The heyday of the “high-skill” worker is ending.

As corporations find new ways to replace labor with machines, more and more professionals are seeing their vaunted credentials lose their value. Many have been forced into menial jobs — while others cling to their prestigious positions only by accepting ever more exploitative terms of employment. 

The class distinctions that once cleaved skilled workers from common laborers are therefore eroding. And as they do, the former are starting to embrace the politics of proletarians: identifying with the masses instead of management — and demanding structural change instead of milquetoast reforms. Today, “high-skill” workers’ declining fortunes are a problem for them; tomorrow, they will be one for the oligarchic elite. 

Or so Karl Marx argued in 1848. 

The ensuing 17 decades weren’t kind to Marx’s prophecies. Instead of melting every strata of worker into a uniform proletariat, capitalism generated myriad new gradations of skill, pay, and prestige. And rather than immiserating professionals and proles alike, market economies drastically raised living standards for workers in general, and the highly educated in particular (or at least, they did so once leavened with a spoonful of socialism).

Nonetheless, some now suspect that Marx’s predictions may have been less wrong than premature. The steam engine might not have devalued all skilled labor, but artificial intelligence sure seems like it might. What’s more, even before the past decade’s AI breakthroughs, many college graduates were already struggling to find white-collar work, growing disillusioned, and drifting left.

In a recent New York Times essay, the (very good) labor reporter Noam Scheiber argues that the past 15 years of economic change have taken a toll on young college graduates, bequeathing them “the bank accounts — and the politics — of the proletariat.”

In his telling, recent grads feel they were sold a bill of goods. Throughout their childhoods, every authority promised that they could attain a comfortable, middle-class lifestyle, so long as they secured a university diploma. But too many students took this offer. The economy started minting more knowledge workers than white-collar jobs, thereby consigning a historically large share of graduates to unemployment or low-wage service work.

As a result, in Scheiber’s telling, the politics of college graduates have been transformed. In the Reagan and Clinton eras, the highly educated tended to see themselves “as management-adjacent — ­as future executives and aspiring professionals being groomed for a life of affluence.” Throughout the 1980s and 1990s, university graduates voted to the right of working-class Americans, while holding more conservative views on economic policy.

Now, grads are more likely to identify with rank-and-file workers than their employers. In fact, overqualified baristas, discontented coders, and precariously employed journalists have spearheaded a boom in labor organizing. 

Meanwhile, college-educated voters have become slightly more economically left wing — and much more Democratic — than those without degrees.

Scheiber acknowledges that these political shifts have multiple causes. But his account of college graduates’ realignment is still largely materialist: The demographic was increasingly “proletarianized” — which is to say, shunted into working-class jobs — and moved left as a consequence.

There’s much truth in Scheiber’s reporting. And in his new book, Mutiny: The Rise and Revolt of the College-Educated Working Class, he offers keen insights into the radicalization of the overeducated and underemployed. 

But his big-picture narrative about college grads’ shifting fortunes and politics is a bit misleading. A variety of forces have been pushing highly educated voters to the left. But a broad collapse in the economic position of the well-educated is not one of them.

The (college) kids are all right

Without question, the past two generations of college graduates have faced some unique economic challenges. The cost of a university education has risen sharply since the 1990s, forcing students to shoulder larger debts. And in the cities where white-collar jobs are concentrated, housing costs have soared. 

Nevertheless, there is little evidence that college-educated workers have been proletarianized, en masse. To the contrary, by some metrics, graduates are doing better today than they were in the 1990s.

In painting the opposite picture, Scheiber leans heavily on anecdotes. Much of his reporting centers on college-educated workers who are stuck in low-wage service jobs. And he suggests that the fate of these scholarly waiters and well-read retail clerks is becoming increasingly common. 

To make this case, Scheiber cites Federal Reserve data on the types of jobs held by “underemployed” college graduates — meaning, graduates whose occupations don’t require a degree. He notes that, among this subset of young grads, the percentage with well-paying, non-college jobs — such as insurance agent or human resource worker — has declined over time, while the share with low-wage jobs has increased.

This is true. But Scheiber’s presentation of the data point is misleading. 

