Is this part of Warren’s plan?
In the latest Ballots and Dollars podcast, Rick and Alexis discuss how billionaires lashing out at Elizabeth Warren is playing into her strategy.
“I think this is really clever on Elizabeth Warren's point because I think that is exactly what she wants.” Says Newman in the latest episode of Ballots and Dollars. “I think she wants billionaires to be attacking her and I think she's just sitting there saying, ‘Bring it.’
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Full Episode Transcript Below
Rick Newman: 00:02 From Yahoo Finance, this is Ballots and Dollars, a podcast about the politics that affect your pocketbook. I'm Rick Newman.
Alexis C: 00:09 I'm Alexis Christoforous. Today we're talking about Elizabeth Warren and how she continues to trigger billionaires with her wealth tax plan. The latest one, billionaire investor, Mark Cuban, he said in a series of tweets, a bunch of things about her wealth tax, but he also said that it is diverting attention from reality and Rick Newman would that reality be that Warren is one of the richest candidates running for president right now?
Rick Newman: 00:34 That's one of the things Mark Cuban is pointing out and he's citing Forbes data. I guess her net worth is around $13 million, so notably her net worth is below the threshold at which she would impose her wealth tax. Her wealth tax starts at $50 million and then the tax is higher once you're a billionaire, and again, that's on wealth, not on income, but I think Mark Cuban is also making the point that first of all, the wealth tax is implausible for a bunch of different reasons. He's attacking Medicare For All, one of her big programs, which is part of what the wealth tax would pay for. He's also just defending billionaires. I mean, we've seen a real backlash from billionaires during the last couple of weeks. She's drawing blood among the 1% or the 0.1% and they're starting to fight back. I think this is really clever on Elizabeth Warren's point because I think that is exactly what she wants. I think she wants billionaires to be attacking her and I think she's just sitting there saying, "Bring it. Come on everybody. I want all the billionaires in America [crosstalk 00:01:33]
Alexis C: 01:33 Some of that is coming from Leon Cooperman who recently said that he thinks billionaires are being vilified. Bill Gates also had some things to say about Warren, right?
Rick Newman: 01:40 Yeah. So Bill Gates, his net worth is around a hundred billion dollars or so, I guess. He said, "Look, I've paid $10 billion of taxes in my lifetime, and if I had to pay 20 billion, I guess that would be okay." But he basically said, "The number she's talking about, I'd have to start to do the math." In other words, he would have to say, "Is this actually going to cut into my wealth and going to degrade my wealth over time?" There are questions about that because her tax on billionaires, I think it used to be 3% but when people like me and a lot of others said, "How are you going to pay for Medicare For All?" She came out with a plan and she decided she had to raise wealth tax on billionaires from 3% to 6%. So if you're paying a 6% per year in tax on your wealth, you have to earn 6% on your wealth just to stay even.
Alexis C: 02:35 Just to stay even, right?
Rick Newman: 02:37 Our audience might think, well billionaires, "Don't they earn like 20 or 30% per year?" Not necessarily. Just because you have a lot of money doesn't mean that you get higher returns. Sure you can invest with hedge funds and stuff like that. But hedge funds have actually been having bad years, so you know we are going to have downturns in the stock market also where or people's net return will be negative for a year or two at some point in the future. So if you're hitting them with a 6% ... I'm not saying I'm opposed to the wealth tax, but I'm saying this is how they're thinking about it.
Alexis C: 03:07 But also isn't part of it the way she would tax capital gains? That she would tax it at face value even before a profit was realized.
Rick Newman: 03:17 I don't think it's any single policy that's triggering these people. I think it's all of them-
Alexis C: 03:21 Right.
