Elizabeth Warren

Elizabeth Warren's Plans Don't Add Up

The Warren worldview of ill-founded economic pessimism is both bloodless and moralizing.

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At the heart of Elizabeth Warren's campaign for president—and of her entire career as a politician and public intellectual, really—are two simple ideas.

The first is that the economy is fundamentally broken. This downer of an idea was present in the speech that launched her presidential campaign on February 9, 2019, in which she declared that "millions and millions of American families are also struggling to survive in a system that has been rigged by the wealthy and the well-connected" and in which she insisted that the only response was to fight for "big structural change."

It was present at the first Democratic primary debate, in which she inveighed against corporate profits and monopolistic businesses and corrupt lawmakers who have "made this country work much better for those who can make giant contributions, made it work better for those who hire armies of lobbyists and lawyers, and not made it work for the people," and in which she scored the opening night's standout moment by offering a full-throated argument for the elimination of private health insurance.

It was present in the 2007 essay that imagined what would eventually become the Consumer Financial Protection Bureau, a federal agency premised on the notion that American families were being "steered into overpriced credit products, risky subprime mortgages, and misleading insurance plans" and that many of these products needed to be regulated as pervasive dangers to the American family.

It was present in the very title of her breakout 2004 book, The Two-Income Trap: Why Middle-Class Mothers and Fathers Are Going Broke, which promoted a systemic view of America's economic fragility, driven by data that Warren had compiled during her career as an academic bankruptcy researcher.

It was explicit in her campaign's July broadside, "The Coming Economic Crash—And How to Stop It," which cast Warren as a prophet of economic collapse and proposed an array of economic policies, from a $15 minimum wage to enforcing restrictions on certain bank loans, that she argued could stave off the crisis.

And it is present, in spirit if not in word, in each and every one of the slew of white papers and policy proposals that have poured forth from Warren's campaign as if she were running a think tank rather than a presidential bid.

In the space of just a few months this year, Warren released plans for everything from ending drilling on public lands to breaking up Facebook and Amazon to imposing a new industrial policy of "economic patriotism." She wants to spend $500 billion on affordable housing and trillions more to cancel most student debt, make public college tuition free, and offer subsidies for child care. And she has proposed paying for these costly programs with wealth taxes designed not only to offset the price tag of new government spending but to help reduce economic inequality by shrinking large stores of wealth.

This brings us to Elizabeth Warren's second big idea: The economy is fundamentally fixable—but only if Elizabeth Warren is manipulating all the levers of power.

Warren's penchant for wonky policy detail has defined her candidacy: "Elizabeth Warren has a plan for that" has become a rallying cry and a slogan, one her fans have plastered across an array of T-shirts and campaign signs. Warren has happily embraced this persona, joking with crowds that her focus on the details of federal agencies would turn them all into nerds.

Warren is running as a wonk populist, the sort of politician who could give a rousing speech at a picket line in the morning, then stroll into a conference room and offer detailed comments on a new regulatory scheme in the afternoon. Her campaign is an attempt to marry rabble-rousing economic grievance to high-class technocratic solutionism.

The Warren worldview is thus both bloodless and moralizing. It is also dangerous, combining self-righteous certainty about the perils of the economy with dubious data and an instinct for bureaucratic paternalism. Warren wants the federal government to be the American economy's hall monitor, telling individuals and companies what they can and can't sell or buy and making some of the nation's most successful businesses answer to her demands.

It seems to be working. During the first six months of 2019, this strategy vaulted Warren into the top tier of Democratic primary contenders, helping her raise more than $19 million during the year's second quarter and placing her among the top three or four candidates in the party's crowded field. Focus groups and political reporting have consistently found that Democratic voters are warming not only to the substance of Warren's ideas but to the very fact that she has them.

Yet Warren's wonkery and her populist fury are both based on myths and misdirection, often perpetuated by Warren herself. Although she styles herself as a data-driven champion of the little guy, she has run a campaign based on a dismal representation of the U.S. economy that fails to account for factors that complicate her story. And although she has received kudos for the volume and specificity of her plans, Warren has a history of pushing misleading research and cherry-picked data designed to support politicized conclusions.

So, yes, it's true that Elizabeth Warren has a lot of plans. The problem is that they don't all add up.

To understand the deep roots of Elizabeth Warren's economic pessimism, you have to know a little about her most well-known book, The Two-Income Trap. And to understand The Two-Income Trap, you have to understand Warren's early work as a bankruptcy researcher.

Warren first rose to prominence as the co-author of a pioneering study of consumer bankruptcy, which was published in book form in 1989 under the title As We Forgive Our Debtors: Bankruptcy and Consumer Credit in America. Warren and her co-authors based the book on a trove of court data from about 1,500 bankruptcy cases in Pennsylvania, Illinois, and Texas during 1981.

The book made a splash, partly because of its reliance on real-world case studies and partly because of its stark language. "Bankrupt," reads the book's opening line. "The single word is a body blow, like 'Dead.'" Warren was an academic, working with other academics to code and statistically analyze a trove of unique data. But she wasn't just poring through variables and spreadsheet entries. She was telling a story in order to make an argument about politics and policy.

The story was that rapacious credit card companies, rather than consumer overspending, were primarily responsible for a run-up in consumer debt and the resulting sense that household budgets had grown more precarious. The book's authors saw bankruptcy in broadly sympathetic terms, as a financial safety net for struggling families. In the years that followed, Warren would go on to become one of the nation's most prominent advocates of making bankruptcy easier, more lenient, and more accessible.

But that story had some notable problems. Among others, it was based on cases from 1981, a recession year when consumers would have looked worse off than usual. It was released years later, after a significant reform to the bankruptcy code in 1984 rendered its picture of American bankruptcy somewhat out of date. And it wasn't clear whether data from the three selected states could be generalized to the population as a whole.