Low-wage workers do account for a rising share of underemployed college graduates. And yet, the percentage of college grads who are underemployed has declined over time. For this reason — according to Scheiber’s preferred data set — recent college graduates were less likely to hold a low-wage job in 2023 than they had been three decades earlier.

More critically, throughout this period, the share of recent graduates in low-wage jobs was always tiny. In 2023 — the most recent year in the Fed’s data — just 4.5 percent of young college-educated workers held such positions. Among college graduates of all ages, meanwhile, that figure was 2.2 percent. Rep. Alexandria Ocasio-Cortez’s early career as a struggling bartender saddled with student loans is a key part of her political biography, but it’s not the typical experience for the diploma set. Nor has it become more common over time. 

Of course, just because a job requires a college degree doesn’t mean it’s well-paid. But college grads’ wages have also trended upward over time. And the gap between the pay of workers with a degree and those who only completed high school has widened slightly since 2003.

Scheiber argues that such wage data obscures as much as it reveals. He concedes that college grads earn much more than working-class Americans “on average.” But he suggests that these averages are skewed by the knowledge economy’s inequalities: If a small minority of workers in tech and finance reap massive pay gains, then the average wage for college graduates can go up, even if most are treading water or falling behind.

And yet, the median wage data tells the same general story as the averages: Between 2000 and 2025, the median college graduate’s earnings rose both in absolute terms, and relative to the median worker with a high school diploma (albeit only modestly). 

All this said, Scheiber identifies one indisputably concerning trend in the college-educated labor market: For five years now, the unemployment rate for recent college grads has been higher than the overall jobless rate. This is highly unusual; historically, young grads have had an easier time finding jobs than the typical worker. 

Still, it’s important to put this trend in context. Young college graduates remain much less likely to be unemployed than other workers of the same age. And joblessness still afflicts only a small fraction of graduates. In December 2025, the unemployment rate among recent grads was 5.6 percent; among all grads, it was only 3.1 percent.

None of this means that young college graduates have no legitimate grounds for complaint or concern. The point is merely that, in the aggregate, college-educated workers’ economic circumstances have not dramatically deteriorated, even as their political behavior has drastically changed. The “proletarianization” experienced by some college graduates therefore can’t explain more than a small fraction of the demographic’s leftward shift.

Why college graduates moved left (or “What’s the matter with Greenwich?”)

So, what can? Why have college graduates become so much more left-wing — in their economic attitudes, issue positions, and voting behavior?

There are many right answers to this question. Here, I’ll just sketch four:

1. The demographics of America’s college-educated population have changed.

“College-educated voters” are not a fixed caste of immortals, drifting through time — backing Calvin Coolidge in one era and Kamala Harris in another.

Rather, that phrase denotes a demographic category, whose internal composition is constantly changing. Over the past four decades, America’s college-educated population has grown less white and more female. In 1980, just 13.6 percent of American women over 25 had a college degree, while just 7.9 percent of Black Americans did, according to US Census data. By 2024, those figures had jumped to 40.1 percent and 29.6 percent respectively. (Rates of college attendance among white and male Americans also rose over this time period, but at a much slower rate.)

This shift surely pushed the college-educated population leftward. Since the 1980s, women have been more likely than men to espouse progressive views on the economy and vote for Democrats in elections. And the same is true of nonwhite voters relative to white ones. Thus, the feminization — and diversification — of the college-educated electorate likely accounts for much of its liberalization. 

Put differently: If nothing else had changed about America’s society or economy since 1980, the changing demographics of college-educated voters would have been sufficient to move that population to the left.

2. The culture war led many socially liberal college graduates to become Democrats.

College graduates have been more socially liberal — and cosmopolitan — than less educated voters, since at least the 1950s. In the mid-20th century, however, cultural issues were less politically salient. Republicans and Democrats didn’t have uniformly divergent positions on immigration, feminism, racial justice, or the environment. 

But the major parties began polarizing on those subjects in the 1970s. And such issues became increasingly central to our politics in the ensuing decades. In part for this reason, college graduates have been drifting toward Democrats — and working-class voters, toward Republicans — for half a century.