Rick Newman: 03:22 Combined because she wants to raise the capital gains tax, but the reason she's focusing on a wealth tax is because she says if you just do this through the usual way, try to get more money from the wealthy through raising the income tax or the capital gains rate. She basically says we have too many loopholes that will allow them to wriggle out of that. Now a lot of tax experts say, "Well, why don't you just close the loopholes instead of trying this new wealth tax?" Which is a dubious proposition, but in addition to take as much as we can from the wealthy, she also wants to put a surtax on corporate income for companies that earn more than $100 million per year.
If you total up everything she is proposing, which I've done, the cost would be about $4.2 trillion per year in new spending. That's in new spending. Now the government only spends about $3 trillion, right? I mean, so you would more than double federal spending. So if you're going to pay for it all, you need $4.2 trillion in new taxes. So she's taxing everything. Also, financial transactions is another one. So she has just got Wall Street and the billionaire class up in arms. I think that's exactly what she wants.
Alexis C: 04:38 So many people have said on so many levels, that this could never pass muster, even if she were to make it to the White House. So then why promise things? I mean she's a smart woman. Warren has to realize that this is a very slim chance, what she's talking about would actually see the light of day. So why talk about it?
Rick Newman: 04:54 Well, that's perfect, isn't it? So she can talk about these ideas that sound radical and are populist. Basically she's saying, "Let's take from the rich and give to the rest."
Alexis C: 05:04 When she can't do it-
Rick Newman: 05:05 When she can't do it- [crosstalk 00:05:07]
Alexis C: 05:06 "See, I tried and no one's helping me."
Rick Newman: 05:08 I think that's exactly right. I think it's fair to say she's now a front runner along with Joe Biden. I think the two-
Alexis C: 05:15 They keep flip flopping, right? The latest I saw a Quinnipiac poll had Biden with 20% and Warren with 16%.
Rick Newman: 05:24 She is not overtaking Biden. She is not surging ahead of Biden, but she has surged to become pretty even with Biden. At this point it's Biden and Warren and in some polls, it's no longer Bernie Sanders who's number three, but it's Pete Buttigieg coming up as the youthful moderate, but-
Alexis C: 05:42 Who actually has a net worth. I read of less than a million dollars.
Rick Newman: 05:46 In my range. He's in my range.
Alexis C: 05:48 One of the few running-
Rick Newman: 05:49 Probably not for long.
Alexis C: 05:50 Running for president, right?-
Rick Newman: 05:52 Is becoming famous. We've talked before on this podcast about all of Elizabeth Warren's plans and when you go through them, even if she becomes president and even if she becomes president with a democratic house, I think it still is very unlikely that most of her plans could pass through Congress. Most of them require Congress to change the law or pass new laws. So let's just take Medicare For All, for example, it is nowhere near a given that if Democrats have control of the White House and Congress, they will automatically pass Medicare For All. There are many Democrats who don't support it, who are more moderate, who represent more moderate districts, and they're nowhere near willing to go to their constituents and say, "We're moving all of you off your private insurance if you have it and we're putting everybody into a government program." It just not going to happen. So if you just carry through and you connect the dots on all of her plans between spending and revenue. So then if she can't get that, then she doesn't need the wealth tax to fund Medicare For All.
So couldn't she use it to fund something else? Yes, she probably could, but there are problems with the wealth tax in itself. Voters are fine with the idea, let's just tax the wealthy and let's make it a wealth tax instead of an income tax. Because one of the things voters worry about when they hear about raising taxes on the rich is, well how do you define rich? Don't all taxes just filter down to at some point they affect me? That happens and doesn't happen. I think with a wealth tax, voters think that I'll never have $50 million worth of stuff. So sure, that's fine with me. Let's say it falls all the way down to $10 million.
I'm never going to have $10 million worth of stuff. That's most voters, not all but most. So I think the wealth tax is plausible except there's this matter of constitutionality, and this gets a little bit complicated because it's a legal technicality. But in the Constitution, the US constitution, it says, "Any direct tax, and a wealth tax would be a direct tax, has to be apportioned among the states according to population." You cannot impose a tax that way like this because of the differences in population, you would have to have a much higher wealth tax in lower populated states and it would just become ...You'd end up having 50 different tax rates for 50 different states. It would literally have to be different for every state. That's inherently confusing. Then it would just be prohibitively high for some states.
