Politics

President Elizabeth Warren: Here’s what it would mean for California

Sen. Elizabeth Warren is proposing dozens of policy plans in her presidential campaign that revolve around a premise: The rich and powerful have rigged a corrupt system in their favor, and the antidote is “big structural change.”

More conservative parts of the country might stiffen at much of what Warren wants. But California is already doing — or at least exploring — parts of her wish list.

Gov. Gavin Newsom, like Warren, wants to negotiate contracts with drugmakers to offer generic medicines to bring down costs to consumers. Warren is proposing free universal preschool, something California has already started implementing for low-income children. And while Warren envisions tuition-free public college, many university and community college students in California already don’t pay tuition.

But there are also differences between what the Massachusetts senator wants and what California is doing. Here’s what would be in store for the state under a Warren administration.

Health care

Californians could keep their private health care insurance if Warren were elected. At least for a while. That is a key difference between how Warren and fellow progressive Sen. Bernie Sanders want to implement Medicare for All.

Sanders would start transitioning to a government-run plan right away. Warren prefers to wait until her third year in office to ask Congress to support the plan, which would ultimately move more than 157 million Americans from their private insurance to a system the government would administer.

“My plan will reduce the financial and political power of the insurance companies — as well as their ability to frighten the American people — by implementing reforms immediately and demonstrating at each phase that true Medicare for All coverage is better than their private options,” Warren wrote in Medium.

Until that transition, Warren would give Medicare coverage for free to everyone under 18, along with families making less than $51,000 annually. That would cover a little more than a third of families in California, according to census figures. Everyone else who now receives insurance through employers could buy into the Medicare program.

Warren wouldn’t wait as long to do something about prescription drug costs. Soon after taking office, she would take executive action to lower the price of EpiPens, HIV/AIDS drugs and insulin. She would also have the federal government either produce certain generic drugs itself or sign contracts with companies to do so.

Campaign 2020: How we cover candidates

The Chronicle is examining what California would look like if the major Democratic presidential candidates were elected and could implement their top policy priorities. The candidates’ positions are taken from their websites, comments they have made during the campaign, and in some cases legislation they have sponsored in office. Here are the other installments in this series: Joe Biden, Mike Bloomberg, Pete Buttigieg, Amy Klobuchar, Bernie Sanders. Previous stories and all The Chronicle’s 2020 campaign coverage can be found at sfchronicle.com/politics.

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That is similar to what Newsom proposed in his state budget this month. He wants California to negotiate contracts with drugmakers as a way to leverage the power of the nation’s largest state to lower prices.

“They’re generic drugs, but the drug industry has figured out how to manipulate this industry, keep jerking prices up and up and up,” Warren said at a recent candidates debate. “So my view is: Let’s give them a little competition.”

Finances, taxes

California’s wealthiest residents would pay a lot more in taxes under a Warren administration. Higher taxes for the rich are a selling point — literally — for Warren, whose campaign website offers mugs that say “Billionaire tears,” a nod to a former Wall Street executive who teared up during a television interview when talking about her tax plans.

Last year, for the first time in U.S. history, the nation’s 400 richest families paid a lower effective tax rate (23%) than the poorest bottom half of households (24%), according to UC Berkeley economists Emmanuel Saez and Gabriel Zucman, who are supplying the research to bolster Warren’s and Sanders’ tax-the-rich plans.

Warren wants a 2% annual tax on people with more than $50 million in wealth and an additional 1% tax on those with more than $1 billion. Her tax would hit roughly 75,000 families nationally and raise $2.75 trillion over 10 years, her campaign says. Saez estimates it would affect roughly 18,750 families in California with incomes above $50 million and about 900 billionaires.

But Howard Gleckman, a senior fellow at the Urban Institute’s Tax Policy Center, said taxing the super-rich wouldn’t generate as much revenue as Warren expects.

“In the real world, nobody will pay tax rates this high. They might stash assets under a mattress (though it likely would be a very nice mattress). They might spend down their assets to avoid — or reduce — their wealth tax,” Gleckman wrote in Forbes. “Or, most likely, they’d use some of their vast wealth to hire very expensive, very smart lawyers who would figure out other ways for them to avoid these taxes.”

Corporate taxes would go up, too. Warren would raise the top corporate tax rate to 35%, up from its current 21%. Corporations with profits above $100 million would pay an additional 7% tax.

Warren doesn’t oppose all tax breaks. She supports repealing the $10,000 cap on state and local tax deductions that the 2017 Republican tax law imposed, a provision that hit people in high tax states such as California hard. As many as 2.6 million Californians annually claimed more than $10,000 in such deductions before the federal law changed.

Education

Good news for those who get into a University of California or California State University campus: Two- and four-year public institutions would be tuition-free for everyone, even the children of wealthy families, under a Warren presidency. She would also invest an additional $100 billion in Pell Grants to help people pay for non-tuition-related college costs.

Many California students already pay no tuition. UC undergrads whose families earn $80,000 or less can attend school tuition-free; one-third of undergraduates qualify. In the CSU system, the threshold is $70,000; 63% of students qualify. California already offers free tuition for the first two years of community college for first-time students who attend full time.

One of Warren’s rivals for the Democratic nomination, former South Bend, Ind., Mayor Pete Buttigieg, criticizes plans by Warren and other candidates for free college with no income limits. He said recently that he didn’t think “subsidizing the children of millionaires and billionaires to pay absolutely zero in tuition at public colleges is the best use of those scarce taxpayer dollars.”

Warren responded that under her tax plan, “the lowliest millionaire” would pay more in taxes. “If he wants to send his kid to a public university, then I’m OK with that,” she said. “Because what we really need to talk about is the bigger economic picture here.”

A Warren presidency also would bring good news to most people holding student debt. She would cancel up to $50,000 of debt for 95% of borrowers — roughly 42 million people nationwide. She contends that it wouldn’t need to be approved by Congress. The secretary of education holds a little-known power to cancel student debt under a 62-year-old law, Warren maintains.

If Warren invoked this power, it would probably inspire a host of lawsuits. It could also have the unintended consequence of giving borrowers a huge tax bill, as canceled student debt is considered to be taxable income.

Preschool-age children of low-income families would get free child care in a Warren presidency. Families making more than 200% of the federal poverty line — a household income of $26,200 for a family of four — could also participate and pay no more than 7% of their income for the benefit. It would be funded by her tax on the ultra-wealthy.

Environment

Warren’s environmental plan could mean big business for California, home to 58% of the nation’s venture capital investment in clean-energy technology in 2018, according to an analysis by the nonpartisan Next10 organization.

Warren wants to invest $3 trillion over the next 10 years in green research, manufacturing and exporting of American-made products. She would fund this by rolling back the 2017 tax cuts.

The centerpiece of her plan is for the federal government to spend $1.5 trillion over that period to “help create the kind of sustained economic demand that promotes innovation.” She envisions the federal government buying zero-emission vehicles, energy storage technology and energy-efficient light bulbs and then selling them to state and local governments at discounted rates.

Immigration

Warren would loosen immigration laws to help “Dreamers” — undocumented immigrants who were brought to the U.S. as children and are temporarily protected from being deported. California is home to 223,000 of them.

Warren would reinstate the Deferred Action for Childhood Arrivals program that President Trump suspended, and expand the program to include anyone brought to the United States before they turned 18.

She would also expand how many refugees the U.S. takes in to 125,000 in her first year in office. She would expand that to 175,000 annually by the end of her first term. Trump has capped the total at 30,000 annually.

Joe Garofoli is The San Francisco Chronicle’s senior political writer. Email: [email protected] Twitter: @joegarofoli

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