The French economist Thomas Piketty illustrated this trend in 2018. In the following chart, negative values mean that Democrats did better with working-class voters than college-educated ones in that election year; positive values mean the opposite:

In other words, the highly educated’s realignment began long before the (real and supposed) 21st-century economic trends that Scheiber describes. 

To be sure, the “diploma divide” widened dramatically in recent years. Yet the inflection point for that shift was not the Great Recession, but rather, Donald Trump’s 2016 campaign — which associated the GOP with an unprecedentedly anti-intellectual, authoritarian, and xenophobic brand of nationalism. 

And there are other signs that it was the culture war — not economic strife — that drove college graduates toward Democrats.

For one thing, across Western countries, there is a tight correlation between how central social issues are to political conflict and how likely college-educated voters are to support left-wing parties.

For another, the college-educated voters who’ve joined the Democratic coalition in recent years are disproportionately affluent. Of the 57 counties that have consistently moved toward the Democratic Party in all three presidential elections since 2012, 18 have a median household income above $100,000. 

The same pattern shows up in individual-level voting data. In 2012, white voters in the top 5 percent of the income distribution voted to the right of Americans as a whole. In every presidential election since 2016, however, rich whites have been more Democratic than those in the bottom 95 percent of the income distribution.

Simply put, Greenwich did not swing toward Democrats because its people were proletarianized, so much as because the GOP was Trumpified. 

3. When socially liberal college graduates became Democrats, many adopted the economic orthodoxies of their new coalition.

To his credit, Scheiber acknowledges that the culture war played a big role in college graduates’ partisan realignment. But he suggests that this can’t explain the transformation of educated voters’ economic views. 

Which is reasonable. Perhaps, the rising salience of immigration, feminism, and authoritarianism have made college grads more likely to vote Democratic. But why would it have rendered them more pro-labor? Surely, one may think, the latter must have more to do with changing economic circumstances than culture war allegiances.

As I’ll note in a minute, I do think that college graduates’ shifting economic views partly reflect their material challenges.

But it’s also plausible that, to a large extent, the demographic has become more economically progressive because it’s grown more Democratic.  

Voters often switch parties on the basis of a few key issues — those core to their political identities — and then take dictation from their new coalition on other subjects. One can see this anecdotally in the evolution of “Never Trump” Republican pundits like Bill Kristol or Jennifer Rubin. Each broke with the GOP over Trump’s authoritarianism and foreign policy views, but subsequently embraced a variety of liberal policy positions. 

This dynamic — in which partisanship can drive economic ideology — is arguably visible in some of the polling that Scheiber cites. In his essay, he notes that college graduates are much more likely to approve of labor unions today than they were in the 1990s. And he interprets this as a sign that graduates have stopped seeing themselves as “management-adjacent.” 

And yet, in the Gallup survey he references, college graduates were 15 points more likely to support unions than those with a high school degree or less. Meanwhile, Americans with annual incomes above $100,000 were 6 percentage points more pro-labor than those earning less than $50,000.

Notably, this appears to be a novel development. According to American National Election Studies data, college graduates expressed warmer feelings for “big business” than for “labor unions” virtually every year between 1964 and 2012. Then, in 2016, they abruptly became more pro-union than pro-business. By 2024, America’s most educated workers were its most pro-labor.

Conversely, the least educated segment of Americans —– those without a high-school degree —– went from being the most pro-union segment of the workforce in the early 1980s to the least in 2016 (although, they still approved of labor unions by more than big business in that year). 

This pattern of support is difficult to explain, if we assume that a voter’s opinion on unions is a reliable index of their (perceived or actual) adjacency to management. On the other hand, if voters’ economic opinions are shaped by both their material interests and partisanship, then the disparities make perfect sense. Labor unions are associated with the Democratic Party. So, as college graduates have grown more Democratic, they’ve looked more kindly on unions. As the “poorly educated” (in Trump’s famous phrase) became more Republican, they became less likely to approve of labor than other Americans. 

If true, this would be consistent with a large body of political science data showing that partisans express more sympathy for groups that favor their political party. 

4. Millennials and capitalism got off on the wrong foot.

In saying all this, I don’t mean to deny that some college-educated voters have embraced radical, pro-labor politics, in response to material difficulties. 

