June 15, 2021

Baby Steps

Spectator
By Stephen Tuttle | Jan. 9, 2021

It didn't take the ultra-progressive wing of the Democratic Party long before they started carping away at President-elect Joe Biden. His cabinet nominees, so far the most diverse group ever, wasn't diverse enough. Or he wasn't aggressive enough combating the Trumpian nonsense. Or he wasn't sufficiently loyal to their agenda. 

They were surely correct on the last point, and Biden has made no secret of that. In fact, he doesn't support most of that ultra-progressive orthodoxy like “Medicare for All,” defunding the police, or lots and lots of free stuff paid for with dramatic tax increases for rich folks and corporations. Not to mention new environmental plans that are a practical impossibility.

The Bernie Sanders/Alexandria Ocasio-Cortez (AOC) faction, who call themselves Democratic Socialists, are actually a tiny part of the Democratic caucuses in both the U.S. House and Senate. But they have an oversized voice and have cleverly used both mainstream and social media to generate an audience and adherents, especially among those who would most benefit from their ideas. So, what is that agenda? 

Start with a single-payer “Medicare for All” healthcare system. Add free public education from pre-K through graduate school. Forgiveness of current student debt. Defunding police. (It should be noted here that AOC has plainly said she doesn't mean that phrase euphemistically or metaphorically; she really wants to eliminate or greatly reduce budgets for police departments.) Meeting 100 percent of power needs from renewable sources within the next decade. The list is pretty long — some of it based, they think, on the Scandinavian model the progressives so admire.

So let's take a look so we can understand why it won't work here.

Denmark, Sweden, and Norway have remarkably generous social programs including free cradle-to-grave healthcare, free education at every level, at least a year of paid maternity/paternity leave, five weeks of paid vacation to start, and a generous social security program. They also are among the world’s leaders in taking steps to combat climate change.

All this requires an enormous financial commitment from the government, paid for by what most of us would consider monstrous tax increases. In Sweden, for example, the tax rate for those making more than 1.3 percent of the national average is nearly 56 percent. That system here would take more than half of what anyone earned beyond $65,000. And they don't have thousands of deductions to ease the burden.

Norway also has a wealth tax — those whose net worth exceeds certain levels must pay a fraction of their estate in the form of a wealth tax — and they have the equivalent of a consumption tax of about 10 percent, which everybody pays with every purchase.

(Interestingly, environmentally conscious Norway makes half its export revenue from vast offshore oil and natural gas reserves. And private enterprise is responsible for 80 percent of its “socialist” economy.)

But Sweden, Denmark, and Norway combined are small — only about the size of Texas and with nearly 10 million fewer people. More importantly, the people of those countries chose, by legislation or referendum, to have the kind of social welfare system they do, and they chose to pay for it with their tax dollars.

The majority of Americans have made no such choice and aren't likely to do so in the foreseeable future.

Progressives have made proposals that would cost $30 trillion over just the next decade so they will need new revenues aplenty, and rich folks and corporations are the targets — like a top income tax rate of 70 percent for the very rich, restoring the corporate tax rate to 35 percent, instituting a wealth tax, and even creating an exit tax for those wishing to move on to greener pastures. 

Even then it doesn't pencil out without raising taxes for everybody from the lower middle class on up.

Biden doesn't support much of it, and there aren't 219 votes in the House nor anywhere near 60 votes in the Senate to get something passed. Without a House majority and a filibuster-proof Senate, the progressive agenda is only an interesting topic of discussion.

Frustration and grumbling are the more likely outcomes as Biden assumes the presidency. He can and likely will undo much of President Trump's backward steps on the environment. He might be able to negotiate a small corporate income tax increase, perhaps from the current 21 percent to 23 percent. He campaigned on expanding the Affordable Care Act (Obamacare), not Medicare for All. Like all other Democratic candidates, he says he will close tax loopholes and eliminate outlandish and excessive deductions. 

Not much of that will appease progressives. But there is not yet public support, and nowhere near the political will, for the model of government programs they propose. They have taken big strides in gaining attention for their ideas but will have to settle for baby steps when it comes to realizing any of them.

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