This is a lightly edited transcript of the April 1 edition of Right Now With Perry Bacon. You can watch the video here or by following this show on YouTube or Substack.
Perry Bacon: And there’s all this tax news on the Democratic side—big tax plans, federal, state, wealth taxes, tax cuts. So I want to talk to somebody who really knows about tax policy. I have a great guest today, Bharat Ramamurti. He was the NEC deputy director in the Biden administration. He was an adviser on Senator Warren’s campaign. Great guy, expert on a lot of issues, so welcome.
Bharat Ramamurti: Thank you for having me.
Bacon: So I want to start with Washington State this week. The governor signed a 9.9% tax on income over $1 million a year. Washington had no income tax before, but you’re seeing a lot of these taxes on the wealthy happening at the state level. New York is considering one. Massachusetts passed one—a 4% tax a couple years ago—and that has ended up funding a lot of important stuff there.
So I think the question here is, even some sort of conservative Democrats will say these tax increases will cause the wealthy to move out of your state and you’ll end up with a net reduction in income. So talk about why these kinds of tax increases are good.
Ramamurti: Yeah. Look, there’s a pretty robust body of research about whether wealthy people respond to tax increases like this by moving out of state. And the empirical literature suggests that it’s pretty infrequent—or at least that it’s infrequent enough such that the new revenue you get by imposing higher taxes on that group of people more than offsets any loss of revenue from those people leaving the state. And so you mentioned the Massachusetts one.
There’s good empirical research about what happened following the imposition of that sort of millionaire’s tax in Massachusetts. There was relatively little evidence of out-migration—basically people moving out of the state—and as you noted, the new revenue that was brought in helped fund a lot of valuable programs for lower-income and middle-income people. I view that as a net win. Obviously the jury is still out about what will happen in Washington once this is imposed, but again, based on the Massachusetts experience, I think it’s unlikely that you’ll see a massive outflow of people.
Now I want to be transparent. I think if you impose a large enough tax, then I think it’s fair to say you’ll see more of a response to that, especially if you do it at the state level, right? Where if you don’t like your new higher taxes in Massachusetts, you can move to New Hampshire, Vermont, Connecticut. It’s easier to move across state lines than it is to leave the United States, right? When you’re talking about a federal tax. Same thing with Washington State.
But the bottom line is—and I think this is consistent with most people’s intuition—if you live in a place, you have roots in that place, your kids go to school there, you have your business there, the idea of picking up and moving and completely overhauling your entire life because you’re paying marginally higher taxes doesn’t make a lot of sense. And I think, again, that’s in the data.
Bacon: Okay, so second issue. We’re seeing these wealth tax proposals. I think the big one we’re talking about is California has a ballot initiative—they haven’t gotten it on the ballot yet, but they’re trying to get it qualified—where it’ll be a 5% one-time tax on income over a billion dollars. Senator Warren has reintroduced her wealth tax, similar to the one you worked on in the campaign. Bernie Sanders has a wealth tax that he’s talking about now. I think the usual critiques of these are: one, that they’re unworkable, too complicated to assess the richest people’s wealth in trusts and so on. And the second is that these have not worked in European countries. So talk about those two objections.
Bharat Ramamurti: Yeah. I think they’re relatively easy to address. Number one, the vast majority of wealth that people have is in the form of easily valued goods, right? A lot of it is in publicly traded stock, right? Where there’s a market price for that. A lot of what’s not in the form of stock is in the form of property, where again, the state already values your property—your residences—on an annual basis. People like to talk about these edge cases: what about, you buy a Picasso, how do you value that? You have a classic car collection, how do you value that?
First of all, that stuff tends to be a very small portion of the overall wealth. Second of all, at both the state and federal level, there’s already a process—because we have an estate tax, right?—when somebody dies, you have to value their estate. There are already people at the state and federal level whose job it is to value these types of assets. And so when we’re talking about a wealth tax that applies to a very small sliver of people—you’re literally talking about hundreds of people in California, you’re talking about thousands of people if you’re talking about billionaires in the United States—it’s really not that onerous to have the resources and the capacity at the government to value all of their assets on an annual basis.