Although recent graduates have not been proletarianized en masse, many millennials did graduate into a labor market scarred by the Great Recession. During our first, formative years as workers, we often struggled to secure well-paying jobs, as a direct consequence of Wall Street’s malfeasance. 

Millennials’ earnings and net worths eventually caught up to those of prior generations. But people’s political beliefs are typically forged during late adolescence and early adulthood. The 2008 crisis therefore left many millennials persistently skeptical of capitalism, even when it didn’t render them durably underemployed. The 2011 Occupy Wall Street protests, which crystallized these grievances for many recent graduates, were an important precursor to today’s left-wing activism.

Separately, young professionals in the media and academia have seen a genuine collapse in their economic prospects: It was much harder to earn a middle-class living at a magazine or humanities department in 2016 than it was in 1996. And it is harder still to do so in 2026. 

The “ideas” industries comprise a small share of the overall economy. But they exert wildly disproportionate influence over political discourse. Thus, the declining fortunes of aspiring journalists and academics has likely colored the worldviews of other politically engaged millennials and zoomers, even if their own industries are fairly healthy.

This said, these factors probably don’t have that much to do with the movement of college-educated Romney 2012 voters toward the Democratic Party. Rather, the Great Recession — and jobs crises within journalism and academia — help explain why perennially left-of-center subsets of the college-educated electorate have gravitated toward socialism in recent years.  

AI could still prove Marx right

Capitalism still hasn’t turned educated professionals into immiserated proletarians — or unified the working class in opposition to the bourgeoisie. 

This may be about to change. Certainly, AI poses a greater threat to knowledge workers’ class status than any previous technological breakthrough. Indeed, many tech CEOs are explicitly promising to put millions of white-collar workers out of a job. So, reports of the college-educated’s economic dispossession — and political mutiny — may prove prescient. But such declarations remain, for the moment, ahead of their time. 

For months, America’s war with Iran has been slowly suffocating the global economy. 

In March, Iran closed the Strait of Hormuz — the narrow waterway that links the Persian Gulf’s oil reserves to global markets. As a result, energy prices steadily rose while stock markets and growth forecasts fell. Analysts started warning that, if the Strait did not reopen soon, the global economy could slide into a deep recession.

And then, Tuesday night, these storm clouds scattered: The US and Iran reached an agreement on a ceasefire, one that would ostensibly pause American attacks on the Islamic Republic, in exchange for a resumption of transit in the Strait.

Oil prices swiftly fell by as much as 20 percent, while the Dow jumped more than 1,000 points.

And yet, some fear that Wall Street’s mood has brightened faster than geopolitical reality. Israel continued attacking Iranian proxies in Lebanon on Wednesday, in alleged defiance of the ceasefire agreement. Iran, meanwhile, kept the Strait shuttered, accused the US of violating the terms of their understanding, and declared negotiations with America “unreasonable.”

To get a clearer picture of what all this means, I spoke with the oil market expert Rory Johnston on Wednesday. Author of the popular newsletter, Commodity Context, Johnston has long argued that investors are underpricing the risks of the US-Iran conflict.

We spoke about why time may be on Iran’s side in a war of attrition, what a postwar global economy could look like, and how US consumers will fare in the most optimistic — and pessimistic — scenarios. Our conversation has been edited for clarity and concision. 

Now that there has been a ceasefire — sort of — what do you think is the most likely scenario for this war, the Strait of Hormuz, and oil markets going forward? 

I think we’ve taken a step in the right direction. But there are many unresolved questions. As of Wednesday afternoon, it does not appear that there has been any resumption of flow through the Strait. And in fact, we’ve seen many, many, many explosions and attacks continue during the ceasefire. 

My core assumption about this crisis was always that [President Donald] Trump was the actor most likely to cave — he is the one most sensitive to external market pressures. Given that, the most likely course of the war was that Trump would, eventually, unilaterally de-escalate. And Iran would retain quasi-control of the Strait of Hormuz. 

And that seems to be the situation that we are trending toward, which — while problematic — is much better than the doomsday scenario.

But Iran has stressed that it is only allowing a limited number of ships through the Strait and that the waterway will remain under control of the Iranian Revolutionary Guard Corps. We had accounts last night that Iran would only be allowing 10 to 15 ships through a day. If true, then that wouldn’t be much of a change from the status quo.

