Here's how Pete Buttigieg would pay for $5.7 trillion in federal spending

Chris Sikich | IndyStar

Show Caption Hide Caption Pete Buttigieg and his major policy proposals Democratic presidential candidate Pete Buttigieg has released major policy proposals addressing foreign policy, minority voters, domestic terrorism and other issues.

Presidential hopeful Pete Buttigieg's campaign would pay for $5.7 trillion in total spending he has propose largely through a capital gains tax on the top 1% of all earners and through eliminating President Donald Trump's tax cuts.

The campaign exclusively provided IndyStar the details on Friday, after he unveiled a round of proposals to help the middle class.

“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,” he said in a prepared statement. “In the United States of America, economic gains should be shared by everyone and everyone should have a fair shot at real opportunity.”

Here's how Buttigieg will pay for it all

IndyStar reported Wednesday that Buttigieg had proposed, at that time, more than $4 trillion in spending in 10 major proposals, doing so without providing details on how he would pay for it all.

Including the middle class proposal released Friday, his campaign puts the total cost of all of his proposals at more than $5.7 trillion.

To pay for it, the campaign told IndyStar it would raise $2.1 trillion by reforming the capital gains tax on the top 1% of all earners, recoup $2.2 trillion by eliminating various tax cuts and reforms Trump made for the wealthy, save $675 billion in health care costs, largely through negotiating drug prices and reducing administrative costs, gain $100 billion by making big banks pay for financial crisis risk and $54 billion in various other proposed savings.

The South Bend mayor surged in the polls after attacking U.S. Sen. Elizabeth Warren for not revealing how she would pay for her massive Medicare expansion, a move that positioned him as a moderate in a field led largely by liberals. Under pressure from Buttigieg and others, Warren ultimately unveiled a $20.5 trillion Medicare spending plan. But until now, many of Buttigieg's proposals themselves lacked details.

Ball State economist Michael Hicks said Buttigieg's costs and revenues looked reasonable.

"The problem is we are on track to run a $1.1 to $1.4 trillion deficit this year," he said. "So, there has to be a way to close that budget hole, and the tax increases in his plan would be the most likely mechanism for revenue growth."

Buttigieg's approach is more moderate than some of his competitors.

Warren, by comparison, has proposed a wealth tax on those making $50 million or more. She and U.S. Sen. Bernie Sanders also have proposed free college for everyone.

Buttigieg proposes $1 trillion in spending for the middle class

The highlights of Friday's middle class proposal include:

$700 billion for pre-kindergarten and child care. Programs would be free for low-income families, he said, and more affordable for everyone else. He also would provide assistance for middle-class families for after-school and summer care.

$500 billion to make college more affordable. He says 80 percent of families making less than $100,000 won't pay for public college. Those making up to $150,000 will have reduced tuition based on a sliding scale.

$430 billion for affordable housing, providing options for another 7 million Americans.

A $400 billion tax cut fueled by increasing the earned income tax credit. He estimates take-home pay will rise by $1,000 for 35 million families.

Some proposals he also included spill over from previously released plans, including $200 billion over 10 years to train workers who lost their jobs, $50 billion to boost historically black colleges, $80 billion to expand broadband access in rural America and a $15-per-hour minimum wage.

Hicks found some things to like and some things to dislike in the proposals. He thinks raising the minimum wage would lead to job losses, for instance, and he thinks having the government provide more low-income housing reflects a misunderstanding of the problem.

"We don’t have a national housing shortage, we have local imbalances," he said. "These local imbalances make places like San Francisco less attractive, and Peoria and South Bend, more attractive. If the federal government steps in with more low-income housing, we’ll just send more people to urban places, and fewer to South Bend."

But Hicks also thinks the tax reforms and educational policies are largely smart.

"By scaling costs to family income, he would certainly get more-talented but lower-income students to attend colleges," Hicks said.

Hicks also wonders whether many of the problems Buttigieg is hoping to address are better dealt with at the state level.

"The great laboratory of the states is a place to solve many of these problems," he said. "and remedying them at the federal level fails to acknowledge vast differences in state and local labor market, housing market and health care market conditions."

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Buttigieg's campaign expects to make announcements in coming weeks, with funding proposals, about cracking down on multinational corporations and saving Social Security.

Call IndyStar reporter Chris Sikich at 317-444-6036. Follow him on Twitter: @ChrisSikich.