Brian Reidl, a senior fellow at the Manhattan Institute and a reporter for Vox Media, set out to calculate exactly how much the “Democratic Socialist” agenda, as embraced by such economic luminaries as Alexandria Ocasio-Cortez, would actually cost American taxpayers, and even he seemed surprised at the result.
In a study published at Vox, Reidl claims implementing the full Democratic Socialist slate of programs — including a single-payer health care system, free college, and a guaranteed minimum-wage job — will cost at least $42 trillion. And that’s just to start.
Reidl’s numbers aren’t based on conservative think tank estimates, either. His costs come straight from the Urban Institute, a left-leaning organization generally predisposed to favoring large scale government interventions.
A single-payer health care system is the most expensive, at around $30 trillion (a number Bernie Sanders disputes but has not contradicted with evidence). A minimum wage job for every American who isn’t currently employed would cost another $6.8 trillion. Free college would run around $8 trillion.
But there’s more. Senate Democrats, even moderate ones, want at least $1 trillion for infrastructure updates, and $1.4 trillion to pay off existing student loan debt. The Congressional budget also runs $12.4 million in the red.
That means, according to Reidl, that federal spending would “immediately hit 0% of GDP, on [its] way to 50% by 2048.” Thirty years from now, the United States will be running a baseline deficit of $84 trillion, with $218 trillion in new programs — and that’s if the Democratic Socialists don’t add any additional programs on top of their current agenda.
The news gets even worse. Reidl notes that there would be no easy shift from today’s health care and education systems to a single-payer style model, and it’s unlikely current government spending in either arena would decrease. Care, however, might, leaving around 77 million people who currently use some form of Medicare or Medicaid in the lurch.
And then, there’s the taxpayers.
Ocasio-Cortez and other Democratic Socialists propose slashing defense spending, but that takes care of only a few trillion dollars. The remainder has to come from American pocketbooks. The CBO suggests three ways Democratic Socialists could raise the money, and all three are very painful, and only solutions for the short term.
- 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.
That still wouldn’t be enough. Reidl suggests that they only way to make up the deficit is a 15% tax hike across the board. And this is in a best case scenario, using numbers from progressive think tanks. According to conservative think tank estimates, the cost is much higher, and not a single American will be left out of the pool of potential targets for taxation.
“Taxing rich is not enough. America would need to match or even surpass, Europe’s enormous tax burden on the middle class. There is no evidence that American voters will accept this level of taxation.,” Reidl says.
“America might be ready for Democratic Socialism,” quipped one commenter on Twitter, “but it’s not ready for the bill.”