In terms of Europe, there are some really important distinctions between wealth taxes in Europe and wealth taxes in the United States as they’ve been proposed. Number one, in Europe taxes are applied based on residency. So if you are a resident of France and they impose a new wealth tax, all you have to do to avoid the wealth tax is move to Belgium or Switzerland or Luxembourg. And we talked about this before—at the state level with some of these state taxes, people aren’t really responding by moving. But if you’re talking about a wealth tax that could potentially take a relatively big bite out of your net worth, maybe it’s worth it to move across the lines.
But in the United States, taxes are imposed based on citizenship. And we know that because there are U.S. citizens who live in Singapore or wherever who are paying U.S. taxes because they’re U.S. citizens. And so the only way to avoid a wealth tax imposed at the federal level by the United States government would be to renounce your U.S. citizenship, right? And so the Warren proposal and the Sanders proposal have what are called exit taxes. So if you do want to renounce your U.S. citizenship, you say: okay, the cost of that is a one-time very large wealth tax to renounce your citizenship. So you capture the revenue that you would’ve been collecting on an annual basis. And it’s much easier to do because it’s based on citizenship.
The other thing is that the European wealth taxes had a lot of exceptions to them, right? So in France, for example, they said your residences don’t count towards your net worth, or your retirement fund doesn’t count towards your net worth. And so what happens when you create exceptions? Obviously rich people are going to move all of their money around into the excepted categories, right? They say: okay, we’re going to buy a lot of properties now, or we’re going to shift all of our money into these retirement funds to protect it. And as a result, the tax base started to shrink because the money migrated into these excepted assets. Both the Warren and Sanders proposals and the California proposal don’t have these exceptions, right? And so you don’t have this easy way of evading the wealth tax.
I’ve been arguing about this for years now. As you said, I worked on the original Warren wealth tax back in 2019, 2018. By not having these exceptions, by taxing based on citizenship, and by pairing it with an exit tax, you really do avoid a lot of the normal critiques about why wealth taxes are ineffective.
Bacon: You’ve seen—I think the founders of Google and a few other very wealthy people have left California. Does the California wealth tax have a particular problem where people are going to try to escape in a way that other things we’ve talked about have not?
Ramamurti: Look, doing it at the state level presents additional complications, and I think I’ve tried to be clear about that, because it’s different than the federal level—again, they apply it based on residency in California. Now, the way they tried to solve it in California is that they did it retroactively. So this proposal hasn’t even gone on the ballot yet. But if it’s on the ballot this November and it’s approved, it would apply the one-time wealth tax to anybody living in California as of the end of last year.
So some of these people who are moving—it’s not clear to me whether they moved before the deadline, right? So in other words, if you moved in January, it doesn’t matter, you’re still going to be captured by this wealth tax. Doing it retroactively—and there are probably some other ways that you can design the wealth tax so that at the state level you’re addressing this concern about people moving—but I think from my perspective, optimally, you would do something at the federal level and avoid all of these concerns about moving across state lines.
Bacon: Now we’re going to talk about federal taxes. Senator Booker—as opposed to a wealth tax—would basically create a 41 or 43% tax bracket. Senator Van Hollen wants to raise taxes by 12% on income over $5 million. So those are more traditional Democratic tax ideas. You think those are fine and normal? I think the critique of them is they might discourage investment—I think that’s a less strong critique. Talk about those proposals.
Ramamurti: So you’ve got a host of these ideas at the federal level to raise more taxes from the wealthy. And I think it’s an important contextual point to just note that between the George W. Bush tax cuts in the 2000s, Trump one tax cuts in 2017, and then the most recent tax cuts that they passed last year, the wealthy have gotten a huge number of tax breaks in the last 25 years. And so even just resetting things to where they were in 2000, before this bevy of Republican tax cuts, would bring in an enormous amount of revenue, and I think it’s really important that Democrats at least do that.