But would that be temporary? If the ceasefire leads to an actual peace agreement — which allows Iran to collect tolls on ships in the Strait — wouldn’t Tehran want a lot of traffic to move through that waterway?

Yeah. If the US Navy withdrew — and the bombing stopped and Iran felt safe and secure — then it would have an interest in resuming a moderate level of flow.

The issue is: Trump has been saying, “Let’s negotiate. And while you’re negotiating, just do us a favor and reopen the Strait, so that the global economy doesn’t crash while we’re talking.” But that’s basically asking Iran to forfeit its main source of leverage. Iran has its foot on the aorta of the global hydrocarbon market. It’s probably not going to step off before securing a more durable agreement.

So, the question is: Can the negotiations that begin Friday lead to such an agreement? And I think that’s the trillion-dollar question right now. 

Let’s say we do get a peace deal, in relatively short order. In the most realistic version of that scenario, what can Americans expect to experience economically? What happens to the prices of gasoline, travel, and other energy-related commodities?

If this holds up, then we’re going to avoid the scenario where America’s average gallon of gas costs $6. But even if everything goes perfect from here, the world will still be operating with about half a billion fewer barrels of oil than it would have had, were it not for this war.

And that’s because the Gulf states had to ramp down oil production — since, without the Strait, they had no way to transport or store all of that crude.

Right. And even if flow through the Strait resumes today, it’s going to take weeks to months for them to get that production back to pre-war levels. 

What would that mean for products that are downstream from fossil fuels — jet fuel, plastics, semiconductors, etc.? Would it take longer for the prices of those things to normalize? 

Yeah. For one thing, there haven’t been many confirmed attacks against oil fields or oil processing facilities in the Gulf. But there have been attacks on refining assets and petrochemical facilities. So productive capacity is down.

At the beginning of the year, a barrel of diesel was $30 more than a barrel of crude oil. As of right now, it’s nearly $70 more. But that’s down from a high watermark in late March of about $90 a barrel. So, the prices of both crude and products have come down. But markets for the latter remain very tight. And they will likely remain tighter relative to crude going forward.  

Let’s talk about the more pessimistic scenario. At this point, what’s the most plausible, worst-case outcome? What are you worried about?

The most obvious answer is that we get to Friday, no one can agree, and then we’re back in the same place as we were before the ceasefire.

Of course, we now know that there’s some appetite from the White House for an agreement. We can see that they’re responsive to market pressure. But Iran can see that too.

From Tehran’s strategic point of view, they have an interest in dragging this out.

So, let’s say that Iran decides that time is on their side and feels no rush to back off its most audacious demands. If the Strait remains effectively closed for another two months, what would that mean for US consumers?

By that stage, I think we will see things like $200-a-barrel crude. And that’s assuming that there is no escalation in tit-for-tat attacks on Gulf energy infrastructure. 

But if we just get pre-ceasefire conditions continuing until June, we’ll be in a situation where prices will need to rise until they force demand destruction.

In other words, prices will need to be so high that consumers have no choice but to use less energy. 

Right. Let’s say we have a 10-million-barrel-a-day deficit in the market. There’s no way that supply can react fast enough to fill that hole. So, to stop the global oil market from basically cannibalizing itself — and drawing inventories down to zero — you’ll need to ramp up prices until people just stop consuming. 

In Western countries, that will manifest as extremely high prices. But people will manage. In the developing world and the Global South, that will manifest as outright shortages. Ultimately, you would need a large drop in consumption. If that doesn’t happen in the West, then it will happen in poor countries.

And the same will happen with diesel and jet fuel.  

How much would America’s status as an energy exporter protect us in that scenario? After all, high oil prices are good for oil producers. So America’s terms of trade would improve: The stuff we export would become more valuable, relative to the stuff we import. And oil-rich regions of the country would presumably reap some benefit. 

Separately, we’re less reliant on the Gulf’s energy supplies than Europe or Asia. So, might those factors save us, if this ceasefire falls apart?

The United States — and North America, more broadly — remains the most energy secure area in the world. We likely won’t see shortages here, although we will feel the price pressure. 

