The Washington PostDemocracy Dies in Darkness

Democrats face internal rift over including rich in new government programs

Hillary Clinton, then the Democratic presidential nominee, and Sen. Bernie Sanders (I-Vt.) appear at a rally Nov. 3, 2016, in Raleigh, N.C. (Andrew Harnik/AP)
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Huddled with a handful of staffers in his Senate office Wednesday, Sen. Bernie Sanders (I-Vt.) reminded liberal Reps. Ilhan Omar (D-Minn.) and Pramila Jayapal (D-Wash.) of some of the criticisms that reporters would soon bring up with him.

Sanders had already decided to propose eliminating all $1.6 trillion in student debt in the United States, but he predicted to Omar and Jayapal that opponents would ask how it would be paid for and why it offers complete federal loan cancellation to all Americans, including the affluent, according to two aides with direct knowledge of the meeting who spoke on the condition of anonymity to share details of the private conversation.

Omar, whose team had been working for months on debt forgiveness legislation, responded by citing research showing its impact on stimulating economic growth, the aides said.

Sanders proposes canceling entire $1.6 trillion in U.S. student loan debt, escalating Democratic policy battle

On Monday, the three lawmakers appeared together along with Rep. Alexandria Ocasio-Cortez (D-N.Y.) outside the U.S. Capitol to introduce a multi-trillion-dollar package to enact tuition-free public universities and universal student debt eradication, in a significant escalation of the 2020 presidential primary’s policy stakes. Sanders had come to see debt cancellation as part of his suite of proposals to offer universal government benefits to Americans.

But their plan also deepens a split in the Democratic Party over how to craft government programs, one that could come to the surface in Wednesday’s first presidential primary debate.

Whereas Sanders and some other candidates in the race have backed “universal” programs that would give benefits to every American regardless of their income, many of the other Democratic presidential candidates have unveiled plans with benefits targeted to specifically help the working class and middle class but exclude more affluent Americans. This latter design is known as “means-testing,” or tailoring a program’s benefits to the means of its beneficiaries.

“For all the talk of an insurgent left, many of the detailed proposals from leading Democratic presidential candidates have, in one way or another, reinforced a commitment to means-testing,” said Samuel Hammond, director of poverty and welfare policy at the Niskanen Center, a center-right think tank.

Supporters of programs that give benefits to all Americans say doing so helps protect their political viability by giving everyone in the country a shared stake in the project. These advocates argue the targeted approach requires layers of additional government bureaucracy and can create sharp disparities of outcome between those in relatively similar financial positions.

They also point as examples to Social Security and Medicare, two universal programs that members of both parties in Congress are wary of cutting, although some critics note those popular programs, while universal in nature, can be considered “means-tested” because they offer different benefits to the poor.

But other experts and Democratic presidential candidates note universal programs tend to be more expensive, often by dramatic margins, and offer help to those who may not need it. South Bend, Ind., Mayor Pete Buttigieg has rejected calls for universally tuition-free college, favoring a dramatic Pell Grant expansion to help poorer students, while Sen. Amy Klobuchar (D-Minn.) has similarly rejected the idea of funding free four-year college for more-affluent families.

“Government programs targeted to provide relief to people who are struggling should absolutely be means-tested,” said former congressman John Delaney (D-Md.), another presidential hopeful. “Programs to provide relief to people with student debt should be targeted for those who are actually struggling.”

Still other candidates have backed some universal plans while also introducing others that are means-tested. For instance, Sens. Elizabeth Warren (D-Mass.), Kamala D. Harris (D-Calif.), Cory Booker (D-N.J.) and Kirsten Gillibrand (D-N.Y.) have all co-sponsored Sanders’s single-payer “Medicare-for-all” legislation, which would enroll all Americans in the same government health insurance plan regardless of their income. These four candidates have also backed plans to make public colleges and universities debt-free for all.

But these candidates have also introduced programs that do not offer universal benefits. Warren has proposed a plan that would provide free child care to all Americans earning under about $51,200 for a family of four, while requiring payments ranging from 0 percent to 7 percent of income for everyone above that income threshold. Unlike Sanders, but like former Obama housing secretary Julián Castro, Warren’s $640 billion debt forgiveness plan would phase out for wealthier Americans as well, with benefits diminishing above $100,000 in annual income.

Booker has touted as one of his key campaign pledges a “baby bonds” plan that would give children a savings account at birth that they could use for various purposes when they turn 18. The plan would offer only about $1,700 for a child in a family of four with an income of $126,000, according to Vox, but close to $50,000 for a child in a family earning under $25,100.

Harris has campaigned on a nearly $3 trillion tax cut for working-class families, but the plan’s benefits diminish starting at $30,000 annually ($60,000 for married couples, $80,000 for single parents) before disappearing entirely for those earning more than $50,000 annually (or $100,000 for married couples). Harris’s housing program would give tax credits only to those who make less than $100,000 a year.

These approaches help limit the sticker shock of Democratic policy ambitions. Warren has released detailed analyses showing her plans — including those for free child care, free public college and debt forgiveness — could be paid for solely through higher taxes on the wealthy, or those with more than $50 million, and on large corporations with more than $100 million in profits.

And some economists say there is good reason for policymakers to vary their approach. There are some government programs — such as libraries, firefighting, and K-12 public education — that make sense to offer as a free and universal public good, even if others should not be structured that way, they say.

“The political and simplicity benefits of pure universal programs has to always be weighed against the benefits of prioritizing resources for those who need them most for their basic economic security and economic dignity,” said Gene Sperling, director of the National Economic Council under President Barack Obama. “That, to me, is a judgment you make on a case-by-case basis, not with a simple rule.”

But Sanders has tried leaning into the contrast, attempting to distinguish himself from the crowded primary field with his support for universal programs.

“I believe in universality,” Sanders said at Monday’s news conference when asked why his plan would also wipe clean the debt of higher-income Americans. “If Donald Trump wants to send his kids to public schools, he has a right to do that.”

Some critics have disputed the idea that all of Sanders’s plans really are universal. In 2017, Sanders proposed a college tuition plan that cut off students with family income over $125,000, the result of a compromise with Hillary Clinton after the 2016 presidential primary. His most recent plan goes back to his 2016 campaign promise to make public colleges free for everybody.

Others have argued Sanders’s debt-forgiveness plan should not be considered universal considering high school graduates do not share in its benefits. Noting the policy excludes those who suffered the costs of paying back their student loans already, Matt Bruenig, founder of the socialist think tank the People’s Policy Project, has also noted that “the policy is not actually universal in the sense that it provides benefits to everyone in the welfare-relevant universe,” noting the measure does not help those who suffered the costs of paying back their student loans already.

But that argument has also faced pushback. Social Security is widely considered a universal program, but its benefits do not accrue to those who die young, noted Marshall Steinbaum, a professor recently hired by the University of Utah who has supported student debt cancellation.

“Student loan borrowers are a group of people who have been induced into a system that promised them higher earnings and did not deliver that,” Steinbaum said. “People who have student debt outstanding are a meaningful group whose welfare it makes sense to argue about.”