As you noted, the Van Hollen proposal has a specific idea of imposing what’s called a surtax—an additional tax amount on income over $1 million, and then an additional surtax on income over $5 million. What’s important about that proposal is that it’s not just wage income. Relatively few people bring in more than a million dollars a year in just W-2 wages, right? If you limited it to just that, it’s basically like you’re taxing LeBron James and Beyoncé—artists and entertainers and athletes. But they have a more expansive definition of income where it includes capital gains, which is really important because for the very, very wealthy—including especially the top 0.1%, the top 0.01%—almost all of their income comes in the form of capital income: from their privately held businesses, from their stock portfolio. And you’ve got to figure out ways of taxing that.
So the Van Hollen proposal does that. It says any income you get—whether it’s from capital gains, whether it’s from wages, whether it’s from rental properties, whatever—if it’s over a million dollars, you’re going to pay a surtax on that. I think that’s a perfectly fine and defensible approach. The Booker proposal is a little bit vaguer on what they want to do for high-income taxes, but in general: we as a country, and we Democrats as a party, have to figure out a way of bringing in much more revenue from the very wealthy, because as of today, the effective tax rate that the very, very wealthy pay on their income is not really that much higher than the effective tax rate that somebody making $60,000 a year pays. When you account for payroll taxes, when you account for state and local taxes, the overall effective tax rate is not that high—and that’s almost all because the way we tax capital income in this country is really unfair, right? We are not taxing capital income in the same way that we tax wage income.
Bacon: When you and I talked when you were working for President Biden, you were aware of politics and elections and how those things work and how they matter. So I guess the first question would be: in 2019, a wealth tax was somewhat unusual as a news or a proposal. And I think secondly, billionaires—I actually look at the data on this—billionaires were not reviled then, and the billionaire class has made themselves much more opposed-to than they were before. So are these ideas—and even before that, to be clear, the wealth tax was popular in 2019 and taxes overall are popular—but is there a moment now where these are even more politically useful for Democrats than they were five or six years ago?
Ramamurti: Yeah, as you noted, when we—meaning Senator Warren—introduced the wealth tax in 2019 as part of our presidential campaign, it was polling at 70, 75%, even 80% back then. And as you noted, I think a couple of things have happened. Number one, the concentration of wealth in this country has gotten much more significant, and I think the easiest way to look at that is: when we introduced that wealth tax in 2019, it was projected to bring in $3 trillion over the next 10 years, which is a lot of money. Senator Warren reintroduced the exact same idea—exact same structure, same rates, everything—a couple of weeks ago. It’s now projected to bring in more than $6 trillion.
Bacon: Okay. Does that mean they doubled their money? Is that a way to think about it?
Ramamurti: They doubled the amount of revenue it would bring in, even though the tax base and the tax rate are the same. So what has changed is that the accumulation of wealth at that very high level has doubled, effectively.
And that’s a sign that we have a growing issue. I always like to say: why should we have a wealth tax? It’s like when they asked a famous bank robber why he robbed banks, and he said, that’s where the money is. That’s where the money is right now. And I think it’s a way of bringing in a significant amount of tax revenue without really affecting the lifestyles of any of these people.
The second thing is, as you said, there has been this growing alignment between the very ultra-wealthy and the Republican Party. And I don’t think it’s about punishing your political enemies, but I think as a whole this class of people has gotten much more overtly political. And I think if you look at what Senator Sanders has said about his wealth tax, it’s about curbing the political influence of a group of people. And I think that’s an important consideration too.
Bacon: Almost a democracy consideration, not just a financial one. Okay. So just to look forward a little bit—I assume we’re going to have a lot of presidential candidates next year, and there’ll be a range of them. Ro Khana is on one end of the range, let’s say Josh Shapiro is on the other end for now—and I’m not promising he’s running—do you think even the more moderate candidates will have to have some kind of tax increase plan, because of where the party’s moving? What’s your sense of that?
