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Buttigieg Touts Progressive Economic Plan

The Wall Street Journal. logo The Wall Street Journal. 12/13/2019 Jacob M. Schlesinger and John McCormick
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Pete Buttigieg has leapt to the top tier of Democratic presidential candidates by touting himself as a moderate alternative to Elizabeth Warren and Bernie Sanders. But his economic platform still embraces an expanded role for government and a shift to the left.

Mr. Buttigieg has a Wall Street tax plan with new levies on financial transactions and capital gains. He wants to uproot decades of labor law, giving unions more clout to counter big business. And he proposes raising Social Security taxes and benefits, while also contemplating slavery reparations for African-Americans.

The South Bend, Ind., mayor has tangled with Sens. Warren and Sanders over their health-care and free-college plans, proposing smaller, more-targeted options. Yet, he has so far proposed $6.9 trillion in new government spending. That is much less than his more progressive rivals—but double that of former Vice President Joe Biden, the leading centrist in the race, and triple the total of 2016 Democratic nominee Hillary Clinton.

“Pete is working with the same color palette as Sanders and Warren, though they might be painting in brighter hues,” says Felicia Wong, president of the Roosevelt Institute, a progressive think tank. “When he talks about curbing corporate power, he is getting to the new thinking.”

Unlike the other leading Democratic presidential candidates, the 37-year-old Rhodes scholar has never held a seat in Congress. The lack of a national track record is to some a sign he lacks experience, but it also leaves him freer to define himself.

And in doing so, Mr. Buttigieg sidesteps ideological labels. Asked whether Democrats are veering into socialism, he told NBC’s “Meet the Press” in April that he believes in “democratic capitalism,” adding that “when capitalism comes into tension with democracy…democracy is more important.” Rather than left vs. center, he sometimes defines the choice as new vs. old, playing up his youth against the septuagenarian trio bunched together with him at the head of the pack.

Mr. Buttigieg’s economic outlook is shaped by his nearly three years as a McKinsey & Co. consultant and eight as South Bend’s chief executive, a term that ends Jan. 1. His supporters say those experiences give him a pragmatic and problem-solving approach.

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Those solutions, however meaningful in South Bend, can seem small in a national debate: knocking down blighted houses, narrowing streets, slowing traffic and luring ice cream shops and beauty parlors to distressed areas. He focused on restoring trust in government with initiatives like a one-stop-shopping 311 hotline for city services and a transparent process for streetlight repairs, says Mark Neal, his deputy mayor who ran the city when Mr. Buttigieg did a seven-month stint in Afghanistan as an intelligence officer in the U.S. Navy Reserve.

Mr. Buttigieg’s willingness to hold big-dollar fundraisers with prominent investors and executives—in contrast with Sens. Sanders and Warren—has drawn questions about his sincerity in challenging powerful economic interests. He is one of the biggest Democratic recipients of funds from the tech, finance and health sectors, according to the Center for Responsive Politics, a campaign-finance watchdog.

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“Mayor Pete Could Be Positive for Financials, Housing” was the title of a November report by Jaret Seiberg, an analyst for the Cowen Washington Research Group, assessing the implications of Mr. Buttigieg’s rise. He has “an appreciation of the benefits of capitalism,” Mr. Seiberg wrote. “We believe that approach would be well received in the market,” the report said.

Mr. Buttigieg has staffed his policy shop with Obama veterans. One is University of Chicago’s Austan Goolsbee, who wrote the economic plan for then-Illinois Sen. Barack Obama’s 2008 campaign, and later became chief White House economist. The “Pete for America” policy director is Sonal Shah, who spent decades moving between government, nonprofits, academia and business, including stints at both Google and Goldman Sachs Group Inc.—two companies frequently attacked by Ms. Warren.

Other advisers are as fresh as Mr. Buttigieg himself. Writing much of his economic platform is Danny Yagan, a 35-year-old economist at the University of California, Berkeley, who met Mr. Buttigieg when both were Harvard College undergraduates. Mr. Yagan is a rising star in the liberal economics world for studies questioning the benefits of business tax cuts, dissecting tax avoidance by the wealthy and addressing racial and income inequities in education. He is a frequent co-author with Berkeley colleague Emmanuel Saez, who helped write Ms. Warren’s wealth tax.

Like most other candidates in the race, the Buttigieg platform espouses a far more-activist government than Mr. Obama and Bill and Hillary Clinton ever proposed. The main 2020 agendas share in common plans to roll back much of President Trump’s signature 2017 tax cuts for business and the affluent, expand the earned-income tax credit for low- and middle-income workers and spend trillions of dollars on green infrastructure to make American industry carbon neutral by midcentury. They all focus more on redistributing wealth than expanding economic growth, and they try to show how they would pay for their plans without increasing government debt.

All the top Democratic candidates also propose making both health insurance and college more accessible to all Americans. But a major dividing line—pitting Messrs. Buttigieg and Biden on one side against Sens. Warren and Sanders on the other—is whether it is sufficient to subsidize the lower and middle classes, or whether it is necessary to create universal programs covering everybody.

As Mr. Goolsbee puts it: “The mayor thinks that if you don’t try to make everything free for everyone, you will have more funds left to apply to the most important cases.” In a recent television ad contrasting his college plan with Ms. Warren’s, Mr. Buttigieg derides her proposal to make it “free, even for the kids of millionaires,” calling it a political loser that would “turn off half the country.”

That prompted a Twitter scolding from liberal hero Alexandria Ocasio-Cortez, who said Mr. Buttigieg was missing the point of making government programs universal to ensure broad-based support. “Universal systems that benefit everyone are strong bc everyone’s invested!” wrote the freshman New York congresswoman, who has endorsed Mr. Sanders. “When you start carving people out & adding asterisks to who can benefit…cracks in the system develop.”

But beyond that fight, Mr. Buttigieg has adopted the rhetoric of a new generation of leading liberal economists articulating a more-expansive government role in the economy. He invokes their jargon about worker struggles in “gig” and “fissured” industries, while embracing government-run public options to compete with the private sector, not just for health care, but broadband, college and retirement savings.

Asked after a recent Iowa campaign event how he differentiates his platform from Mr. Biden’s, Mr. Buttigieg said his plan for “empowering workers I think goes further than a lot of what we’ve seen.” He calls for overhauling the 1935 National Labor Relations Act to, among other things, allow unions to bargain across multiple employers in the same industry, removing the New Deal-era rules limiting bargaining to a specific company. Organized labor has been a pillar of Mr. Biden’s political base since his first Senate run 47 years ago, and he is counting on union backing to help him win the nomination. Mr. Buttigieg sees the evolving labor market as a generational wedge issue, saying that “people in my generation may find ourselves changing careers more than our parents changed jobs.”

“He has done his homework, using a lot of the right words,” says Darrick Hamilton, an Ohio State University economist who backs Mr. Sanders and has consulted other Democratic campaigns this year—though not Mr. Buttigieg’s—on policies to close the racial wealth gap.

“My concern,” Mr. Hamilton adds, “is whether he is appropriating these terminologies and offering solutions that are meant to placate people without really embracing the structural changes that we need.”

Corrections & Amplifications: Emmanuel Saez is an economist at the University of California, Berkeley. A previous version of this article misspelled his first name as Emanuel.

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