So you would cause all these terrible and unintended consequences. I mean, wealthy people would just leave, they would just flat out have to leave West Virginia and Mississippi because the tax will be too high and it's hard to write a law around that because it's in the Constitution.
Alexis C: 08:49 Right.
Rick Newman: 08:49 So it's probably not going to be worth the fight. If Congress were to pass a law, like many things we've seen happen with Trump, it would probably be challenged immediately. The Supreme Court these days, by the way, leans conservative. So the wealth tax may be a nonstarter. But nonetheless, if Elizabeth Warren's goal is to maybe have this as a plausible way to come up with some money but also piss off all the billionaires and get them to be attacking her to make her look like somebody billionaires hate, she's totally succeeded.
Alexis C: 09:18 Another billionaire she attacked pretty quickly was Michael Bloomberg when there was word that he would be entering the race. I think she tweeted something at him about, come on and join and she wants to talk to him about her billionaire calculator and how much he would owe under her wealth tax. I don't believe Michael Bloomberg has responded to that. I think he has bigger fish to fry right now.
Rick Newman: 09:40 Bloomberg's thinking ... So think about who Mike Bloomberg's friends are. It's wealthy Wall Street people and-
Alexis C: 09:47 Leon Cooperman already said if Mike [crosstalk 00:09:49] runs he would-
Rick Newman: 09:50 I'm sure he's hearing from them. "Could you please get in the race so that we don't have to deal with Elizabeth Warren and her horrible wealth tax and all these other things that are going to bankrupt the country." Or even worse from some people's perspective, hand Trump an easy win that he shouldn't otherwise have because he's without a doubt going to brand Warren as a socialist and some voters are going to buy that.
So Bloomberg's probably hearing this from his friends and he did float this idea. Now he hasn't said he's running. What he has done is file to run right before the deadline in Alabama where you have to file if you want to be on the ballot. If he were to run, he would without a doubt, position himself as the socially liberal but fiscally moderate and business friendly Democrat. By the way, he would without a doubt be the richest person in the race, far richer than Trump. Elizabeth Warren ... I mean, I love that she did this, her wealth calculator. So when these billionaires started griping and making headlines, I don't know if she was planning to do this anyway, but right around that time on her campaign website pops up a wealth tax calculator. So if you go there, the first thing it asks you, it says, "Are you a billionaire?"
Alexis C: 11:05 It's fun to play around with the calculator. I've done it.
Rick Newman: 11:07 I typed in no, which is the truth. But I did it more than once. Then I typed in yes. So if you type in no, you get options that say, "Well are you interested in the wealth tax and what the wealth tax paid by some prominent billionaires might be?" It's auto-populated with Jeff Bezos, the Amazon CEO, Mike Bloomberg. I think she put Leon Cooperman-
Alexis C: 11:26 After he's already-
Rick Newman: 11:26 Leon Cooperman is not one of the most prominent billionaires out there. Most people don't even know his name, but she's favoring him, I guess because he had the temerity to attack her publicly. So according to her wealth calculator, Mike Bloomberg's wealth tax in the first year would be about $3 billion in extra tax you'd have to pay. So his net worth is around 52 billion according to Forbes. Bloomberg does billionaires index and I don't know if they include Michael Bloomberg.
Alexis C: 11:55 I'm sure they do. I would imagine they do.
Rick Newman: 11:57 Let's say $52 billion. So 6% of that is around $3 billion. So do the math a little bit. It's $3 billion this year and then another 6% next year, and then another 6% year. So it's 6% per year. It's not a one time thing-
Alexis C: 12:14 Right.