Ramamurti: Yeah, absolutely. I think it’s been pretty mainstream in the Democratic Party to push for very significant tax increases on the wealthy. Joe Biden was considered a moderate Democrat, right? That was his position in the 2020 primary. His budgets when he was in office had about $5 trillion in new taxes—not almost entirely, literally entirely—from the very wealthy, people who are in the top 2% of incomes, and from corporations. And I think that’s probably the baseline. I think even the most quote unquote centrist, quote unquote moderate person running in the upcoming primaries is likely to endorse something like that level of taxation.
And it’s important to think about two things. Number one, that level of taxation is basically getting us part of the way to reversing all the tax cuts that these folks have pocketed thanks to repeated Republican tax cuts. And so it sounds like an enormous amount of money—it is an enormous amount of money—but it’s really just recouping, or resetting us to where we were pre-Republican tax cuts.
The second thing is: in the most recent Republican tax cut, the Trump bill that passed in 2025, there was a massive cut to Medicaid and SNAP, right? Which are hugely harmful both economically and for people’s health, for lower-income people. And I think it’s going to be table stakes for any Democrat running for president to say: I want to reverse those cuts.
Just reversing those cuts is about $2 trillion in additional spending—and that’s before you turn to any other affirmative economic agenda item you might have as president. And so you’re going to need to bring in a huge amount of revenue. Again, in a world where some Democrats are going to say any new spending has to be offset with new revenue, you’re going to need a huge amount of revenue just to cover reversing these cuts to Medicaid and SNAP—let alone if you want to do paid leave or childcare or housing or any of these other priorities you might have. You’re going to need a lot of revenue.
And so I think that if you do have a Democratic president and a Democratic Congress come 2029, there’s going to be a big effort to raise taxes. Now, the same thing you could say was true of the Biden administration.
And we did not raise taxes—far less than what the president wanted—and that was because Senator Manchin and Senator Sinema, as the marginal votes in the Senate, blocked trillions of dollars of tax increases single-handedly. And so the same dynamic could present itself in 2029 depending on the composition of Congress.
Bacon: So we should be reading Roy Cooper’s views on taxes carefully and hoping they’re good. All right, that’s helpful to think about. Okay, so now I’m going to talk about tax cuts, because this is where the party has moved in a way I didn’t expect. Senator Van Hollen—who has done a great job on a lot of issues and is somebody I really respect—his proposal would basically give you no income tax if you make $90,000 or $92,000 or below for a family, or $46,000 or below for an individual you’d have no income tax.
To be fair, we don’t have much income tax in the first place for these families, but zeroing it out is an interesting idea, and in some ways some critics might say it takes away from the idea that we’re all in the tax system together. Then Cory Booker has proposed essentially making the first $75,000 of income tax-free—no taxes on that—and so that would have a different impact in a certain sense. But talk about those ideas.
Let’s start with the broad concept of these tax exemptions. A broad base you would think would come from Republicans—Republicans have always focused on the higher end, so they’re still focused on the middle and working classes here—but this sort of no taxes, period, is unusual for Democrats. How do you view that broadly?
Ramamurti: Broadly? Yeah. I think it raises a philosophical question, which is: what are taxes for? I think that this is a live debate in the Democratic Party. What I’m sympathetic to from the Van Hollen and Booker proposals is that everyone’s concerned about the cost of living. Voters are saying that affordability and cost of living is their number one priority. It’s been that way since 2021 and the inflation that started post-COVID. And Democrats are looking for a way to be responsive to that concern in a way that people feel is tangible.
Bacon: You think it’s reasonable and probably smart, right?
Ramamurti: I don’t actually, but I think that’s—
Bacon: —not the plans themselves, but the idea of being responsive to affordability is useful.
