As Senator Bernie Sanders’s thunderous Brooklyn-accented denunciation of “the millionaires and the billionaires” once again echoes through the political conversation, it seems likely that if and when Sanders releases his tax returns, they will show that he is himself a millionaire. Not only in the sense that his net worth exceeds a million dollars, but it’s possible that his household crossed the seven-figure threshold in income at least once. “If it’s wrong for billionaires to exist, why isn’t it wrong for millionaires to exist?” New Yorker writer James Surowiecki asked on Twitter.
To answer Surowiecki’s question, first let’s note that it’s unsurprising for a 77-year-old white male college graduate with a steady white-collar career to have a net worth considerably over a million dollars, assuming that’s what we’ll find out about Sanders. In fact, there’s one sure formula for accumulating a million dollars: Be born early enough in the 20th century to buy a house in the 1980s, and then by sometime in your 40s, reach a low six-figure salary and keep working steadily up to or past nominal retirement age. Avoid any of the major vices, such as gambling in the stock market, and you’ve got the equivalent of the “success sequence” for upper middle-class households.
Even before any book deals, Bernie Sanders had followed exactly that familiar boomer path, at least since he was elected to the House in 1990, when a member’s salary was $125,100. And he’s been extra fortunate to be able to keep going for at least 12 years past the age when many people begin to spend down, especially if they have had physically demanding jobs.
“Millionaires” and “billionaires” are really not the same thing at all, and there’s more than a multiple of a thousand that differentiates them. A person with a few million dollars in assets can make a few decent political contributions, but not necessarily enough to get more than a handshake photo with a candidate. Billionaires, on the other hand, or multibillionaires such as Jeff Bezos at about $150 billion pre-divorce, operate on a different plane. Their power extends far beyond political contributions to the ability to make cities jump with tax incentives to lure their companies, to launch vast philanthropic initiatives that change public policy, or to draw media attention merely by ostentatiously contemplating a run for president.
Not only are millionaires less blameworthy for inequality than billionaires, I’d go even further: A reasonable long-term goal of public policy would be to create fewer billionaires and more millionaires. Where would the additional millionaires come from? Some would come from above, as billion dollar fortunes would be taxed and economic structures reformed. Entrepreneurs would still be amply rewarded for ingenuity and risk-taking, but those rewards would come with two commas, not three. A suitable motto for Elizabeth Warren’s proposed wealth tax — and for the new wave of democratic socialists — might be, “What if all the billionaires became just multimillionaires?” which is hardly a revolutionary chant.
But policy should also make it possible for many more people and families to move up to that threshold, by their mid-60s, where they have enough savings and security to enjoy a stress-free retirement and help their children and grandchildren. Retirement savings calculators likely overstate things, but a standard one indicates that a 35-year-old in a household making the median income of $56,500 should aim to save $1.6 million in order to retire at 67.
But that path is likely to be much more difficult for someone born in 1991 than it was for Sanders, born 50 years earlier. With student loan debt extending deep into one’s 30s and the cost of child care, it’s nearly impossible to begin saving early. Buying a house at 1980s prices is, by definition, impossible, and today’s young workers are unlikely to enjoy either the runup in real estate values that began in the mid-1990s or in stock prices that began earlier in that decade. Vanishingly few will have the kind of pension that provides a guaranteed base of security, and tax incentives for retirement savings provide far more benefit for those well above the median income.
There are two approaches that public policy could take to improve the lives of people who weren’t born early enough in the 20th century to have had Bernie Sanders’s good fortune. One would be to simply provide far more benefits through public programs, such as by expanding Social Security, as advocated by a sizeable congressional caucus that includes Warren and Sanders.
In this case, people wouldn’t necessarily be “millionaires” in terms of ownership, but they could enjoy more of the security and options that are open to someone who enters retirement with a high net worth. But another approach, entirely compatible with expanding Social Security, is to make it easier for people to build their own base of assets, through programs such as Cory Booker’s proposed “baby bonds,” by reducing the burden of student loans, raising wages, or making homeownership accessible.
The first goal of such reforms would not be to create millionaires, but to give people who have little or no economic security a firmer base from which to take advantage of opportunity. If the full slate of economic policy ideas that have emerged in the 2020 campaign were put in place, many more people could follow the path to a million dollars by the end of their working lives, as Sanders has, which is nothing to be embarrassed about.