I know Alexandria Ocasio-Cortez is seen as the future of the Democratic Party right now, but her inability to answer this basic question about the cost of her agenda is starting to seem like a real stumbling block. Just over a week ago, Ocasio-Cortez was asked by friendly interviewer Trevor Noah of the Daily Show how she planned to pay for her Democratic Socialist agenda. Her response left a lot to be desired. Today, she got a second bite at the apple when she appeared on Pod Save America and was asked the exact same question. Here’s how the exchange went:
Host: We don’t talk about what defense costs. We’re about to hit a trillion dollars in debt because of the corporate tax cuts, yet when we talk about pre-K, healthcare, college suddenly it’s unrealistic because of the cost.
Host: And it’s not just bad faith Republicans that make that argument, you hear it from Democrats as well. What’s your response to that?
So here it is, her moment to wow us with a solid answer about how she plans to pay for all of this.
Ocasio-Cortez: Well I think it’s that same exact thing. It’s that we…you know they say ‘How are you going to pay for it?’ as though they haven’t used these same ways to pay for unlimited wars, to pay for trillion dollar tax cuts, and tax cut extensions. They use these mechanisms to pay for these things all the time. They only want to know…it just seems like their pockets are only empty when we’re talking about education and investing in human capital in the United States: education, healthcare, housing, and investing in the middle class. All of a sudden, you know, there’s nothing left. All of a sudden the wealthiest nation in the world, we’re just totally scarce. We have complete scarcity when it comes to the things that are most important. And so for me I think it belies a lack of moral priority and it’s unfortunate.
I guess the first thing to note is that Ocasio-Cortez doesn’t even try to answer her own question: How are you going to pay for it? What she does do is suggest some answers she’s obviously not ready to commit to, i.e. maybe we could raise taxes, cut defense spending and…well, that’s really it.
The problem, as Ed pointed out earlier today, is that the cost of the DSA agenda is probably in the realm of $40 trillion dollars over the next decade. There’s no way to pay for that based on cuts to current spending on defense. If you zeroed out the defense budget and reversed the tax cut you wouldn’t even be a quarter of the way to your goal. So with zero military and a foundering economy, we’d still be looking at a $3 trillion deficit per year.
The only option left to pay for Ocasio-Cortez’ moral priorities is to raise taxes. How much? Well, going back to the same Vox piece that Ed wrote about, here are three options:
Paying for the remaining $34 trillion would require nearly doubling federal tax revenues. Let’s examine three paths using data from CBO’s menu of budget savings:
- What about just taxing corporations and rich families? Raising the final $34 trillion would require seizing roughly 100 percent of all corporate profits as well as 100 percent of all family wage income and pass-through business income above the thresholds of $90,000 (single) or $150,000 (married), and absurdly assuming they all continue working. (This calculation refers to individual income, not investment income.)
- How about a European-style value-added tax (VAT), which is basically a national sales tax? A rate of 87 percent would be needed to collect $34 trillion under the American tax base.
- What about payroll taxes? Lawmakers would need to create a new 37 percent payroll tax, on top of the existing 15.3 percent payroll tax, in order to collect $34 trillion.
Now you know why Ocasio-Cortez wants to talk about moral priorities rather than math. She is almost literally promising her disciples the world but failing to inform them that the cost of giving them free everything is destroying the U.S. economy. You can’t seize all corporate profits or institute an 87% sales tax and expect things to just chug along as always.
Ocasio-Cortez isn’t a savior, she’s a flimflam artist. If you’ve taken a look at Venezuela lately, you probably already know populist socialism can be a dangerous road to travel. The real-world result of socialist delusions often turn out to be catastrophic.
— Pod Save America (@PodSaveAmerica) August 7, 2018