Within the world of academic bankruptcy research, the book generated controversy. In the 1990–91 edition of the Rutgers Law Review, Rutgers law professor Philip Shuchman, a star of the field who had initially recommended a $110,000 grant to help fund Warren's research, wrote a scathing and brutal assessment of the book, calling into question the authors' methods, data, and scholarly ethics. Shuchman, who died in 2004, accused Warren et al. of making "serious errors" and refusing to produce raw data that would allow other scholars to check their conclusions. His review said the research exhibited an "anti-scientific bias" and accused the authors of engaging in "repeated instances of scientific misconduct."

The scientific misconduct charge was investigated and dismissed by the National Science Foundation, which provided funding for the work. But the investigators noted that there remained "extreme differences" between the feuding researchers "regarding the interpretation of data." Warren and her co-authors were given the opportunity to respond to Shuchman but never did.

In retrospect, it's clear that this research played a significant role in the formation of Warren's staunchly populist worldview and in her conclusion that the only solution was substantial policy reform. Bankruptcy was a system governed by legal rules, rules that in her view had been rigged to empower one group—financial elites—at the expense of others. The rules could be changed if politicians and bureaucrats were sufficiently committed. But convincing people that change was necessary meant telling a clear and simple story, one that captured the raw feeling of what was happening to ordinary people. That sometimes meant ignoring nuances and complications that made the story less compelling.

Earlier this year, Warren was questioned about the controversy surrounding Shuchman's review by The Washington Post. She insisted that "the data are rock solid" but did not address specific criticisms: "There's just nothing else to say." She claimed she couldn't remember why she never penned a response to Shuchman's review. According to the Post, she had pushed aggressively for a retraction. The Rutgers Law Review never withdrew the article.

In the ensuing years, Warren not only stood by her story of predatory financiers exploiting sympathetic middle-class families; she amplified it—and sold it to an eager public.

The Two-Income Trap, which Warren co-authored with her daughter Amelia Warren Tyagi, a business consultant who has served as chair of the liberal think tank Demos, is largely an explication of the worldview underlying her bankruptcy research. Even more than As We Forgive Our Debtors, the book was targeted squarely at a popular audience, free of academic jargon and full of easy-to-digest stories about middle-class struggle.

By the time the book was published, Warren had risen through the academic ranks to become a Harvard law professor. She had also served as an adviser to the National Bankruptcy Review Commission.

Once again, Warren drew on her bankruptcy research to argue that the middle class had been given a raw deal. The number of households filing for bankruptcy had shot up dramatically, she said, and it wasn't because they were spending too much. Instead, the increasingly high cost of housing, driven heavily by competition for access to good schools, and the pile-up of medical debt were driving families into dire straits.

These effects were compounded by the movement of women into the workforce. Where stay-at-home wives had once served as a safety net—the earners of last resort should a breadwinner husband lose his job—the rise of the working mother had increased financial risk for two-earner families. Using comparisons between a hypothetical 1970s single-earner household making about $39,000 in inflation-adjusted dollars and a hypothetical 2000s dual-earner household making about $68,000, she purported to show that middle-class families weren't really any better off than they were when men were the primary earners. "Today's dual income families have less discretionary income—and less money to put away for a rainy day—than the single-income family of a generation ago," she wrote.

The book and its ideas served as a kind of manifesto for Warrenism in both substance and style. It was accessible, folksy, pessimistic, and wonky, and in the years since its publication it has, if anything, grown in influence, establishing Warren as a policy thinker ahead of her time. In many ways it does feel prescient, not only in its preview of a politics focused on middle-class malaise but in its warnings about the systemic economic risks posed by subprime mortgages granted to borrowers with limited ability to pay.

Yet as with her previous work, the book's findings were marked by controversy and unanswered questions about the soundness of her methodology. In particular, Warren's notion that housing prices have been pushed upward by school competition doesn't fully stand up to scrutiny.

Although research has found that school quality does impact housing prices, the effect is fairly modest. A 2006 study in the Quarterly Journal of Economics found a 2.5 percent increase in home prices for every 5 percent increase in test scores. Additionally, Warren's comparison budgets aren't entirely realistic. She adds preschool, for example, to the list of expenses for the modern two-income family (thus detracting from the wages brought in by the second earner)—but that is a cost that is incurred for only a few years. Although the book notes that the price of food and clothing declined between the 1970s and the 2000s, the budget comparison lumps those purchases into a catchall category labeled "discretionary income." This makes it difficult to see where the cost of living has gone down.

And then there's the role of taxes. In the book's hypothetical comparison budgets, Warren presents fixed dollar amounts for every type of expenditure—mortgage, health insurance, car payments, discretionary spending, etc.—except one: taxes. Instead, taxes are presented as a percentage of household income—24 percent in the 1970s, 33 percent in the 2000s—which the book describes as a 35 percent change.

Yet as George Mason University law professor and consumer finance scholar Todd Zywicki has noted, the choice to render taxes only as a percentage of income has the effect of masking the total dollar value. Using Warren's own figures, Zywicki calculated that the tax increase—owing partly to the hypothetical family hitting a new tax bracket and partly to the imposition of additional state, local, and property taxes over time—was by far the largest factor affecting the modern family's budget. Warren's own numbers, in other words, showed that families had been strapped not by increased spending on homes or health insurance but by a bigger tax bill.

"The data is presented in a fashion that makes it very difficult for the reader to understand," Zywicki says. "It almost seems to be designed to mislead."

Zywicki is among Warren's most outspoken critics, and he has made this case—that Warren's own data do not show what she claims they do about the plight of the middle class—on multiple occasions over the span of more than a decade. Yet Warren has never responded directly to his arguments, he says, and Warren's campaign did not agree to an interview request for this story.

Warren's insistence on the prominent role of medical bills in bankruptcy cases has drawn even sharper criticism.

