Elizabeth Warren says she is “not running” for president, but hasn’t ruled it out. Photo: Getty
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Why Elizabeth Warren should take on Hillary Clinton and run for the US presidency

Simply by running, Warren will drag the centrist Clinton to the left and put the causes she cares about – financial reform, fairer taxes, income inequality – at the centre of the 2016 presidential election.

Can you imagine Ed Miliband giving the following speech?

I hear all this, you know, ‘Well, this is class warfare, this is whatever.’ No. There is nobody in this country who got rich on his own – nobody. You built a factory out there? Good for you. But I want to be clear. You moved your goods to market on the roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn’t have to worry that marauding bands would come and seize everything . . . Now, look, you built a factory and it turned into something terrific, or a great idea. God bless – keep a big hunk of it. But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along.”

If only, eh? The centre left in the UK tends to recoil from using such stridently populist language. Miliband, in particular, is sensitive to the tabloid charge of being “Red Ed”. But the centre left in the US? It’s got Elizabeth Warren: senator, former law professor and darling of the Democratic Party base.

It was Warren who delivered that rousing address in Andover, Massachusetts, in August 2011, a month before announcing her candidacy for the US Senate. (Spoiler alert: she won.) Her audience applauded wildly; the video of her speech went viral, amassing more than a million views online.

Here, it seemed for the first time, was an unashamedly left-wing US politician who could tell stories and capture the public mood; who could tailor a message for both middle-class and working-class voters; who was confident and unapologetic, rather than defensive and cautious.

In an age of Occupy Wall Street and Thomas Piketty, of growing public concern over income inequality and rising anger towards the big banks (including among supporters of the Republican Party), Warren has become a progressive superstar. Her memoir, A Fighting Chance, has been on the New York Times bestseller list since it was published in April. In the book, she recalls a dinner she was invited to in April 2009 with President Obama’s then chief economic adviser, Larry Summers. “Late in the evening, Larry leaned back in his chair and offered me some advice,” she writes. “I could be an insider or I could be an outsider. Outsiders can say whatever they want. But people on the inside don’t listen to them. Insiders, however, get lots of access . . . [but they] also understand one unbreakable rule: they don’t criticise other insiders. I had been warned.”

The warning didn’t work. Four years later, Warren led the Senate Democrats’ campaign to prevent Summers from being nominated to run the US Federal Reserve. Hers is a no-nonsense, take-no-prisoners approach. In February 2013, at her first appearance on the Senate banking committee, Warren skewered a gaggle of top regulators by asking when they had last prosecuted a major bank. Again, the video of her remarks went viral. So, too, did her July 2013 clash with a CNBC cable news host over whether or not to break up the big banks – it was viewed online more than a million times.

Will Warren dare to run against Hillary Clinton for the Democratic nomination for the presidency? She repeatedly tells reporters that she is “not running” for president, but hasn’t ruled it out. She is 64. If Clinton runs, wins and serves two terms, there won’t be a White House vacancy until 2024, when the Massachusetts senator will be 75.

It’s 2016 or never. Can she win? Junior senators with a single term on Capitol Hill, a lack of foreign-policy experience and an opponent called Clinton can’t win, right? I mean, er, just ask Obama.

Like Hillary Clinton, Warren is a feisty female with a national profile and a knack for fundraising: she secured $40m for her Senate race, more than half of it online. Unlike Clinton, who gave two paid speeches to Goldman Sachs in 2013 alone, Warren does not have to rely on the big banks for financial support: eight out of every ten contributions to her Senate campaign were less than $50.

Then again, whether she wins or not isn’t the issue. Simply by running, she will drag the centrist Clinton to the left and put the causes she cares about – financial reform, fairer taxes, income inequality – at the centre of the 2016 presidential election. A Warren candidacy would not just be “Hillary’s nightmare” – to quote the headline of the New Republic’s cover story on Warren last November – it would be Wall Street’s.

Ed Miliband tells friends he’s an admirer of Warren but he hasn’t yet been able to emulate her style, passion or rhetoric. (The only videos of Miliband that go viral involve him either robotically repeating himself or trying to eat a bacon sandwich.)

There is still time. On paper, Warren, lest we forget, is as wonkish as Miliband, if not more so. The Labour leader may sound professorial; Warren was a professor. There is no reason why the Labour leader, if he eschews the triangulating tendencies of some of his aides, stops giving dense speeches and takes a much stronger stance against Big Finance, can’t rediscover his own inner populist. He has done so before: on those brief occasions when he stood up to Rupert Murdoch or when he challenged the “big six” energy companies.

Forget the hapless Hollande or the opportunistic Obama: Elizabeth Warren’s way should be Ed Miliband’s way. You never know – he may even end up paying her a visit at the White House.

Mehdi Hasan is a contributing writer for the New Statesman and the political director of the Huffington Post UK, where this column is crossposted

Mehdi Hasan is a contributing writer for the New Statesman and the co-author of Ed: The Milibands and the Making of a Labour Leader. He was the New Statesman's senior editor (politics) from 2009-12.

This article first appeared in the 11 June 2014 issue of the New Statesman, The last World Cup

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Q&A: What are tax credits and how do they work?

All you need to know about the government's plan to cut tax credits.

