would harm the middle class. Clinton has repeated her line on the stump about not raising taxes, and her campaign has pointedly said Sanders' plan would hurt middle class incomes without providing the broad benefits the Vermont Senator claims. , Sanders has struck back, with his aides accusing Clinton of taking a Republican's approach to economic problems and calling Clinton's criticism attack a "false attack." , Clinton is out of step with the Democratic mainstream, Sanders' aides say. , "You have a candidate who claims to be a progressive and is essentially laying out an approach to problems that is a Republican approach," said Jeff Weaver, Sanders' campaign manager. "It's an instinctive move back to the corporate centrism that the Democratic rank-and-file has disavowed.", More than half a dozen economists told TIME that while Clinton's red line may be good politics in a general election, it is misguided policy that would limit her ability to work with Congress to enact a domestic agenda. They say that Clinton's 250,000-threshold constrains her from proposing progressive items that might require broad tax increases and give her an arbitrary obstacle to negotiating a smart tax policy. , "From the perspective of the progressive policies we actually neednot to mention the pressures on the fiscal budget in coming yearsit's a serious mistake to sign up to these thresholds as if they're etched in stone," said Jared Bernstein, chief economist for Vice President Joe Biden from 2009 to 2011. , "It's not conceptually very different from Republicans who say they agree to the Grover Norquist pledge, I will never raise taxes on anybody,'" said Roberton Williams, fellow at the Tax Policy Center, referring to the conservative activist who has pushed Republican lawmakers to sign a no-tax pledge. "Clinton just adds the clause on the the middle class.'", At least one economist from a conservative outlet also argued that the pledge would make it harder to reduce the deficit. "As a long-run policy, I don't think it's viable for our country to say that we're not going to raise taxes on people making less than 250,000," said Alan Viard, an economist with the American Enterprise Institute. A Clinton aide disagreed, saying it was politically unrealistic to expect Congress to enact to any broad tax hike on the middle class, adding that in practical terms, Clinton's pledge does not close off any options if she wins the White House. Clinton's ambitious progressive agenda can be paid for without targeting working families, the aide said. The debate carries with it echoes of a seminal moment in recent domestic politics George H.W. Bush's vow not to raise any taxes at the 1988 Republican convention. When Bush broke that pledge to broker a deal with congressional Democrats, it arguably cost him his re-election, with Republicans bashing him for raising taxes and Clinton's husband, then the Arkansas Governor, using it to undermine his trustworthiness. Read More What to Know About Clinton's Economic Proposals, During the 2008 Democratic primary, then-Sens. Barack Obama and Clinton both pledged not to raise taxes on families earning under 250,000, a promise that the Obama Administration has largely upheld in his seven years in office which has shaped much of his policy. The Administration has repeatedly worked around the 250,000 cutoff, and many of his proposals have come right up to the line he drew in his 2008 campaign. As part of the Affordable Care Act, for example, families earning over 250,000 began paying 0.9 more on their wages. A 2013 Obama fiscal deal limited personal exemptions for married couples earning over 300,000. Overall, the average federal tax paid by the top 1 of households has gone up more than 6 percentage points to an estimated 33.8, according to the Tax Policy Center. Two former Obama Administration officials who are now helping Clinton's campaign coauthored a paper after Obama's reelection in 2012 that advocated for a slight increase in taxes on families making 100,000 to 250,000 per yearwell within the tax bracket Clinton has said she would protect. John Podesta, now Clinton's campaign chair and formerly a counselor to President Obama, and Neera Tanden, an informal advisor to the Clinton campaign and formerly a senior Obama advisor, were among eleven co-authors of the December 2012 paper. The paper called for a 0.3 increase on families in the 100,000 to 250,000 range. Read More Clinton to Propose Tax Credit for Caregivers, Tanden, who is the president of the Center for American Progress, explained that the deficit was larger in 2012 and would have required a different fiscal approach. She now supports Clinton's pledge, saying that the middle class has been squeezed even further in the Obama years. A commitment not to raise taxes on middle earners makes more sense than ever, Tanden said. "The wealthy have so much more wealth than they've ever had and the middle class is struggling more than it has," Tanden said. "So why we would think we would have to tax middle class folks to get enough income doesn't make sense to me.", A Clinton aide declined to comment on Podesta's support of the policy three years ago. The no-new taxes debate between Clinton and Sanders reached a boiling point in the days after the Democratic debate last Saturday. , Sanders supports a huge and expensive single-payer healthcare plan that would guarantee healthcare to all Americans, in the style of Canada and European countries. He hasn't announced a new single-payer healthcare plan so far this campaign, but a 2013 plan he introduced in the Senate called for a 2.2 payroll tax increase and a tax on employers of 6.7 to raise the trillions of dollars the program would cost. , Clinton's proposals also come with a big price tag. She has already proposed a 350-billion plan to make public college debt-free, and a campaign aide said that Clinton will in the coming weeks announce a new paid family leave program that will likely cost in the range of 400 billion. She has not announced an infrastructure program, but it is likely to cost in the hundreds of billions of dollars as well, a campaign aide said. , The campaign say that those big-ticket items and others will be easily be paid for by tax increases on the wealthy, and her policy shop is rolling out a more detailed tax plan in the next few weeks. Even as Clinton's rivals and some progressives compare her to a Republican candidate and point to deep ideological differences, the frontrunner has emphasized her closeness to the other Democrats. Americans "need a raise, not a tax increase," Clinton said to cheers at a barbecue in Iowa the day after the debate, knocking her Democratic rivals. But, Clinton said, "Our differences pale compared to what we believe, what we stand for.", Read More How Clinton Is Targeting Republican Candidates,