In The Two-Income Trap, Warren says that for families with children, the vast majority of bankruptcy filings are a result of just three factors: medical problems, job loss, and family breakup. The following year, Warren, still a Harvard professor, co-authored a Health Affairs study purporting to show that at least 46 percent of the nation's bankruptcies were a result of medical bills, a figure she subsequently updated to 62 percent. Her research claimed that medically induced bankruptcies had increased a shocking 23-fold since 1981.

These figures garnered major media headlines and became talking points during the debate over the health care law that passed in 2010. President Barack Obama warned that sky-high medical costs had forced many Americans to "live every day just one accident or illness away from bankruptcy."

But these numbers, too, relied on dubious methodology and misleadingly presented research. Warren broadly categorized bankruptcy filers as having a "major medical cause," even if they did not list medical issues as the cause of their bankruptcy, so long as they had incurred $1,000 in personal medical expenses in the two years prior to filing. The alleged dramatic uptick relied on a comparison between this broadly defined group and people who had explicitly described themselves as filing for medical reasons, a much narrower category.

In early 2018, a group of health economists from the Massachusetts Institute of Technology, Northwestern University, and the University of California, Santa Cruz published a study in The New England Journal of Medicine directly countering Warren's claims. In "Myth and Measurement—The Case of Medical Bankruptcies," the authors argued that her research suffered from a "basic statistical fallacy." Her paper's methodology, they wrote, "assumes that whenever a person who reports having substantial medical bills experiences a bankruptcy, the bankruptcy was caused by the medical debt. The fact that, according to a 2014 report from the Consumer Financial Protection Bureau, about 20% of Americans have substantial medical debt, yet in a given year less than 1% of Americans file for personal bankruptcy, suggests that this assumption is problematic." Using a more rigorous approach, they estimated that hospital bills cause only about 4 percent of bankruptcies—not nothing, but a far cry from the majority share that Warren's paper had estimated.

This was not an ideologically motivated attack on Warren's character or politics; it was an attempt by a group of widely respected health policy researchers to set the record straight on an important matter of fact. And it followed years of criticism of the initial study—criticism that had begun almost immediately with rebuttals in Health Affairs, the journal that published the initial work. Warren and her co-authors responded to early criticism with a letter defending themselves and noting that their critics had received funding from insurance industry sources who were opposed to universal coverage schemes, a tactic she has relied on more than once.

"In Elizabeth Warren's worldview, there are no good-faith disagreements with Elizabeth Warren," Zywicki says. "Anybody who doesn't agree with her is a shill."

The response by Warren and her co-authors was revealing. In one sense, they were engaged in a conventional academic dispute about interpreting bankruptcy data. But what they were really fighting about—what was really at stake—was public policy. Warren clearly believed that the value of her research was in the story it told and the way that story informed and influenced the real world of politics and public affairs.

Warren had already served as an adviser in the 1990s to the National Bankruptcy Review Commission, fighting a series of bankruptcy proposals that would eventually pass as the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. But in the years after her bankruptcy study's release, Warren would begin to explore more direct roles in the policymaking process.

In 2007, Warren wrote an essay for the influential liberal policy journal Democracy arguing that many consumer financial products, such as home loans, were dangerous. Titled "Unsafe at Any Rate"—a nod to Ralph Nader's bestselling 1960s book accusing auto manufacturers of malfeasance—the essay made a case that many financial products posed an active threat to American consumers and should be regulated accordingly. Analogizing home loans to toasters that could burst into flames at any moment, Warren called for "a new regulatory regime, and even a new regulatory body, to protect consumers who use credit cards, home mortgages, car loans, and a host of other products."

A few years later, Warren got her wish. In the aftermath of the 2007–08 financial crisis, Congress, then controlled by Democrats, passed the Dodd-Frank Wall Street Reform and Consumer Protection Act, which was billed as a direct response to the economic meltdown and an attempt to make sure it never happened again. A centerpiece of the bill was the creation of a new federal agency, the Consumer Financial Protection Bureau (CFPB), which was modeled on Warren's original proposal.

It is often difficult to determine how presidential hopefuls would govern, especially when, like Warren, they have no executive experience and only a few years of lawmaking experience. But the CFPB offers a glimpse of what a Warren presidency might look like in practice.

The bureau, as imagined by Warren, was first and foremost a paternalistic enterprise. It was premised on the notion that consumers did not and in some cases could not understand the financial services they relied on, and that only an army of unusually powerful government bureaucrats could save them from blundering into the tricks and traps set by lenders.

Those bureaucrats, meanwhile, would be heavily insulated from both presidential and congressional oversight. Housed within the Federal Reserve, the CFPB has its own funding stream and is thus removed from the congressional appropriations process. And instead of a bipartisan board of commissioners like those that govern comparable independent federal agencies—the Federal Trade Commission, for example—the CFPB was designed with a single agency head who could only be removed by the president for cause, such as neglect of duties or malfeasance.

This design was not just unaccountable. It was, critics said, unconstitutional. Because it vested authority in a single director who was insulated from oversight, it created a law enforcement body outside of the constitutional hierarchy; it was an unchecked superagency with the power to make law. In a series of legal cases, multiple federal courts have agreed, although the issue remains under dispute.

The goal of the structure, supporters said, was to remove the CFPB from the significant pressures that large financial institutions could exert on the regulatory process. The bureau had been created as a check on such financial institutions, the "moneyed interests" that Warren and others argued caused the financial crisis; those interests could not be allowed to capture their regulators.

Yet Warren herself has not been entirely immune from the pressures of wealthy interests: As a U.S. senator, she has pushed for the elimination of a tax on medical device makers (which have a heavy presence in her home state of Massachusetts) using language that closely mirrors industry talking points. And in the 1990s, as a law professor, Warren worked as a legal consultant for a variety of large corporations, helping them navigate bankruptcy proceedings. Among those corporations was Dow Chemical, which was being sued by women who claimed they had been made ill by the company's silicone breast implants. Warren's role, according to The Washington Post, was to help a company trying to limit its payments to the women.