Ramamurti: I think it’s an animating force behind both of these proposals—to say: what we as Democrats have largely proposed is these targeted proposals. Okay, we’re going to do something about childcare, we’re going to do something about the cost of higher ed, we’re going to do something about the cost of groceries, we’re going to do something about the cost of gas. And so I think the logical follow-up to that is: well, if we really just want people to have more money in their pockets, why don’t we just cut their taxes? Which is an easy way of doing that, right? Because person X may say: I don’t need childcare, I’m too old, I don’t need higher education, so your proposals don’t mean anything to me—but you cut my taxes and that’s great. So I think that’s what people are responding to.
I think there’s an important distinction between the two proposals. The Van Hollen proposal is much more targeted—it’s much less expensive, about $1.5 trillion tax cut. The Booker proposal is like a $6 trillion tax cut. It would include tax cuts for people making $700,000 or $800,000 a year. The Van Hollen one strikes me as better designed, but the philosophical idea—
Bacon: —because the Booker one, just to be clear, exempts all income below $75,000 a year. So that means people who make a lot of money would qualify, versus the Van Hollen one, which appears not to do that the same way.
Ramamurti: Exactly. So the way I think about it is that the Booker one basically raises the standard deduction to $75,000. So if you make $800,000, it’s still valuable to you to have that money exempted. Whereas the Van Hollen one is basically like a cap: if you make under this amount of money, you don’t pay taxes; if you make above it, all the normal taxes apply. But aside from those design questions, I think it raises this philosophical question: is it important that we have a broad tax base in order to make people feel invested, both economically and philosophically? Can we survive at the federal level by saying that half or more of people don’t have to pay any federal income taxes?
I think mathematically the answer is yes. Income and wealth is so concentrated in the United States that you largely could finance most government activities—including expansions of programs—through much higher taxes on the rich. I’m not saying it’s necessarily economically justifiable, but it’s mathematically feasible because of the level of income and wealth inequality in the United States. And remember, this is the income tax—payroll taxes are still the main tax that a lot of low-income and middle-income people pay, and those aren’t changing. Those go toward Social Security, which is a very big program. So I think it’s important to keep that in mind.
One thing that people say is that the reason Social Security is so popular and so hard to cut is because everyone feels like they have a stake in the system. They pay their payroll taxes into the system, they get their Social Security out when they retire. And does it become harder to run a government that provides housing support, nutrition support, and so on, if most people feel like they aren’t paying into the system and feel like: do I have a stake in the system? I guess I’m not really sure about that.
Bacon: That’s what I was going to ask you.
Ramamurti: I think that we should design a federal tax code that is most economically beneficial—meaning if it makes sense from that perspective to mostly tax the rich, we should do that.
Bacon: Because it’s interesting. These tax ideas have divided the Democratic Party a lot of ways, but what I saw is my wonkish friends on the center-left and the left, the progressives, all were like: these are stupid. And then you could tell the actual politicians who have to get people’s votes were like: no, we think this is a good idea because it appeals to people.
What I’m struggling with is: my guess is $92,000 for a family of four is not poverty level, but it’s also probably less than most of the people analyzing these proposals are talking about. We may need to think about how we define middle class in a certain way, and what’s comfortable, because I don’t know if $90,000 for a family of four in Washington, D.C.—where I think you live, and I used to live—is comfortable.
Ramamurti: Yeah, exactly. The way to think about it is that as a party we’ve been pretty comfortable arguing that we should be providing benefits to people pretty high up the income spectrum, right? So for example, I spent a lot of time in the administration working on student debt relief, and we basically said: if you make under $125,000 as an individual, $250,000 as a household or a couple, you’re entitled to some relief. And I think that gets at this intuition that even firmly middle-class people could use a little bit of help.
I don’t have any problem with saying a firefighter married to a teacher who make $180,000 combined still could use a little bit of help. And whether that comes in the form of tax cuts or childcare benefits or an expanded Pell Grant or whatever—I don’t see why there should be a distinction between those two things. And if we’re comfortable with getting benefits to that set of people, why are we uncomfortable with having tax cuts for that set of people? It seems to me like one and the same.
