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Elizabeth Warren Has Good Reasons to Stay Vague on Health Care

No, keep it fuzzier. Photo: Joe Raedle/Getty Images

Elizabeth Warren has been unusually fastidious about explaining how she will pay for most of her proposals: For example, she believes her wealth tax would raise about $2.75 trillion over a decade, and she’s apportioned the proceeds among plans for higher education, K-12, and child care.

But she hasn’t said how she will pay for by far the biggest-ticket item in her policy agenda: single-payer health care, which would cost something like $30 trillion over a decade. And based on reporting from Jeff Stein at the Washington Post, I think we can see why Warren has been fudging: All the options she’s reportedly being offered for greater specificity sound like political nightmares.

One of the ideas she’s been advised to look at is saying she will divert funds from Medicare and the Department of Veterans Affairs to pay for much of the cost of a single-payer plan, essentially rolling them into her new system — and potentially alarming anyone who depends on those programs in their current form. Another idea is a business gross-receipts tax of about $600 billion a year, which is about half as much as the federal government currently collects from personal income tax, but still only enough to pay for about a fifth of the cost of a single-payer plan. A third option is to propose a broad-based tax but call it a “public premium” instead of a tax.

As Warren considers these unpalatable options, I think it would be worth her time to look at a mistake Mitt Romney made during the 2012 presidential campaign.

During the Republican primaries, Romney was under pressure to announce a big tax-cut plan, similar to those his more conservative opponents were running on. It’s worth remembering than cutting taxes after winning the 2012 election was going to be a much dicier proposition than cutting them after the 2016 elections. After Romney lost, two major tax increases went into effect — mostly on the wealthy — and in combination with restraint of federal spending, these tax increases created fiscal space that made it more feasible for Trump to cut taxes after he took office. (Not responsible, but feasible.) At the time that Romney was running, he was looking forward to huge budget deficits and already-low, Bush-level income taxes, which is a reason he spent most of the 2012 primary campaign being vague about his intentions on taxes.

But in February 2012, with Rick Santorum on his heels, Romney allowed himself to be goaded into promising to cut the top income rate to 28 percent. (The tax law Trump signed in 2017 sets this rate at 37 percent, though it created other tax preferences Romney didn’t contemplate.) A 20 percent cut in tax rates across the board would not grow the deficit, Romney said, because he would eliminate deductions and loopholes in sufficient quantity to make up the lost revenue, while also leaving anyone who makes less than $200,000 a year unharmed by tax increases.

This proposal helped satisfy economic conservatives that Romney intended to deeply cut tax rates. But there was a problem: The math didn’t add up. There weren’t enough deductions and exemptions in the whole tax code to offset all those tax-rate cuts without raising taxes on the middle class. And in the general-election campaign, Barack Obama beat Romney over the head with his tax plan, saying it was tantamount to a pledge to raise taxes on the middle class and give the money to the rich.

Of course, one lesson is Romney should have checked his math before releasing his plan. Warren is more careful than that about details. But there was a bigger problem Romney could not have fixed through greater attention to detail: Fiscal policy is about the allocation of resources, and cutting federal taxes from an already-low level was going to require redistributing resources away from someone toward the rich. Romney got caught between the demands of his donor and voter base and the broader electorate, and he chose wrong.

Like Romney, Warren faces a dilemma that makes it hard for her to satisfy her party’s ideological base without creating a major general-election problem. There’s no way to finance single-payer without a big new broad-based tax (this has been the death of single-payer efforts in California and Vermont) and nobody wants to run in a general election on a platform that includes a new broad-based tax.

But Warren faces an added risk that Romney did not. If she announces a specific plan, she could hand ammunition both to Bernie Sanders (who will point out any manner in which her plan is less comprehensive than the damn bill he wrote) and to her more centrist opponents (who will be able to identify more specifically what she’s proposing that could hurt her in the general election).

That’s why, if I were Warren, I would stay vague. Look at Mitt Romney: If he’d stuck to vagueness on taxes, he still would have beaten Rick Santorum (even if it took a little longer) and he would have given Barack Obama less ammunition for November. And since she’s so specific on so many other things, she can probably get away with fudging this one little thing. “I will be vague” is even a plan of sorts.

Why Elizabeth Warren Should Stay Vague on Health Care