So yes, that will benefit America’s terms of trade in a way. But the distributional effects will be extreme. You could see a boom in Texas and New Mexico, for example. But it will hit consumers across the entire United States. And it will hit them much harder on the coasts because you have more trade exposure there than mid-continent. 

More fundamentally, at the end of the day, if prices continue to spiral upwards, and we do have shortages throughout the Global South, that is a world of deep, deep recession. Much of the planet would probably be in an economic depression. 

No matter how energy-secure the United States is, it is still part of a global economy. And it will ultimately feel the economic ramifications of that economy downshifting in all sorts of ways. This would not be good for the median voter, by any means. It would feel like a massive tax increase. Markets would tumble. The world would simply be forced to consume less than it did before this war began.

A bold new idea is taking the Democrats by storm: massive middle-class tax cuts. 

Last week, two of the party’s rumored 2028 candidates — Sens. Chris Van Hollen and Cory Booker — unveiled plans to fully exempt tens of millions of Americans from federal income taxes.

Under Van Hollen’s policy, individuals who earn less than $46,000 — and married couples who earn less than $92,000 — would owe nothing to Uncle Sam each year (outside of their payroll taxes, anyway). And millions of Americans who earn more than those sums would also receive a hefty tax break. Under Booker’s plan, meanwhile, Americans would pay no federal income tax on their first $75,000 in earnings. Both senators would finance their tax cuts by soaking the super rich.

The details of the two bills vary considerably. But each reflects the same general proposition: The Democratic Party needs its own “No Tax on Tips.”

In 2024, Donald Trump endeared himself to many service workers by arguing that their tipped income should be exempt from federal taxes. Kamala Harris quickly embraced the policy. But by then, Trump had already branded the GOP as the party of simple, sweeping tax cuts for the working class.

Many Democrats want to steal that mantle. And “no federal tax on any of your income” presumably beats “no tax on tips” (or, as Trump has also enacted, “no tax on overtime”).

But the two proposals also represent the culmination of a decades-long trend in Democratic politics. 

Call it the rise of 99 percentism: The belief that only the top 1 percent, or even the small coterie of billionaires within it, should be expected to finance government benefits.

For much of the 20th century, Democrats were comfortable asking the middle class to pay higher taxes in exchange for more services. By the 1990s, however, the party no longer had the stomach to substantially raise taxes on anyone but the upper middle class and above. In 2008, Barack Obama promised not to raise taxes on any family earning less than $250,000; in 2020 and 2024, Joe Biden and Kamala Harris raised that cutoff to $400,000.

The party’s left flank, meanwhile, has also lost its enthusiasm for broad-based taxation. In her 2020 presidential run, Sen. Elizabeth Warren (D-MA) proposed a wealth tax on fortunes of over $50 million. More recently, Sen. Bernie Sanders (I-VT), one of the last prominent voices on the left to champion higher middle-class taxes, unveiled his new “defining vision for our age” — a bevy of new social programs funded exclusively through wealth taxes on billionaires. 

This shift has a coherent political logic. Democrats have grown increasingly dependent on upper middle-class support — while Americans writ large have grown increasingly distrustful of their government (and thus, more reluctant to shoulder the costs of expanding it). 

As a substantive matter, however, 99 percentism is incoherent. Democrats can support a robust welfare state or ultra-low taxes on the middle class — but they can’t do both. 

“If what you end up with is a tax code that is nominally progressive but low, you will have a government that’s too poor to achieve the goals that the American people want to achieve,” Vanessa Williamson, a senior fellow at the Brookings Institution, told me. “You’ll have a poor democracy, and it’s very hard to defend a poor democracy.”

The case for “no tax on incomes”

Before examining the problems with Booker and Van Hollen’s tax packages, it’s worth spelling out the case for them in a bit more detail.

Ever since the post-pandemic surge of inflation, America has been in an anti-tax mood. Between 2020 and 2025, the share of Americans who deem their federal tax burden “too high” jumped from 46 percent to 59 percent in Gallup’s polling. Over roughly the same period, the percentage of voters who think the government is “trying to do too many things that should be left to individuals and businesses” rose from 41 percent to 55 percent.