Rick Newman: 12:14 So you can just plug some numbers in and you can see what Mike Bloomberg would have to earn a 6% return. You can see that-
Alexis C: 12:21 Just to stay-
Rick Newman: 12:22 Just to stay. Even-
Alexis C: 12:24 Her calculator and her wealth tax plan doesn't seem to take into account what these billionaires do philanthropically and I'm-
Rick Newman: 12:32 That's correct.
Alexis C: 12:32 I'm wondering if it should because they're giving a lot of their post-tax money to charities that are making a huge difference. Look at what Bill Gates is doing when it comes to research for cancer and we can go on and on with what these billionaires are doing very publicly and sometimes not very publicly.
Rick Newman: 12:48 Right. Bill Gates has signed up to the giving pledge so he is going to end up giving away most of his wealth and putting it in foundations and things like that-
Alexis C: 12:57 Along with Warren Buffet [crosstalk 00:12:56].
Rick Newman: 12:57 Has done that also. Leon Cooperman, I don't know if Leon Cooperman has ... I don't know if he's joined the giving pledge, but he did say in his own defense, he said, "I've given tons and tons of money away to charity and that, these billionaires, they're not just throwing a hundred dollar bills out the limousine. They are pretty careful about what they fund and their point is I earned this money and even if I'm not going to spend it on myself, I have the right to decide how to spend it."
Alexis C: 12:57 They should choose-
Rick Newman: 13:27 They want to spend it on the causes they care about. [crosstalk 00:13:30] A lot of these guys also, they want the least amount of money going to the government because they think the government spends it the worst.
Alexis C: 13:37 Look at what JP Morgan, Warren Buffet, and Amazon are doing when it comes to healthcare.
Rick Newman: 13:41 Yeah.
Alexis C: 13:41 They're taking matters into their own hands. So a lot of these billionaires I think are doing the same with their money in charitable ways.
Rick Newman: 13:46 You're right when you mentioned JP Morgan, Jamie Dimon is another one who has now come out criticized. He says, "She's vilifying successful people. She shouldn't be doing that." Jamie Dimon is a billionaire. I actually did not know he was a billionaire. Billionaire is such a rarefied club that it's hard to get there. Even if you earn $20 million as a CEO for 20 years in a row.
Alexis C: 14:08 Absolutely.
Rick Newman: 14:09 Because $20 million times 20 years is $400 million, you're not a billionaire.
Alexis C: 14:13 That's right.
Rick Newman: 14:13 That's if you don't spend any of it. So I guess Jamie has been in the business long enough and made good investments that he's now over the $1 billion mark. But he's another one. By the way, these are liberal billionaires.
Alexis C: 14:30 That's right.
Rick Newman: 14:31 I mean some of these are Democrats. I think Jamie Dimon, I don't know if he is still a Democrat. I think he used to be, and he leans that way. They're the ones attacking Elizabeth Warren. So in a way, these guys are attacking her from within her own party, just as some centrists are attacking her. By the way, Joe Biden is going to be attacking her more and more. So he has been going after her for the same reason. Joe Biden says, "We don't need to punish anybody, we can get America back to normal." It's his claim without punishing anybody. By that he means, we don't have to take large amounts of money from the wealthy and give them to somebody.
Alexis C: 15:11 You bring up a good point about Democrats within her own party turning against her now because I understand some of the big Democratic donors are basically telling Chuck Schumer, the minority leader, "Look out because we're not going to fund some of these campaigns, if Warren keeps on about all this." Which would make it very difficult for her to get anything done if she weren't able to have a Democratic Congress.
Rick Newman: 15:33 Playing right into her hands. I mean this is-
Alexis C: 15:36 Really, so you think that this is part of her grand plan?
Rick Newman: 15:38 I don't know. I don't know if she is [crosstalk 00:15:41]
Alexis C: 15:40 Could she really have foreseen it?