Bacon: I think tax cuts versus loan forgiveness versus subsidies for housing, subsidies for food, whatever it is tax is a part of that mix. And if we think someone’s struggling enough to get one of those benefits, they should get a tax cut too. I think that’s probably where I am too.
Ramamurti: And I haven’t had this kind of visceral negative reaction to these ideas in the same way that some of my former colleagues have.
Bacon: The Booker idea seems badly designed and gives a bit too much to people who have too much money. That’s my concern with it—not that it’s tax cuts.
Ramamurti: Yeah. The Van Hollen idea, which a lot of people have started to coalesce around—and his proposal had a lot of co-sponsors in the Senate—I think it would be neutral to good to do some version of that. Now the question is, empirically new administrations don’t have either the political or fiscal muscle to do more than a few things. And I find it heartbreaking because in the Biden administration I wanted to do housing and childcare and all these things, and if we had been able to get some of these revenue measures past Manchin and Sinema, we probably could have done a lot of them and done some transformative things. But same thing with the Obama administration—they were able to do financial regulation, they did Obamacare, and other than that it was a bunch of relatively small things. And that was with 59 or 60 Senate votes. So the question is a prioritization question rather than a good idea, bad idea question.
This strikes me as a pretty defensible idea. But should it come higher than a big investment in new affordable housing supply? Should it come ahead of doing something about childcare affordability? Should it come ahead of doing a refundable child tax credit that would functionally eliminate child poverty in the United States? Should it come ahead of doing something about the affordability of higher education? Those are the hard questions that you need to answer. And adding this into the mix means that you just have another thing competing for these resources and the political capacity.
And I think some of the concern that people have is that it’s easy to do a tax cut—it’s much easier to just say we’re cutting people’s taxes by X rather than saying here’s a brand new childcare program that involves all of these moving parts, state cooperation, and blah blah blah. Let’s just do the tax cut. But if you were given $1.5 trillion in new spending and could use it on one thing—what is the thing that you would want to use it on, if you are focused on doing the best thing for the country, helping the people who need it the most, and also maximizing your political benefit? Thinking about all three of those things together, is the middle-class tax cut actually the best use? That to me is more of an open question.
Bacon: So my understanding is a lot of the members feel like Trump’s no-taxes-on-tips proposal was a big electoral factor. I do election coverage and I don’t perceive that to be one of the top five things that shifted the 2024 election. But you’re in this world too—do you perceive that as something that really made a huge difference? I don’t, but I’m open to it, I’m just not sure.
Ramamurti: I think it made a pretty big difference. And I guess this is what I would say—it made a really big difference in Nevada, which I think is probably true, where you have a lot of tipped workers.
And I’ve written about this. Democrats think a lot about unions, with good reason. But they think a lot about the industries that create goods. About 80% of people in the United States work in the service sector, and I feel like our agenda for service sector workers is pretty unclear. We want to raise the minimum wage—that helps some subsection of them.
But what’s our message to retail workers and people who work in fast food and people who work at the childcare center? No tax on tips—again, it doesn’t cover all these people, but it was a thing that was memorable. And for anybody who made income via tips, it was like: I will benefit from this thing. And I feel like Democrats didn’t have a comparable idea that was really about the service sector. And I think that this is an attempt to rectify that and to say: no matter how you bring in your income, whether you work on the factory floor or you’re a blackjack dealer or you work at the Gap, this is a benefit for you. You’re going to get a tax cut.
And it’s easy now. I think the caution I would have for Democrats is that Republicans have been running on middle-class tax cuts for a long time, and it really hasn’t shown an enormous political upside, in the sense that I think no-tax-on-tips was a memorable proposal in part because Democrats didn’t have a counterproposal that they were pushing for. In 2017 the Trump tax cut included some middle-class tax cuts—it was one of the most unpopular laws ever, and dozens and dozens of Republicans who voted for it lost their elections in the next midterm cycle. There were some middle-class tax cuts in the Trump bill in 2025, and everyone’s actively running away from it because it’s so brutally unpopular. So the idea that this is some kind of political silver bullet I think is unjustified.