The CFPB's mission, meanwhile, was far more expansive than its origin story might imply. From payday lenders to cash advance services, many of the financial products it was given power to regulate had little or nothing to do with the financial crisis. And while Warren pitched the agency as a purveyor of simple rules for a complex world, it would, in practice, end up specializing in inherently complex rules covering inherently complex products. Which is, itself, a central tenet of Warrenism: She believes every economic problem can be solved by changing the rules. Although she also favors new spending programs, her emphasis is on regulatory mechanisms, especially with regard to credit.

Yet by doing so, she "ends up defending America's path down the road to a more credit-centric economy," says Samuel Hammond, a policy analyst at the Niskanen Center, a Washington, D.C., think tank. "Instead of broad-based insurance programs, America did a lot of stuff through credit, making home mortgages artificially cheap."

But focusing on credit rules, Hammond says, merely entrenches that system and enhances the systemic complexity Warren claims to reject. Her approach results in "much more micromanaging, much more complex interaction effects….For the CFPB, complexity is basically the first word."

The Consumer Financial Protection Bureau is a powerful, roving agency, created under a flimsy pretense in the aftermath of an economic calamity, subject to minimal outside supervision, and dedicated to a mission that might best be described as unchecked Warrenism. In this sense, it is a reflection of Warren's own character as both a politician and a public intellectual: self-certain, superior, uninterested in engaging critics. So it was hardly a surprise that the initial expectation was that its first director would be none other than its intellectual brood mother, Elizabeth Warren.

It quickly became apparent, however, that Republican opposition in the Senate would stymie Warren's appointment. Instead, President Obama in 2010 made her assistant to the president and special advisor to the secretary of the treasury for the CFPB, tasking her with setting up the agency. In 2011, he made it clear that Warren still would not be nominated as director, and she stepped down from her White House role.

The CFPB was the culmination of decades of research and advocacy on Warren's part. She had imagined it, fought for its creation, and then, from her perch in the administration, ushered it into being. Now she was being shut out.

What looked like a moment of triumph had become a significant personal defeat. Warren's reputation as a liberal firebrand had rendered her so politically untenable, such a partisan lightning rod, that even Obama would not fight for her. By making herself anathema to the congressional GOP, she had lost the chance to carry out her agenda from a position of unusual power.

And yet there was a kind of victory as well, in the simple fact of the CFPB's creation. Warren would not be its leader—that role would eventually go to former Ohio Attorney General Richard Cordroy, who was given a recess appointment that caused its own controversy—but she had willed it into being and would continue to provide spiritual guidance. She had not achieved her own political ambitions, but on the policy question, she had triumphed.

In the years that followed, something strange happened: Warren, the icon of progressivism whose political brand had proven too toxic to move through the CFPB nomination process, became the object of a strange new respect from the right.

There had always been an undercurrent of social conservatism to Warren's politics. Although The Two-Income Trap was written from a position of nominal support for working women, it was, in some ways, a lament about mothers moving into the labor force and about the decline of the male breadwinner economic model. On occasion, Warren seemed alive to the deleterious effects of government subsidies, such as when she opposed government-funded day care, which she argued would "make financial life more difficult" for families with stay-at-home moms. And the book's best piece of advice—don't buy more house than you can afford—was fundamentally conservative. (It also conflicted somewhat with its thesis that consumer debt was not driven by irresponsible spending.)

Eventually conservatives, especially those whose focus tended toward family and culture, started to notice. In 2011, Christopher Caldwell published an essay in The Weekly Standard titled "Elizabeth Warren, Closet Conservative: The Most Misunderstood Woman in Washington," praising the arguments in The Two-Income Trap. Warren had placed the economic stability of middle-class families at the center of her politics. She was a progressive, yes, but at heart she was a woman of the right.

Under President Donald Trump, that overlap has only grown. In July, The American Conservative, long a bastion of immigration-skeptical conservative nationalism, ran an essay extolling Warren's economics, particularly her plans for a new bureaucracy dedicated to "defending good-paying American jobs," and saying that in some respects, "Warren may be a bigger economic nationalist than even Trump himself."

Nor is Warren's popularity limited to small opinion journals. In June, Fox News' Tucker Carlson, among the most-watched hosts on cable news and an influence on the Trump administration, opened his show with an extended monologue praising Warren's domestic jobs plan and its elevation of "economic patriotism," which calls for, in the senator's words, "aggressive new government policies to support American workers."

"Many of Warren's policy prescriptions make obvious sense," Carlson said. "She sounds like Donald Trump at his best." Later, at a conference in July, he praised The Two-Income Trap as "one of the best books I've ever read on economics."

It is hard to imagine the Republican Party ever embracing Elizabeth Warren. Trump frequently mocks her claims of Native American heritage, and the congressional GOP continues to view her with deep hostility. She'll never be an ally to the party. But in some increasingly influential corners of the right, her ideas and her outlook are winning.

In 2012, Warren challenged Massachusetts Sen. Scott Brown, a Republican whose 2009 special election had caused headaches for supporters of Obamacare, and won. It was hard not to see the move as a steppingstone toward a run for president.

Despite the urging of many progressives, Warren sat out the 2016 race but watched as her fellow senator, Bernie Sanders (I–Vt.), ran a surprisingly strong primary campaign against frontrunner Hillary Clinton on a self-described democratic socialist agenda—one that mirrored Warren's own in many ways. Given the energy of the Sanders campaign and the closeness of the general election vote, it's easy to wonder whether Warren, had she run, would have captured the Democratic nomination and perhaps even defeated Donald Trump.

Now she has a second chance. In 2018, Warren soft-launched her 2020 effort with a series of policy proposals, and she has continued to roll out plans since her official announcement early this year. Each works from the themes of economic despair and disillusionment that she has dwelled on for decades, telling a dire-yet-evocative story of ever-more-powerful corporate interests preying on the middle class.

