While Sens. Elizabeth Warren (D-Mass.) and Bernie Sanders (I-Vt.) have proposed making college free for everyone, Buttigieg is taking a more targeted approach of giving free tuition only to families he considers middle-class and lower. His new policy calls for reduced tuition at public universities for families earning $100,000 to $150,000 and no tuition for those below that threshold. Like several in the Democratic field, Buttigieg also proposes expanding Pell Grants to help low-income students pay for housing and fees and investing $50 billion in historically black colleges.
Buttigieg’s new economic plan includes proposals for universal prekindergarten, greater college access, major expansions of affordable housing and job training, and a bigger tax credit for the working poor. He plans to fund the $2.1 trillion worth of new expenditures over the next decade by hiking taxes on the top 1 percent of earners.
While Biden proposed free community college for all Americans, Buttigieg’s plan expanded that to include four-year public universities, but only for those in the bottom 80 percent. Warren and Sanders want free two- and four-year college for all and cancellation of most, if not all, of the $1.6 trillion in student loans. So far, Buttigieg has only called for student debt forgiveness for people in “low quality” programs, such as many for-profit schools.
“Pete is proposing plans targeted to making programs affordable for the middle class and below, not giving it free to everyone,” said Austan Goolsbee, an economic adviser to Buttigieg and former chief economist for President Barack Obama.
Others argue that Buttigieg does not go far enough in his policies and that his definition of $100,000 as the cutoff for the free college is arbitrary, especially in a nation where costs vary greatly in big cities and more rural areas.
“A $100,000 income ceiling is a lot of money in some states and not very much in others,” said Michelle Miller-Adams, a senior researcher at the Upjohn Institute for Employment Research who has studied existing free college programs in numerous states and cities.
There is widespread agreement in the 2020 Democratic field that inequality is a top issue and that the wealthy need to pay more in taxes, but how much more is a heavy debate.
Warren has pitched a wealth tax on Americans with more than $50 million in assets, among other new taxes on the rich. Buttigieg favors a more slimmed-down approach of taxing the capital gains of the top 1 percent every year by forcing the richest Americans to calculate how much their assets rose (or fell) each year, even if they do not sell the asset. The rich would have to pay the top income tax rate on any capital gains, according to the Buttigieg plan, a major shift from the current system, which taxes capital gains at a lower rate to encourage people to invest.
Buttigieg, who hails from the Midwest, casts himself as someone who understands the plight of the working class. In this latest plan, he is aiming to show some policy leadership by calling for a major expansion of the earned income tax credit (EITC) that helps the working poor, $200 billion more over the next decade for job training and $5 billion to ensure apprenticeships are available within 30 miles of every American.
“As president, I will measure success not just by the size of the stock market or gross domestic product, but by whether working and middle-class families are succeeding,” Buttigieg writes in the plan’s introduction.
His EITC plan is based off the Working Families Tax Relief Act that several Democratic senators proposed earlier this year, including Sen. Michael Bennett (D-Co.) who is also running for president. The goal is to increase the income of low-income workers with kids and without kids by giving them a refundable tax credit, meaning if the credit is larger than the amount of tax they owe, the U.S. government would write them a check.
An analysis by the left-leaning Center on Budget and Policy Priorities found that about 35 million American households would get a bigger tax credit under the plan, averaging about $1,000. The expanded tax credit would only be available to families earning under about $55,000 a year.
The EITC has historically had bipartisan support, as people must be working to receive it, but Republicans did not include an expansion of the credit in their 2017 tax bill.
“The EITC is the most effective anti-tax program we have, lifting millions of people, including children, out of poverty. It also increases employment,” said Michael Strain, director of economic policy at the right-leaning American Enterprise Institute. He called this particular proposal a “welcome development.”
Democratic candidate Julián Castro, the former secretary for housing and urban development in the Obama administration, has also proposed expanding the EITC. Castro would go even further and also make the child tax credit fully refundable, another benefit to lower-income families that Buttigieg did not include in his plan. Sens. Kamala D. Harris (D-Calif.) and Cory Booker (D- N.J.) have also pitched tax credits that would primarily benefit the bottom 60 percent, according to an analysis by the Institute on Taxation and Economic Policy.
Buttigieg is also launching new plans on Friday to invest $700 billion in universal prekindergarten and free child care from birth to age 5 for low-income families. On housing, he is pitching $430 billion over a decade to add or restore 2 million more affordable housing units and expand the low-income voucher program. These measures are on top of previously announced support for a $15 minimum wage and a $1.5 trillion green infrastructure plan.
Jeff Stein contributed to this report.