And we probably don’t have time to get into it here, but for me, people’s concerns about the economy are not really like my taxes are a little bit too high. It’s more about the structure of the economy and feeling like their ability to control their own destiny has eroded over the last 30 or 40 years. And what they really want is a feeling of more control, more empowerment—in their workplace, in their life—to live where they want and have the kind of lifestyle that they want. And a thousand-dollar tax cut, while meaningful, is not going to solve that.
Bacon: I think that’s right, because I think a lot of this affordability discourse has ended up being too vague. But I think you said it well: can I afford the things I want is what people are really talking about. Let’s close with state-based taxes.
Katie Porter is running for governor of California and would exempt people from income taxes on their first $100,000 of income. Keisha Bottoms is running for governor in Georgia, and her proposal is no weekend taxes for teachers. So I think you’re seeing a couple of different things—particularly around jobs, Democrats want to signal they like certain workers, I assume we’ll see proposals for firefighters too, and then Katie Porter’s income exemption. How do you feel about those? These are very different ideas, but what is the trend with state-level tax proposals?
Ramamurti: I have two problems with it. Number one, at the state level there are balanced budget requirements, right? And so every time you say I don’t want to bring in revenue from X, the immediate question should be: okay, what are you giving up for that? Some people say we’re going to balance it with higher taxes on the rich—okay. But if you’re talking about having to cut school funding or nutrition funding in order to offset the effect of this tax cut, then you’re going to raise very hard questions about whether it’s worth it. Or even weather the people that your supposedly benefitting are coming out ahead because of the loss of services on the other side of it.
The other thing is: when you start exempting certain categories of people from taxes, we talked about the philosophical question before—I do think that starts to reinforce the idea that taxes are some punitive thing, and that when we exempt our favorite groups from certain forms of taxes, we’re saying we’re letting them escape this horrible punishment. And the line between when it’s okay and when it’s not okay I think is hard to define.
But I think it opens the door to more of a Republican framing. When you start to say I love teachers and I don’t think they should have to pay taxes no matter what their income is, it starts to reinforce this idea that taxes, rather than being a thing that we all have to pay in order to support the kind of society that we want, are like a punitive tool from the government that we exempt our favorite groups from while forcing everybody else to pay them. I think it does reinforce that kind of negative idea.
But anyway, I think the main concern I would have is the first one, which is that at the state level the trade-offs are more severe, because unlike the federal government—where we can go out and borrow at still pretty reasonable rates if we need to—at the state level that becomes much harder. And so you are often talking about a trade-off between the provision of some services and these tax cuts.
Bacon: To close with—what do we learn from the Biden years? Is this purely inflation bad, don’t have inflation, or is there anything more? Because the job growth, unemployment decreases, Black people at the lowest unemployment for Black people of all time—there were, to me, a lot of good things. And inflation aside, people who had student loans got them forgiven. So is the lesson inflation, or is there anything deeper that you think about? If you go back to government, what would you do differently?
Ramamurti: I think a lot of it was inflation. I think if you look at the data on how every incumbent party—whether left-leaning or right-leaning—across the world fared in 2024, all of them saw a decline in their standing. And in fact, Democrats in the United States overperformed dramatically compared to the average incumbent party globally. So I think the main lesson to me is: don’t be the incumbent party during a global inflation crisis. I don’t know how replicable that lesson is. But I don’t want to diminish—and I don’t want to seem like I’m passing the buck—because I do think there were a lot of things that we could have done better, and I’ve talked about them.