Rick Newman: 15:43 She could have foreseen it. I don't know if she is clever enough to have actually tried to bring about that very thing, but she said from the start during a presidential campaign, not doing our senatorial campaign by the way, her last one. But while running for president, she's not taking any big money donations. She's only taking small dollar donations. She's not going to have a super PAC, which is where the big money tends to go and she's raising tons of money. So if she becomes the nominee, it's quite possible that some of those funders won't be contributing money to what would basically be a Democratic super PAC. So that would be the Democratic National Committee and other groups that would at that point be campaigning on Warren's behalf. If you're a Democrat, you have to get behind Elizabeth Warren if she's a nominee.
Alexis C: 16:34 Now there's-
Rick Newman: 16:34 The funders don't though the big money.
Alexis C: 16:36 Exactly, exactly. They can definitely talk with their wallets. That Quinnipiac poll that we talked about earlier, found that 54% say they would never vote for Michael Bloomberg. Do you think that it's going to be?
Rick Newman: 16:49 That's Democrats?
Alexis C: 16:50 That's Democrats.
Rick Newman: 16:51 Yeah. That doesn't surprise me at all. This is why I think Bloomberg is not going to get in the race. I've written that. He is testing the water and I think he's going to find that the water is very, very cold because you've had more than 20 campaign operations on the ground in all the key states doing all the hard work for a year or more. I mean John Delaney has been doing this since the middle of 2017 and Democratic primary voters who've been listening to these candidates, they don't want a billionaire parachuting in at the last minute saying, "I'm here to rescue you."
I think another problem is, I guess Mike Bloomberg thinks he's the antidote to Joe Biden, but he's not. He and Joe Biden are actually very similar in terms of their policies. Joe Biden is one year younger. So what problem with Biden does Mike Bloomberg solve? The only one I can think of is that he can fund himself. He has unlimited money to fund a campaign, which Biden does not. Biden has struggled with fundraising, but if Biden becomes the nominee, he's going to have the whole party behind him.
Alexis C: 18:03 But would he not be a friendlier candidate for Wall Street or those moderate Republicans who might be on the fence?
Rick Newman: 18:10 I don't think so. I think Biden is actually pretty cozy with Wall Street. I think he won't come out and say it. If you have Biden on the ticket and not Bloomberg, who else are Wall Street donors going to give to? They are actually giving to Pete Buttigieg because he is relatively centrist and healthcare is the litmus test for where all these people stand. Elizabeth Warren and Bernie Sanders full-on Medicare For All, get rid of private insurance. Joe Biden and Pete Buttigieg, we need a new public option for people who can't get good private insurance, but leave private insurance intact. That's how you distinguish it. So yeah, Buttigieg is getting some funding and I think that's fine.
I mean he's a new player in the Democratic party. He's going to be around for awhile and you should have guys like that. If Buttigieg does not win and he's not favor to win at the moment, he'll be a speaker at the Democratic National Convention this summer. He could end up in a Democratic Administration as a cabinet member. I mean, he's obviously become a prominent and likable young face among Democrats who's going to be around for awhile.
Alexis C: 19:18 Well, you know what? I think that the next few debates are going to be really entertaining.
Rick Newman: 19:22 I think they're actually going to get better. You make a good point. I think we're still going to have 10 candidates in the November debate, but after that it's going to shrink and Joe Biden and Elizabeth Warren are going to have to stop treating each other like senatorial colleagues. I think both of them are going to start really highlighting the differences between them. We're going to see some fight from Joe Biden, I think, which we have to, if he's a viable candidate, we have to see Joe Biden coming out and really holding his ground in the middle because that's where he's being assaulted.
Alexis C: 19:54 All right. Want to thank everybody for listening to this podcast today and be sure to follow us. I'm @Alexistvnews.
Rick Newman: 20:02 I'm @rickjnewman.
Alexis C: 20:02 Be sure to go rate and review what you just heard. We'll be back next week with a fresh podcast.
Rick Newman: 20:06 All the billionaires check it out.