As campaigns for the Democratic nomination take off, many ideas are being exchanged on the national stage. Some of the most newsworthy ones however, sprouted from the 2018 midterm elections. Progressive candidates from deep-blue districts were freshly elected on platforms based on green energy, affordable healthcare, and income inequality.
I’m talking, of course, about the Green New Deal, Medicare for All, and the 70% Progressive Tax.
Since then – and really, the 2016 election before it – conversations have roared both in D.C. and on social media. Progressive members of the Democratic Party have made it clear that they are unhappy with President Trump leading America’s government and economy.
President Trump ran on a platform to bring back industrial jobs. This included, to the dismay of progressives and other Democrats, bringing back jobs in coal, natural gas, and oil. To achieve this, Trump also promised to cut 2 regulations for every 1 new regulation, which he is exceeding 22:1.
Overall, Trump’s plans are working, though with some drawbacks. The economy;
- has added 3.3 million jobs,
- has added 11 times more factory jobs in 2017 than industry lost in 2016,
- boasts the lowest unemployment rate since 1969 at 3.6%, and
- has more open jobs (6.8million) than unemployed persons (6.6million) for the first time ever.
Healthcare and health insurance costs are still astronomical. To combat this, Trump signed an executive order to allow interstate competition between insurance companies. Republicans also passed a price transparency law that mandates healthcare providers post costs online for consumers to end hidden costs.
Unfortunately, no other meaningful legislation has come out of Washington. We await combat against price gouging on drugs or durable medical equipment, limiting waste, or diminishing administrative overhead.
While incomes are rising across the board, income inequality is expanding.
In response, the Trump administration immediately spearheaded one of the most successful tax cuts in modern history. Analysis shows that about 65% of all income earners were able to keep more of their money compared to the previous year.
Unfortunately, the Republican Party, with control of both Congressional houses and the Oval Office, once again failed to cut spending. As a result, the deficit has once again exploded.
In spite of all of the economic successes, the low- and middle-classes are struggling with upward mobility. As costs continue to rise, pennies are still being pinched.
While sincere efforts are being made, Democrats are irate over how hard lower-income earners are being hit. It’s clear that they are also impatient and how long it is taking to solve this issue.
Progressives took the stage in 2017 and 2018 with bold, and in some cases, fresh new ideas. Alexandria Ocasio-Cortez, Congresswoman from New York City, has generated a massive conversation on two of these platform points.
She has called for a 70% tax on salaries over $10 million in order to combat D.C.’s deficit. She also spearheaded a think-tank that proposed a policy proposal called the Green New Deal.
Bernie Sanders, a Congressman since 1979 and a newfound supporter of AOC, has also proposed his own massive federal program. With the goal of driving down healthcare and health insurance costs, Sanders proposes expanding Medicare to cover everyone. Dubbed Medicare for All, Sanders seeks to join “the rest of the industrialized world” by implementing universal healthcare.
In spite of the fact that moderate Democrats still make up a large – if not the largest – portion of the Democratic party, the progressive fringe is taking over. Far-left “democratic-socialists” are storming the fronts of public debate and altering discourse. And it shows, given that 23 people have declared their candidacy for the Democratic Nomination, and all have spoken out about these policies.
And many of them came out in favor of them.
But can these policies actually work?
Facts and Figures
Our federal budget according to the most recent GPO publication is $4.4 TRILLION in 2019. It includes a deficit of $984Billion (“printing money” accounts for the shortfall).
Progressives often blame billionaires for outrageous salaries that cause them to amass and hoard their wealth. They proposed that their income should be taxed at 70% to make up the difference.
But will this work? Let’s look at a few billionaires.
Jeff Bezos: His annual salary is just $81,000. He has a total annual compensation of $1.7million. Yet his total net worth is $135.5Billion. Bezos would have to work for 79,700 years to attain his net worth if his only income was his salary.
Warren Buffet is worth $81.5B but has an annual income of only $100K. He would have to work 850,000 years.
Elon Musk is worth roughly $22Billion, but earns a mere $37,000 salary. Elon would have to work 594,594 years to amass his wealth if his only income was his pay check.
Why do I mention this? While not every CEO earns such wages (Bill Gates earns $2.6 billion, Mark Zuckerberg and Bernard Arnault earn about $9 million, and Larry Ellison takes in $41.5 Million), the numbers vary and one thing is obvious: regular wage is not the primary contributor of net worth.
So where does all of the extra wealth come from?
Investments and innovations.
Now, lets talk taxes.
NOTE: Remember that a graduated tax rate means that everything over $10Million (according to the proposal) would be taxed at 70%. For the sake of simpler math and simpler discussion, I’m going to work the numbers accounting for the entire dollar amounts. This means that, in real world application, hypothetical PT70 revenues would be SMALLER than I’m actually about to display.
In 2017 (most recent year that wage index was produced by SSA), out of 165.4Million workers, only 3,755 earned $10Million or more. The aggregate (total) earnings among them was $82.4billion. If this total were taxed at 70%, that would be a mere extra $57.68 billion for the federal coffers. (Remember, the real PT70 haul would be less because its graduated).
In order for the 70% tax to cover just the 2019 deficit, the tax would have to be collected for 18 years. To cover the entire 2019 budget, it would need to be collected for over 78 years.
Or, in other terms, almost $1.5 trillion worth of wages in excess of $10 million would need to magically appear — roughly 450,000 new multimillionaire positions. That’s 120-times as many than exist right now.
Green New Deal
Let’s take a different look at things;
Progressive Representative Ocasio-Cortez was tight-lipped about how much her proposal would cost. However, engineers at Stanford led by Mark Jacobson produced a similar simulation which would cost an additional $1.3Trillion annually.
It gives us an imperfect idea of the out-of-pocket costs. But doesn’t at all account for the damage the program would do to existing industries, though a variety of think tanks are trying to crunch the numbers at the outlooks are bleak. It’s so bad, even the left-of-center Washington Post is calling it “make-believe.”
Medicare for All
What about Medicare For All?
Medicare For All is altogether far worse for our budget — almost three-fold — daring to add $3.2 Trillion to our federal budget each year at minimum for the first 10 years. Those are just the conservative estimates.
So, between the Green New Deal and Medicare for All, progressive policymakers are suggesting that we effectively double our federal budget by adding an additional $4.5 Trillion to our already $4.4 Trillion budget, increasing the expenditures as a percent of our GDP from a hair-pulling and pocket-emptying 21% to a completely unsustainable, economically devastating and destructive 42%.
And remember, the 70% tax would need to be collected for roughly 160 years just to pay for a single year of these programs combined. But realistically, they would have destroyed our nation long before then anyway.
It’s clear that the hearts of Democrats are in the right place with these proposals. Equally so, it’s clear that these proposals are simply unworkable and if implemented would be disastrous.