I think that given the fact that we were facing this inflation issue, part of me wonders whether we should have taken time in 2022, when we were trying to do Build Back Better—if you remember that effort, which was this kind of omnibus effort to do childcare and housing and all these things that would’ve helped people on affordability—whether we could have done something that was even more targeted at the cost of living at that point, where we had congressional majorities. Especially short term focus, a lot of the things we were working on would’ve been a longer-term focus.
The other thing I don’t want to diminish is that we have a really inadequate social safety net in the United States, and we built one temporarily during COVID—both with the CARES Act, which passed under Trump, and the American Rescue Plan under Biden. We had all of these supports in place: a pause on student loan payments, a foreclosure and eviction moratorium, the checks, an expanded child tax credit, expanded Medicaid, and probably a dozen other things that I’m not talking about now that basically created, for once, a robust social safety net in the United States. And despite the fact that we were going through a global pandemic, if you look at survey data about how people felt about the economy during that time, they actually felt pretty good, because they weren’t feeling so precarious. And then all of that withered away over the course of 2022 and 2023.
Bacon: Like it was emergency spending, so it made sense for it to wind down when the emergency ended—but it effectively took money out of people’s pockets in practical terms.
Ramamurti: Yeah. We restarted student loan payments. The public health emergency ended, so a lot of people lost Medicaid. Obviously the foreclosure and eviction moratorium ended. The child tax credit expired, even though we tried to extend it. So the net effect of all of that was a real withdrawal of the social safety net for a lot of low-income and middle-income people.
So is it that surprising that people responded to that by saying: whatever good things Biden has done, my material circumstances got worse—because I was getting these checks and all these other sources of income and support, and now they’re gone. Unemployment insurance, in retrospect, it was a much more challenging political moment than I think a lot of people appreciated. You had the surge of inflation on the one hand, and then the expiration of all of these pandemic-era social safety net programs on the other hand, and navigating the intersection of those two was really hard—figuring out how should we make sure that the average family was coming out ahead.
I think for us in the Biden administration, we said: if they are getting good-paying jobs and their wages are going up, that should be enough. And the data showed that we got people back to work, unemployment was really low, wages were going up—especially at the low end of the income spectrum. But the truth is a lot of people aren’t in the labor market, so they weren’t benefiting from all that improvement in wages, and they had a bunch of costs added to their balance sheet.
What’s frustrating—and the analogy I like to give is: if you got an additional $10,000 in income one year because of higher wages, but then you’re spending $9,500 of that just paying for the same stuff you were paying for before—you’re ahead, but who’s going to be happy about that? You’re just like: all this money I made is going to pay for the same stuff. That’s frustrating. And so I think that manifested itself in a lot of frustration with how the economy was working, understandably. Democrats paid the price for that, in addition to a lot of other stuff that we still need to get into here.
But there was real concern and frustration about the economy that I think made a lot of sense, and that I wish we had been better able to address. Some of it we tried to address but Congress wouldn’t go along with it. Some of it we just came to a little bit too late in the game. But I hope that we learned from that and are more proactive about it next time.
Bacon: Bharat, tell people where they can find you—you’re doing some excellent work. Tell people where they can find the content you’re doing.
Ramamurti: Thanks. Yeah. So I have a Substack too. It’s called The Bully Pulpit. And if folks want, they can subscribe. I tend to write about less news of the day and more big-picture thinking about progressive ideas, both at the federal and state level, and how we can try to accomplish that, along with some political analysis. I’ve been doing a lot of writing about AI recently, so if any of that’s of interest, check it out.
Bacon: You’re doing a really great job combining—you’re a policy expert, you’re really thinking through how do we get these things done. I assume that’s an important part of what we’re thinking about here?
Ramamurti: Yes. I have become extremely pragmatic over the years, because these policymaking moments are so rare and our problems are so big, that we need to take maximum advantage of them whenever we get them. And so a lot of my focus is: when that time comes—hopefully 2028, 2029 where we get complete control of Washington—how do we take maximum advantage?
Bacon: Good to see you. Thanks for joining me.
Ramamurti: Thanks for having me.