Yet in many ways, her plans still don't add up.

Her signature policy is a 2 percent wealth tax on households worth over $50 million, with an additional surtax on households worth $1 billion or more. Her campaign claims the change would raise $2.75 trillion over a decade.

Most first-world countries that have implemented wealth taxes in recent decades have abandoned them, however. They're expensive to enforce, and they encourage rich people to park their money—and the jobs that money might fund—elsewhere. As a result, these taxes rarely raise as much as hoped.

That helps explain the considerable academic skepticism about Warren's revenue projections. Lawrence Summers, who served as a senior economic official in the Obama and Bill Clinton administrations, has argued that the estimates Warren relies on discount the likelihood that the wealthy would evade the new tax by strategically moving their money.

And in July, a trio of economists from the U.S. Treasury Department, Princeton, and the University of Chicago Booth School of Business presented a paper at the National Bureau of Economic Research finding that the rich simply have less wealth to tax than the estimates assume. This suggests that, even ignoring evasion, a wealth tax would raise only about half what Warren expects. In a survey of economic experts conducted by Chicago Booth, 73 percent said Warren's wealth tax would be "much more difficult to enforce than existing federal taxes." (Her campaign says the plan is structured to avoid these pitfalls, partly by imposing hefty fines on those who try to move their money elsewhere.)

Despite all this, Warren has outlined plans to spend the revenue aggressively. She has said her wealth tax could pay for a universal child care plan (which would cost about $700 billion, according to a Moody's estimate) as well as her free college and student loan forgiveness plan (which would cost about $1.25 trillion). She has further suggested that the same tax could be used to cover a $7 billion plan for minority entrepreneurship, plus "down payments on a Green New Deal and Medicare for All"—an environmental policy that the center-right American Action Forum found could cost as much as $90 trillion (yes, trillion) and a single-payer health care plan that multiple estimates have found would cost more than $30 trillion. Given the likelihood that the wealth tax would not raise as much revenue as her campaign claims, it is probable that she would end up spending more money than she raises.

There are other problems as well. The cost estimate Warren points to for her child care plan relies on "dynamic scoring," which assumes that the program will have a positive overall effect on the economy. But as Philip Klein of The Washington Examiner has noted, the revenue estimate for Warren's wealth tax relies on what's known as a "static" analysis. It counts no growth effects into its assumptions, presumably because taxing the sort of people who are likely to make large, economy-building investments would have a negative impact on growth. As with her early research, Warren has deployed her wealth tax in a slippery manner designed largely to further her policy goals.

It's also quite possibly illegal, since the U.S. Constitution prohibits "direct taxes," which probably means taxes that apply to a state of being—as in, the state of being wealthy—rather than an action. The Supreme Court has never offered a precise definition of the term, but there's little question Warren's effort would face a lengthy court challenge.

Her announcement speech in February, meanwhile, was peppered with dubious economic factoids such as the notion that "40 percent of Americans can't find $400 to cover an emergency." This commonly repeated statistic is based on a misreading of a government survey question about how people would choose to pay a $400 emergency expense: Forty percent said they would use a credit card, not that they couldn't afford it at all. In fact, 86 percent of respondents said they would either pay with cash or use a credit card that they would pay in full at the end of the month.

Warren's speech also included an outdated warning that "wages in America have barely budged" since the 1970s. It's true that wages stagnated in the years after the 2008 recession, especially for workers at the bottom end of the income ladder. But in May, The New York Times reported that "wage growth, long stuck in neutral, has at last found a higher gear." Furthermore, the article noted, "the recent gains are going to those who need it most. Over the past year, low-wage workers have experienced the fastest pay increases."

In the midst of the longest economic expansion in American history—an expansion that has particularly benefited minorities and women—Warren's campaign is structured as an extended argument that, actually, the economic outlook for most Americans is awful.  Yet under Warren, things could be even worse: Her economic micromanagement, her heavy-handed approach to regulation, her lack of interest in transparency, her willingness to pursue policies based on dubious and politically motivated data, and her unwillingness to respect the conventional checks and balances of multiparty democratic politics all foretell a presidency that would be dangerous for the economy writ large and potentially fatal for basic economic freedom. The current economy has serious risks and flaws. But the risks of Warrenism are even more severe.

To be sure, the economy could take a nosedive at any moment. Boom times always end eventually, and by the time the Democratic primaries are held next year—let alone the general election—the country could well be in a recession. The overhang of federal debt has added risk to the economy, as has Trump's tariff-driven trade policy.

But Warren isn't really arguing about federal debt, which she would almost certainly expand, or about the merits of Trump's protectionist approach to trade, which her industrial policy would continue in spirit if not in precise detail. And she isn't warning about the recurring cycle of economic ups and downs. Instead, she is making essentially the same argument she was making in 2004. She wants people to believe the American economy is rotten to the core—that it is irredeemable, at least without her at the helm.

Like so much of Warren's worldview, it is a simple story, based in part on data that are either erroneous or presented in a misleading fashion. Yet her core conclusions about the struggles of middle-class families have become standard arguments in modern political dialogue on both the left and the right.

The Democratic primary field has adopted much of Warren's agenda, and it has been forced to play catch-up to her high-volume approach to policy. In April, CNN held back-to-back town hall events with Warren's rival candidates: Every single one was asked to answer a question about one of her plans.

Bernie Sanders' success as a proponent of Nordic-style democratic socialism overlaps heavily with Elizabeth Warren's economic doomsaying. New York Rep. Alexandria Ocasio-Cortez's blend of personable social media chattiness, economic catastrophizing, and spare-no-expense policy proposals owes much to Warren's pseudo-wonky populist brand.