Recent trends in state-level fiscal policy appear to reflect these sentiments. In 2023 and 2024, states collectively cut taxes by $15.5 billion and $13.3 billion respectively — the two largest annual reductions on record.

In this context, calls for dramatically reducing ordinary Americans’ tax bills could plausibly resonate. 

Furthermore, middle-class tax cuts are a simple and fast-acting means of addressing voters’ affordability concerns. Every household has a unique set of burdensome expenses. The government can’t create a program or price control that directly addresses each and every one. But if you give families more cash, they can use it to defray whichever costs they find most burdensome. 

Of course, Uncle Sam needs tax revenue to function. But a proponent of the Booker-Van Hollen vision could insist that the richest 1 percent is fully capable of shouldering this burden. 

After all, that small segment of the public commands about 21 percent of the nation’s income and 32 percent of its wealth. And thanks to various loopholes, some billionaires pay a lower effective tax rate than middle-class families. By shaking down these pampered plutocrats, Democrats can drum up enough money to cut the middle class’s taxes — and increase their social benefits — simultaneously (at least, according to this line of thinking).

Trump has demonstrated the political potency of big, simple tax cuts for workers. But his party’s inveterate commitment to billionaires’ interests limits how much it can actually do for the middle class. Democrats therefore have an opportunity to beat Trump at his own game.

Booker and Van Hollen’s bad math

Booker and Van Hollen are probably right to see some political upside in middle-class tax cuts. But they haven’t been clear-eyed (or else, forthright) about the costs of their agendas.

Van Hollen’s middle-class tax cut would reduce federal revenue by $1.5 trillion, while Booker’s would slash it by more than $5.5 trillion. (For context, “No Tax on Tips” — the inspiration for these packages — will cost the Treasury just $83 billion over the next 10 years.)

And yet, both senators officially support drastically expanding America’s welfare state. They have each backed legislation that would subsidize child care costs, socialize the health insurance system, make public college tuition-free, give “bonds” to babies, establish universal prekindergarten, and provide working-class families with a child allowance, among other things.

Taken together, these initiatives would increase federal spending by more than $30 trillion over a 10-year period. 

Even if one stipulates that Booker and Van Hollen’s Medicare For All bill is a pipe dream — and that their real health care goals are to reverse Trump’s Medicaid cuts and expand Obamacare subsidies — their social agenda would still cost many trillions of dollars.

And, while nobody wants to hear about it much these days, merely financing our existing spending commitments to the elderly remains an unsolved problem. Both senators — like virtually all Democrats — oppose cutting Social Security and Medicare benefits. Yet the former program’s trust fund is poised to run out in 2033. At that point, sustaining existing Social Security payment levels will require upward of $4 trillion in new funding (over the standard 10-year budget window). Medicare is also paying out more than it takes in. And covering that gap will cost trillions over the coming decade.

All this makes it hard to reconcile the Democratic senators’ spending commitments with their tax plans. Nonetheless, both Booker and Van Hollen insist they don’t wish to increase America’s high and rising deficits.

A welfare state can’t subsist on the rich alone

In keeping with 99 percentism, Booker and Van Hollen ostensibly believe that Democrats don’t need to choose between building a Western European-style welfare state and slashing middle-class taxes so long as they also soak the rich.

But this is implausible for several reasons.

For one thing, taxes on the super rich don’t “pay for” new social programs in quite the same way that taxes on the middle class do.

This is because the point of offsetting welfare spending with taxes is, in part, to prevent inflation (a phenomenon Democrats have some unfortunate recent experience confronting). 

When you expand social benefits, you increase demand for goods and services throughout the economy. Give a working-class family a child allowance, and they’ll be able to afford more discretionary purchases, such as electronics or restaurant meals. Expand access to health insurance, and more people will visit doctors and undergo medical procedures. Subsidize child care and more parents will enroll their kids at daycare centers.

As Americans increase their consumption in this way, they will bid up the price of labor and other resources — unless tax hikes reduce consumer demand in other parts of the economy.

Unfortunately, billionaire taxes aren’t very effective at reducing demand. Shave $10 billion off Jeff Bezos’s $224 billion fortune, and he won’t have to change his lifestyle at all. His savings will fall. But his consumer spending will likely remain about the same as it was before. 