What are tax credits?

Tax credits are payments made regularly by the state into bank accounts to support families with children, or those who are in low-paid jobs. There are two types of tax credit: the working tax credit and the child tax credit.

What are they for?

To redistribute income to those less able to get by, or to provide for their children, on what they earn.

Are they similar to tax relief?

No. They don’t have much to do with tax. They’re more of a welfare thing. You don’t need to be a taxpayer to receive tax credits. It’s just that, unlike other benefits, they are based on the tax year and paid via the tax office.

Who is eligible?

Anyone aged over 16 (for child tax credits) and over 25 (for working tax credits) who normally lives in the UK can apply for them, depending on their income, the hours they work, whether they have a disability, and whether they pay for childcare.

What are their circumstances?

The more you earn, the less you are likely to receive. Single claimants must work at least 16 hours a week. Let’s take a full-time worker: if you work at least 30 hours a week, you are generally eligible for working tax credits if you earn less than £13,253 a year (if you’re single and don’t have children), or less than £18,023 (jointly as part of a couple without children but working at least 30 hours a week).

And for families?

A family with children and an income below about £32,200 can claim child tax credit. It used to be that the more children you have, the more you are eligible to receive – but George Osborne in his most recent Budget has limited child tax credit to two children.

How much money do you receive?

Again, this depends on your circumstances. The basic payment for a single claimant, or a joint claim by a couple, of working tax credits is £1,940 for the tax year. You can then receive extra, depending on your circumstances. For example, single parents can receive up to an additional £2,010, on top of the basic £1,940 payment; people who work more than 30 hours a week can receive up to an extra £810; and disabled workers up to £2,970. The average award of tax credit is £6,340 per year. Child tax credit claimants get £545 per year as a flat payment, plus £2,780 per child.

How many people claim tax credits?

About 4.5m people – the vast majority of these people (around 4m) have children.

How much does it cost the taxpayer?

The estimation is that they will cost the government £30bn in April 2015/16. That’s around 14 per cent of the £220bn welfare budget, which the Tories have pledged to cut by £12bn.

Who introduced this system?

New Labour. Gordon Brown, when he was Chancellor, developed tax credits in his first term. The system as we know it was established in April 2003.

Why did they do this?

To lift working people out of poverty, and to remove the disincentives to work believed to have been inculcated by welfare. The tax credit system made it more attractive for people depending on benefits to work, and gave those in low-paid jobs a helping hand.

Did it work?

Yes. Tax credits’ biggest achievement was lifting a record number of children out of poverty since the war. The proportion of children living below the poverty line fell from 35 per cent in 1998/9 to 19 per cent in 2012/13.

So what’s the problem?

Well, it’s a bit of a weird system in that it lets companies pay wages that are too low to live on without the state supplementing them. Many also criticise tax credits for allowing the minimum wage – also brought in by New Labour – to stagnate (ie. not keep up with the rate of inflation). David Cameron has called the system of taxing low earners and then handing them some money back via tax credits a “ridiculous merry-go-round”.

Then it’s a good thing to scrap them?

It would be fine if all those low earners and families struggling to get by would be given support in place of tax credits – a living wage, for example.

And that’s why the Tories are introducing a living wage...

That’s what they call it. But it’s not. The Chancellor announced in his most recent Budget a new minimum wage of £7.20 an hour for over-25s, rising to £9 by 2020. He called this the “national living wage” – it’s not, because the current living wage (which is calculated by the Living Wage Foundation, and currently non-compulsory) is already £9.15 in London and £7.85 in the rest of the country.

Will people be better off?

No. Quite the reverse. The IFS has said this slightly higher national minimum wage will not compensate working families who will be subjected to tax credit cuts; it is arithmetically impossible. The IFS director, Paul Johnson, commented: “Unequivocally, tax credit recipients in work will be made worse off by the measures in the Budget on average.” It has been calculated that 3.2m low-paid workers will have their pay packets cut by an average of £1,350 a year.

Could the government change its policy to avoid this?

The Prime Minister and his frontbenchers have been pretty stubborn about pushing on with the plan. In spite of criticism from all angles – the IFS, campaigners, Labour, The Sun – Cameron has ruled out a review of the policy in the Autumn Statement, which is on 25 November. But there is an alternative. The chair of parliament’s Work & Pensions Select Committee and Labour MP Frank Field has proposed what he calls a “cost neutral” tweak to the tax credit cuts.

How would this alternative work?

Currently, if your income is less than £6,420, you will receive the maximum amount of tax credits. That threshold is called the gross income threshold. Field wants to introduce a second gross income threshold of £13,100 (what you earn if you work 35 hours a week on minimum wage). Those earning a salary between those two thresholds would have their tax credits reduced at a slower rate on whatever they earn above £6,420 up to £13,100. The percentage of what you earn above the basic threshold that is deducted from your tax credits is called the taper rate, and it is currently at 41 per cent. In contrast to this plan, the Tories want to halve the income threshold to £3,850 a year and increase the taper rate to 48 per cent once you hit that threshold, which basically means you lose more tax credits, faster, the more you earn.

When will the tax credit cuts come in?

They will be imposed from April next year, barring a u-turn.

Anoosh Chakelian is deputy web editor at the New Statesman.