Liberal think tanks, many of which were built to serve the Obama administration and the expectation of a Hillary Clinton presidency, have been unusually absent from the 2020 primary debate. But the Democratic Party doesn't need a think tank to point the way. It has Elizabeth Warren.

NEXT: From the Archives: October 2019

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  1. This article is too damn long, Peter. I read it in full, but most people won’t. Learn to shorten things, for fuck’s sake.

    1. I thought it was long too and almost stopped reading. But the length is a tribute to just how much of a charlatan Warren is. I can’t think of any person I dislike as much as I do her.

      1. Beto O’Rourke is the candidate I dislike the most this election cycle.

        1. I can understand that, but I live in Massachusetts and Beto has no shot.

          1. Oh we are basing it on people we actually have a fear of winning? than I agree wilsonian indian memaw is the most nauseating as that is the person who is easily the most potentially economically damaging who has the best shot at winning. She’ll have the press lapping up her genius plans for this country.

            1. It is more the familiarity than the fear of winning.

      2. Warrenomics has a ring to it. I don’t think the rest of the circus can say that. Buttinomics? Betonomics? Of course it’s all the same multi-trillion dollar slaver nonsense garbage.

      3. I will shorten it to her being no more than an arrogant freedom hating busy body.

      4. I don’t know….I think Bolshevik Bernie stinks the most!

      5. I agree it was long, but I’m glad Suderman documented just what an academic and political fraud Warren is. Besides being a race fraud.

        But given “You can keep your plan” was a lie the Democrats got away with, why not make plans that don’t add up? Clinton and Obama set the standard that Democrat promises or honesty doesn’t matter.

    2. It’s the first decent article in months. Just take the time you spent not reading shika or boehm articles and apply it here.

      1. Jesse….My reaction as well. I appreciated the ‘deep dive’ and wish this was more the norm than the exception.

        BUT….a bullet item summary with a brief 2-3 sentence synopsis at the top of the article would have been a very good touch. I wish Reason would try that format out.

    3. Warren: “EVERYTHING IS SO TERRIBLE AND UNFAIR!!!!”

      Coulda summed up her entire ideology in 6 words.

      Haha.

  2. One of my friends is a dyed in the cloth Democrat who is very excited about the idea of one of the extreme candidates winning because “we’ve tried the standard ideas of Republicans throughout our lives and know exactly where it leads us, but we’ve never tried the ideas of Warren and Sanders”. I told him to lo at Venezuela for an hour example. He’s a CPA and yet he’d never done the math on what it would truly cost (and require in tax funding) to do all these outlandish ideas. I think my back of the envelope calculation was over $4.8T on top of our current spending.

    The scary part is that one of these knuckleheads will eventually win. Maybe not in 2020, but we’re going to see it in our lifetimes.

    1. Your CPA bud knows arithmetic and how to apply a set of rules and regulations. Math actually requires thought.

      1. Finally someone else is saying this. People at work are always saying that the accountants here are good at math. No, they are not. All they ever have to use is addition and subtraction, and occasionally some multiplication and division. They never have to use exponents, let alone more complex mathematics. An accountant couldn’t differentiate themselves out of a paper bag. I don’t know any accountants that can actually produce decent pro forma financial statements.

    2. Most these rules and regs are the reason his job exists in the first place. It’s not surprising.

      1. As a former CPA who is now in software dev, I totally agree.

      2. As a former CPA I concur. But then again I have an engineering undergraduate and understand not just arithmetic but also mathematics.

        1. I can dig it. I also have an engineering degree.

          1. i’d like to see data around the politics of people with engineering degrees.

            i too have one (mechanical engineering, the best kind 😉 ) and i’ve always felt my ability to think through things is a big reason why i can’t find much support for democrats no matter how bad the republicans try and push me away. all of their ridiculous “solutions” crumble the minute you start considering higher order effects

            1. Electrical engineering is cooler than mechanical engineering IMO.
              Engineers these days are not necessarily conservative or libertarian in outlook. Take a gander at the politics of MIT and Caltech students in the last 15 years. Older engineers- well they are as conservative as most older men. Of course engineers are not as ‘woke” as the poly-sci majors.

    3. we’ve tried the standard ideas of Republicans throughout our lives and know exactly where it leads us

      And presumably he thinks that’s bad?
      For all the problems in the world, and all the stupidity and waste of politics, this is still a pretty great time to be alive.
      A lot of things could be better, but let’s try not to fuck up this remarkably peaceful and prosperous society we have going here.

      1. Well said. A lot of people want to be unhappy. Sometimes they’re not even sure why. Life is good.

    4. A CPA? He should start by knowing our existing socialist Social Security program is not only in financial trouble but not worth what we pay for it even if it could pay the promised benefits. Medicare even worse. And now Warren’s arrogant control over the entire economy? Mathematically ignorant, morally repugnant.

  3. While not my first choice I would have no problem voting for Elizabeth Warren. She has her focus in the right place which is the middle class. She does talk about raising taxes, but there is simply no way to continue even the spending we have now without some tax increase. And neither D or R are talking about cutting spending. Finally she is smart wants the job and will work hard at it. I like that in an employee and remember the President is our employee. Something the current President has forgotten.

    1. Elizabeth Warren’s focus is Elizabeth Warren. She doesn’t give a shit about anyone but herself.

      1. Or she is so detached from reality so as to think her policy agenda is anything but dishonest and terrible.

        1. Perhaps both.

      2. Your comment makes no sense. Anyone running for President has to have a pretty health ego. So yes Warren and rest are focused on their ambitions. But Elizabeth Warren is also talking middle class and a strong middle class is critical to democracy. So I will give her points for that.

        1. Trump talked about a strong middle class as well. As well as a strong lower class. And he improved both. Your critique of him is, well, kinda laughable.

          And Trump didn’t abuse programs he claimed were vital to address previous wrongs to fuck over minorities for his own benefit. Can Warren say the same?

