This Silicon Valley Democrat has a $1 trillion idea to help the working class. It won't work.
Maybe it's time for some smaller but achievable plans?


Give Hillary Clinton this: She may have a run a lackluster and uninspiring presidential campaign, but it wasn't idea-free. Far from it. Her website included more than three dozen issue areas, each containing numerous policy proposals and lengthy white papers. Surely you remember many of them: Free college. Medicare for all. Breaking up the big banks. A trillion-dollar infrastructure plan. Fight for 15!
Actually, of course, those weren't her ideas.
You know that because those ideas are memorable. Clinton's small-ball policies — whatever their wonky merits — lacked a certain stickiness and excitement. Meanwhile, Trump was talking about The Wall, killing trade deals, replacing ObamaCare with "something terrific," and a $10 trillion tax cut. Of course the Trump "plans" weren't much more detailed than bullet points, not that voters cared.
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
But don't expect Democrats to let Republicans out-ideate them again. They seem ready to go big and bold with ideas to help workers deal with globalization, automation, and inequality. Maybe the next Democratic presidential nominee will support single-payer health care and breaking up JPMorgan and Goldman Sachs. Maybe they'll even favor the current hot policy idea on the left, a universal basic income.
If there's support for a UBI, it might look like a new proposal from Ro Khanna, a first-term congressman from Silicon Valley. He's fashioning a bill that would greatly expand the Earned Income Tax Credit, the federal wage subsidy. The EITC is a great antipoverty program that both raises living standards and encourages work for millions of Americans. The embryonic Khanna plan would basically double the current maximum credit for families to $12,000 from roughly $5,500 and to $6,000 from about $500 for childless workers. So an estimated trillion-dollar expansion of a program that, as is, will cost nearly a trillion dollars over the next decade. As Khanna told The Atlantic recently:
The fruits of the economy and all the advantages of technology and globalization have gone far more to the investor class and the professional class and not as much to the working class. … That's where this idea of a trillion-dollar proposal came from. We would give a 20 percent raise to the bottom 20 percent of households in the income distribution, to compensate them for the stagnancy of wages since 1979. [Khanna, via The Atlantic]
This definitely qualifies as big and bold. While folks on the left and right have supported some expansion of the EITC, none of them proposed anything as massive as this. For instance, former President Obama and House Speaker Paul Ryan have proposed doubling the maximum earnings subsidy to $1,000 for childless workers. So it's not surprising that a plan of this magnitude is unlikely to become law anytime soon, at least not with Republicans in charge of Washington. Debt hawks would attack it for its cost (an argument less persuasive if Republicans vote for massive tax cuts that lose trillions). And small-government types would complain about the existing program's wastefulness. The IRS estimates the EITC has a 22 to 26 percent improper payment rate, which Republicans call a "fraud" rate.
So the Super EITC has political problems, which Khanna is aware of — yet he still thinks a future Democratic president might actually sign such a bill.
But it also has policy problems. The EITC tries to help poorer Americans by nudging people into the workforce by making work pay better. Khanna's dramatic increase goes far beyond what's needed to make that happen.
Second, it pretty transparently tries to turn the EITC into a proto-basic income plan. Which is not surprising. Many in Silicon Valley are worried about tech progress creating mass tech unemployment. And some see UBI as eventually a necessary safety net expansion, not to mention protection against an anti-tech backlash. Likewise, many proponents on the left see it as a logical progression of the welfare state.
But that seems premature. The history of automation is one of difficult transitions but eventually greater prosperity and opportunity for most. This time may be different, of course. Forecasts show a great range of possible job-market outcomes over the next few decades. For now, a better policy would be to make sure workers are prepared for the jobs of the future and that employment opportunities are more evenly spread across America. So maybe increase the EITC benefit for childless workers, and then move to other ideas to help workers, such as modernized work-based training programs. Khanna favors that, as well as some regional pro-growth initiatives such as putting more federal agencies and jobs in states outside Washington. There are folks on the right who like both those ideas.
Big and bold proposals are great, but they often don't happen — especially when only one sides likes them. And they often sacrifice soundness for sexiness. Maybe we just need more smaller but achievable plans.
Time for some regional pro-growth initiatives!
Sign up for Today's Best Articles in your inbox
A free daily email with the biggest news stories of the day – and the best features from TheWeek.com
James Pethokoukis is the DeWitt Wallace Fellow at the American Enterprise Institute where he runs the AEIdeas blog. He has also written for The New York Times, National Review, Commentary, The Weekly Standard, and other places.
-
Five years on: How Covid changed everything
Feature We seem to have collectively forgotten Covid’s horrors, but they have completely reshaped politics
By The Week US Published
-
Trump’s TPS takedown
Feature The president plans to deport a million immigrants with protected status. What effects will that have?
By The Week US Published
-
Do I qualify for student loan forgiveness?
The Explainer There are a number of different pathways to qualification, though each requires strict criteria to be met
By Becca Stanek, The Week US Published
-
'Seriously, not literally': how should the world take Donald Trump?
Today's big question White House rhetoric and reality look likely to become increasingly blurred
By Sorcha Bradley, The Week UK Published
-
Will Trump's 'madman' strategy pay off?
Today's Big Question Incoming US president likes to seem unpredictable but, this time round, world leaders could be wise to his playbook
By Sorcha Bradley, The Week UK Published
-
Democrats vs. Republicans: who are the billionaires backing?
The Explainer Younger tech titans join 'boys' club throwing money and support' behind President Trump, while older plutocrats quietly rebuke new administration
By Harriet Marsden, The Week UK Published
-
US election: where things stand with one week to go
The Explainer Harris' lead in the polls has been narrowing in Trump's favour, but her campaign remains 'cautiously optimistic'
By Harriet Marsden, The Week UK Published
-
Is Trump okay?
Today's Big Question Former president's mental fitness and alleged cognitive decline firmly back in the spotlight after 'bizarre' town hall event
By Harriet Marsden, The Week UK Published
-
The life and times of Kamala Harris
The Explainer The vice-president is narrowly leading the race to become the next US president. How did she get to where she is now?
By The Week UK Published
-
Will 'weirdly civil' VP debate move dial in US election?
Today's Big Question 'Diametrically opposed' candidates showed 'a lot of commonality' on some issues, but offered competing visions for America's future and democracy
By Harriet Marsden, The Week UK Published
-
1 of 6 'Trump Train' drivers liable in Biden bus blockade
Speed Read Only one of the accused was found liable in the case concerning the deliberate slowing of a 2020 Biden campaign bus
By Peter Weber, The Week US Published