Elizabeth Warren to billionaires: You didn't build that

If it wasn’t clear enough already, Elizabeth Warren is looking to revive the spirit of the Occupy movement in her bid for the White House. Yesterday she released a new ad promoting her wealth tax by singling out billionaires who have criticized her on television:

One of the billionaires featured in the ad didn’t appreciate it. He made a mocking reference to her history of claiming to be Native American on Twitter:

Did you notice how similar Warren’s argument in the ad sounds to something Obama said a few years ago:”You built a great fortune? Good for you,” Warren says. She adds, “I guarantee you built it at least in part using workers all of us helped pay to educate, getting your goods to market on roads all of us paid to build.” That’s pretty similar to a line Obama used in 2012:

Getting back to Warren’s wealth tax, the argument she’s seen making in this clip is weirdly misleading and out of date. The clip ends with her saying “pitch in two cents…” but the actual proposal is for a 2 percent tax on wealth over $50 million plus an additional 1 percent on billionaires. So in the context of this ad, which is titled “Elizabeth Warren stands up to billionaires,” she’s really demanding 3 percent of everything they have.

But even that’s not right because Warren has already doubled her wealth tax proposal to 6 percent. The added 3 percent is how she plans to pay for her Medicare for All plan. So, bottom line, she’s not asking for 2 cents, she asking for triple that. Not that I expect any of her fans to care. But Americans in general may care when they learn that Warren’s wealth tax could slow economic growth. That’s what an independent analysis of her plan found:

The preliminary projection from the Penn Wharton Budget Model, which will be unveiled on Thursday in Philadelphia, is the first attempt by an independent budget group to forecast the economic effects of the tax that has become a centerpiece of Ms. Warren’s campaign for the Democratic presidential nomination.

The assessment found that if the tax raised as much new federal revenue as Ms. Warren intends, and if the proceeds went toward reducing the federal debt, annual economic growth would slow from an average of 1.5 percent to an average of just over 1.3 percent over a decade.

This is just a preliminary analysis and it has a couple of problems, starting with the fact that it assumes the money raised from the tax would be spent lowering the deficit. Warren’s defenders argue that since the money would be spent that spending would increase economic growth.

However, the other assumption here is that the tax will actually raise what Warren claims it will. That’s the assumption that is likely false and likely to get us in trouble. Once we’ve committed to Warren’s free everything approach we’ll have a serious problem if the revenue to pay for it all doesn’t materialize. Avik Roy’s analysis of her Medicare for All plan concluded her new taxes would actually bring in a little over half of what she claims they would.

Of course people willing to accept a 2 percent wealth tax (which is really a 6 percent wealth tax) won’t balk at a 10 percent wealth tax. Once you’ve accepted that the public has a right to money that has already been taxed once, there’s really no limit except the one that always gets socialists into trouble: Eventually you run out of other people’s money. Megan McArdle estimated that 10 years of Warren’s proposed taxes would deplete billionaire’s fortunes by two-thirds. Once the well goes dry, then what?

Even if she wins in 2020, Warren knows she’ll be out of office before the serious flaws in her plan lead to a collapse. It’ll be a big problem but it won’t be her problem. What matters now is selling the con.