      3. Sounds more like Trump.

    2. WTF is this comment doing here. This is just a nauseating view of politics, Warren and government in general.

    3. Fuck off slaver.

    4. “And neither D or R are talking about cutting spending.”

      True, but one of those two groups is proposing much larger spending increases than the other.

      1. Proposing and actual spending is different. Rs propose cuts but spend instead. Ds have in the past paid for spending (yes through taxes). So the actual net effect may be more spending during Republican administrations.

        1. “”Ds have in the past paid for spending (yes through taxes).””

          Not even close.

        2. Until they are willing to tax the middle class as they do in Europe, Democrats will never come remotely close to paying for their European-level spending proposals.

    5. “”She does talk about raising taxes, but there is simply no way to continue even the spending we have now without some tax increase.””

      You could reduce spending. But to continue current levels of spending, yes. I would be willing to bet that if you raised taxes to cover current levels of spending, people would be so pissed about the extra taxes on that alone that the rest of left’s utopian ideas would immediately come off the table and Warren would lose the next election.

    6. “While not my first choice I would have no problem voting for Elizabeth Warren.”

      No surprise.

  4. Your CPA bud knows arithmetic and how to apply a set of rules and regulations. Math actually requires thought.

  5. Elizabeth Warren’s signature accomplishment is the CFPA, an agency ostensibly serving the interests of the taxpaying public but specifically designed to be insulated from any accountability to the taxpaying public. Elizabeth Warren has faith that government can work, but only so long as the experts and the technocrats are in charge and the sheep recognize that they’re sheep and do as they’re told.

    And how is this really any different than what any politician thinks and says? “The world would be a much better place if I were in charge” is what all of them are saying. Some of them are just a little more open than others about the “and everybody else would just shut the hell up and stop arguing with me.”

    1. the CFPA is one of the most obvious examples of outright graft that I can remember ever existing. It’s a laundry mat for political paybacks.

    2. “Elizabeth Warren has faith that government can work, but only so long as the experts and the technocrats are in charge and the sheep recognize that they’re sheep and do as they’re told.”

      Too many people are sheep and don’t recognize it so they blindly do what they are told.

    3. Of course, remember that Elizabeth Warren is a law professor so she knows plenty about the theory of how things work and absolutely nothing about how things work in practice. That also explains her extremely off-putting lecturing style – she’s not arguing for her policy prescriptions, she’s simply explaining them. There’s no doubt in her mind that these are the correct policy prescriptions, there’s nothing to argue. It’s not a matter of opinion, it’s a matter of fact. It’s like if you wanted to argue with a math teacher that 2+2=5, the math teacher isn’t going to argue about why you should believe that 2+2=4, she’s just going to argue with you about why you should realize that you’re an idiot and you’re wrong.

      1. 2+2 is actually pretty difficult for a lawyer. I remember in law school that if a student was ever asked to do so much as basic arithmetic, their eyes would roll into the back of their head, blood would start trickling out of their ears, and they would start speaking in tongues. As a financial analyst and the only person in the school (professorate included) with a basic understanding of higher-order mathematics, I found this both humorous and sad.

  6. Fauxcahontas? Seriously? A serious contender? Look, we already went down the path of an Ivory Tower pinhead sitting in the big chair at 1600 Pennsylvania Ave. His name was Woodrow Wilson. The man was a disaster for the Republic. We are still suffering from his odious legacy.

    From a practical standpoint, very little of what she proposes will ever become law. Why? It is unconstitutional, and her ‘raison de etre’ – CPFB – is getting ripped apart, plank by plank by the Federal Courts.

    I have no doubt Fauxahontas is an intelligent woman. But face it: She wangled her way into Harvard with very questionable self-identification choices (1/1024th anyone?), and quite frankly, she lacks any common sense whatsoever. Her hectoring ways are not a help to her. She simply does not connect to ‘Joe Six-Pack’, and she never will.

    Nobody wants a ‘Overbearing Nanny’ as POTUS.

    1. Nobody wants a ‘Overbearing Nanny’ as POTUS.

      I don’t know about “nobody”.

      1. If she successfully traverses the primary, there will be an entire legion of people who will suddenly proclaim her the best trained candidate in history. That NOW is the time for the first woman president.

        If she wins nomination, not only will roughly 1/2 the country tolerate her, they’ll be begging for her lectures.

      2. A nanny may be overbearing but she will put a bottle in your mouth when you start to cry. That sound was the left demands.

        1. sounds like what the left demands.

      3. Can’t see the black vote returning to Obama levels for Fauxcahontas (or Lieawatha, whatever one prefers). If she as any whiter, she’d be opaque.

    2. No self-respecting man could ever vote for her

      1. So- democrats, then?

        1. They are mostly soyboys, and Tonys.

    3. C’mon. Why whine about style? At least the article stays mostly on substance.

  7. “At the heart of Elizabeth Warren’s campaign for president—”

    At heart is her authoritarianism (opposite of libertarianism) where she relies almost entirely upon state-mandated associations to achieve her view of society.

    Whether that view is left or right is secondary !

  8. Warren wants the federal government to be the American economy’s hall monitor, telling individuals and companies what they can and can’t sell or buy and making some of the nation’s most successful businesses answer to her demands.

    This economic system sounds vaguely familiar. It has a name, as I recall. Begins with an “F”, I think.

    1. Fascism is a form of socialism hidden beneath a veil of property rights which are totally controlled/regulated by the state.

      1. Have any fascist regimes ever so much as pretended to have any respect for property rights? Collectivism don’t care much for it, no matter which label is on the bottle.

      2. It’s one of the funnier “Hitler wasn’t a Socialist” claims.

        “He worked with big business”.

        No, he controlled them as thoroughly as Stalin did. They made what he wanted them to make. Period.

        1. +100

    2. Frumpism?

    3. That’s what’s so funny about the left calling everyone Fascists. Their preferred way of managing the economy and society is a lot closer to Fascism than anything Republicans traditionally support. And there are plenty of Dems who are into war and national greatness stuff too.