Separately, the amount of revenue one can squeeze from the super rich is inherently limited: If you raise their income tax rates past a certain threshold, they will respond by working less or shifting their capital overseas. If you expropriate their wealth at a high enough rate, meanwhile, they will eventually cease to be super rich. 

To be sure, the government can (and should) extract trillions of dollars in additional revenue from the super rich. But it almost certainly cannot collect enough cash from the 1 percent alone to finance both a robust welfare state and low middle-class tax rates.*

For these reasons, no large welfare state on Earth is funded overwhelmingly through taxes on the rich. To the contrary, by some estimates, Western European social democracies actually tax billionaires at a lower rate than the United States does. America isn’t a low-tax nation because we refuse to soak our wealthy, but rather because we lightly tax our working, middle, and upper-middle classes.

Senate Democrats aren’t Bolsheviks

Thus, Booker and Van Hollen’s fiscal agendas simply do not work, even if we assume that congressional Democrats’ appetite for taxing millionaires and billionaires is unlimited.

But of course, this is not actually the case.

As we saw during the Biden presidency, moderate Democrats are willing to tax the rich — but only so much. Even the House version of Biden’s Build Back Better Act — which proved too progressive to pass the Senate — would have raised taxes on the wealthy and corporations by only $1.5 trillion. The party’s ultimate spending bill, the Inflation Reduction Act, generated only about $457 billion in revenue.

If Democrats reclaim full control of government in 2029, their Senate majority is likely to be narrow. The party’s most moderate members will therefore have veto power over its fiscal policy. 

Even if these centrists support taxes on the rich 10 times larger than those endorsed by former Sens. Joe Manchin and Kyrsten Sinema in 2022, Democrats still wouldn’t be able to implement more than a fraction of their social agenda (at least, without running up the deficit in a potentially inflationary manner).

In practice then, every dollar that Democrats dedicate to middle-class tax cuts is one that they cannot spend on expanding the welfare state. 

“If you’re going to have a trillion dollars — or maybe a little more — from new taxes on the wealthy, you want to make sure that those funds are addressing America’s biggest problems,” Will Raderman, a senior policy adviser at the Searchlight Institute, told me. “Shrinking the tax base does not seem like it should be a top priority.”

Indeed, it is hard to argue that lowering middle-class tax rates is more important than reversing Trump’s Medicaid cuts, ending child poverty, fixing America’s unemployment insurance system, or stabilizing Social Security and Medicare’s finances. 

Americans might feel like their taxes have grown intolerably high. But federal rates for the bottom 80 percent of workers have actually fallen sharply in recent decades and sit near historic lows.

What’s more, Booker’s tax cut would deliver its largest benefits to the upper middle class. Those between the 80th and 90th percentile of the income distribution would see their after-tax earnings rise by $7,755 — while those in the bottom 20 percent would collect just $1,840, according to the Penn-Wharton Budget Model.

This does not seem like a progressive way to allocate a fixed pool of tax dollars. 

Maybe the substantive costs of giant tax cuts would be tolerable, if the electoral upside was truly immense. But there’s reason to doubt that. For all the hype around “No Tax on Tips,” presidents in both parties have showered tax cuts on voters throughout the last 25 years without any consistent boost to their electoral fortunes. 

“The political benefits of giving people cash — through tax cuts or rebates — don’t seem particularly large,” Brendan Duke, a senior director at the Center on Budget and Policy Priorities, said. “Donald Trump did a large tax cut in 2017 and his party proceeded to lose the House in the midterm elections of 2018. He gave out rebate checks in 2020 and then ended up losing the presidential election.”

Perhaps this time is different and Democrats can win in 2028 by pledging to slash middle-class taxes. If they do, however, then the election’s loser won’t just be the Republican Party — but also, American liberalism’s core economic project. 

* It is conceivable that artificial intelligence will soon generate vast increases in productivity — and/or, in the concentration of wealth — thereby fundamentally changing what is and is not possible fiscally. So, if you think that the robots are about to bring about fully automated neo-feudalism, you can ignore most of this column’s arguments.