  9. We Koch / Reason libertarians prioritize #ImmigrationAboveAll. Because we know our billionaire benefactor Charles Koch relies on the free movement of highly skilled doctors and engineers across our border with Mexico. On that basis alone, Warren would be better than Orange Hitler. His regime takes people who only want to move here and strengthen our economy, and puts them in literal concentration camps.

    #LibertariansForWarren
    #AbolishConcentrationCamps
    #VoteDemocratToHelpCharlesKoch

    1. Your first mistake is to assume all illegal border crossers are immigrants. Or is that a political tact to make them all appear innocent ?

      Under open borders, even illegal border crossers dressed in foreign military uniforms and armed would be called/assumed to be immigrants.

      That’s because recognizing that problem would effectively require border control of some sort.

      1. As a student of the leading libertarian theorist Shikha Dalmia, I consider any form of “border control” to be the moral equivalent of enforcing fugitive slave laws.

        1. So you would allow armed troops from another country to freely cross ?

          Or would you establish some form of border control ?

          Tell us which you support !

          1. You must be new here.

            1. Yeah, the “highly skilled doctors and engineers” should have been the tip off. You know, the jobs Americans won’t do. Haha.

              Then the “literal concentration camps” for the finale leaves no doubt about the attempt at comedy.

        2. Dude, you need a new schtick.

        3. As a student of the leading libertarian theorist Shikha Dalmia

          Ok, so parody’s all well and good, but that’s going Hihn levels of batshit unhinged. Waaaay to far of a reach with that one, OBL.

      2. Every time I see or hear that idea about an invading army being just immigrants in uniform, I wonder what kid of weird fantasy world these people live in.

        Who in their right mind would think that invading the US militarily is a good idea? Every time I ask this question, I get no response worthy of being called an answer. It’s like people think Red Dawn was a documentary of the future.

        It’s sofa king bizarre.

        1. I’ve noticed that a lot of anti-immigration people have been using the words “invasion” and “imported” a lot to refer to immigrants. Which I suspect is mirroring language in the constitution to help justify exceptional government action. But I don’t think those are appropriate terms for what is going on now.
          I don’t think it’s unreasonable to be concerned about the border situation, or immigration in general. But hyperbole doesn’t really add to the discussion.

        2. “Who in their right mind would think that invading the US militarily is a good idea?”

          Wow, you’re dense.

          1. If it’s that obvious, surely someone as brilliant as yourself could enlighten me.

        3. Who in their right mind would think that invading the US Roman Empire militarily is a good idea?

          1. Excellent analogy! But at least you tried, unlike Nardz.

        4. “Who in their right mind would think that invading the US militarily is a good idea?”

          No other way to get what they want outside of direct military intervention, eh?

          Don’t worry, your assumptions aren’t rare. Troy really thought the Greeks were giving them a ceremonial horse.

          1. Good! Then you too can fail to provide any actual argument to rebut my message.

            1. Fail to see why it’s my job to raise your gibberish to the intellectual level of an actual argument to rebut it.

              1. Fail to see is sufficient.

                1. Your next cogent point will be your first.

                  1. More than you, who has only scored negative cognizance.

      3. Dude, it’s not a real person.

    2. No, Medicare relies on foreign doctors. It is why Medicare limits the number of American residencies.

  10. “Shuchman, who died in 2004, accused Warren et al. of making “serious errors” and refusing to produce raw data that would allow other scholars to check their conclusions.”

    Refusing to produce raw data? Sounds familiar. SSDD.

  11. Elizabeth Warren’s Plans Don’t Add Up:
    The Warren worldview of ill-founded economic pessimism is both bloodless and moralizing.

    If Capitalism is economic optimism where a person can create great wealth from ideas and business, Socialism is economic pessimism where a person has wealth taken according to his ability, and given to each according to their needs.

  12. “The current economy has serious risks and flaws.”

    Ipse dixit.

  13. two people working households are a requirement only because of tax law, taxes and regulations. and if it wasn’t for evil corporations providing jobs more people would be homeless

  14. Elizabeth Warren’s plans to add up…to her (and her cronies) bank accounts.

  15. Warren is to economics what Nurse Ratchet was to Oregon State Hospital.

  16. Great article thanks Mr Suderman. It reminds me of the earlier days when Reason wrote extended articles on subjects and not drive by polemics. Warren is a mess and it’s hilarious that she doesn’t seem to get the irony she is both wealthy and well connected. Two things she would not be if her plans were enacted.

  17. The Wall Street Journal didn’t think Warren was a bad actor for being a lawyer in that Dow Chemical case:
    https://www.wsj.com/articles/sen-warrens-good-work-for-dow-chemical-11563403976

  18. Easily the most boring thing I’ve ever read on Reason and I’ve been here for at least 15 years.

  19. The only Dem candidate with any sanity is Tulsi. Personally, I think she is the only candidate Trump will treat with any respect and probably the only one who stands a chance of beating him.
    Pity the DNC are screwing her out of the debates.

  20. All they ever have to use is addition and subtraction, and occasionally some multiplication and division. They never have to use exponents, let alone more complex mathematics. An accountant couldn’t differentiate themselves out of a paper bag.
    https://msphackcheats.net/

  21. Her approach to the economy is basically economic fascism.

  22. “millions and millions of American families are also struggling to survive in a system that has been rigged by the wealthy and the well-connected”. According to the middle aged hystera “snowflake” in Native drab.
    The only platform the left has these days is class warfare. She blames the rich for the ills of the indigents and middle class. She wants to be president so government can “fix” the inequities. What she doesn’t understand, or maybe does, is that government is directly responsible for those “inequities”. The examples are paramount.

  23. All of this is true, but you’ll still vote for her if she get the Dem nomination because Orange Man Bad!

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