In July of 2018 I published Commentary No. 39 on the phenomenon called “Democratic Socialism.” (Let’s ignore for the moment that the term Democratic Socialism is an oxymoron. By definition, a democracy cannot be socialistic, and socialism cannot be democratic.)
In that Commentary I complained that even their official organization, the Democratic Socialists of America, was unable to clearly define what Democratic Socialism is. They offered a combination of Marxist socialist and Leninist communist talking points as a definition of what they saw “Democratic Socialism” as.
Their proponents did somewhat better. They offered more than twenty specific programs they thought Democratic Socialism should embrace, most of which either explicitly or by implication included the word “free.”
Today, seven months later, the issue is gradually becoming clearer. As of this writing, five Democrats have announced their campaigns for the 2020 Presidential nomination: Elizabeth Warren of Massachusetts, Kamala Harris of California, Cory Booker of New Jersey, Kirsten Gillibrand of New York, and Tulsi Gabbard of Hawaii. Although none of the five have officially declared themselves to be Democratic Socialists, they are all proposing the same programs—and they’re straight out of the list of Democratic Socialist programs I itemized in Commentary No. 39.
- Medicare for everyone
- Guaranteed jobs for everyone
- Free college tuition for everyone
- Forgive existing college student loan debt
- Raise the national minimum wage to $15 per hour
- Repeal the Trump tax cuts on individuals and businesses
- Establish a “wealth tax.” People with a high net wealth would be required to give a percentage of it to the federal government every year.
- Abolish ICE
- Give amnesty to all illegal aliens currently in the U.S. and give them a “fast track” to citizenship.
Only one candidate, Elizabeth Warren, has proposed the following. However, several Democrat non-candidates (so far, at least) have spoken out in favor of it:
- Raise the marginal tax rate on the highest earners to 70%
Let’s take a realistic look at each of those proposals.
- MEDICARE FOR EVERYONE
The Office of Management and Budget (OMB), a notoriously liberal governmental agency, has estimated that it would cost about $3.6 trillion per year to do that. Mind you, that’s over and above the current budget, which is estimated to be about $4.4 trillion and which includes a deficit of about a trillion dollars.
That means our national debt, which is currently about $22 trillion, would increase at the rate of about $4.6 trillion per year. Since the current GDP is estimated to be about $19.4 trillion, that means our annual deficit (which is to say, the annual increase in the national debt) would be about 24% of our GDP. Clearly, the nation would not long survive that.
(Parenthetical comment: if the OMB estimates the cost at $3.6 trillion, I wouldn’t be surprised to learn the real number is in excess of $4 trillion.)
So when it becomes obvious—indeed, imperative—that changes must be made, what will the changes be?
The answer: healthcare rationing. It will come in two forms. One will be to delay services to everyone. Today, if my doctor orders an MRI on Monday to help him diagnose a problem I’m having, I can have the MRI on Thursday or Friday of the same week. After “Medicare for everyone” goes into effect, the MRI will be scheduled for sixteen to eighteen months later. If I die before the scheduled date of the MRI arrives, oh, well—that’s one less person the government will have to furnish healthcare for.
If you think I’m exaggerating, talk to someone living in Canada or England. Yes, if you want to see a doctor because you have the sniffles, you can see one today—although you may have to wait in his office for eight or ten hours. But if you need to see a specialist, like a cardiologist or a neurosurgeon, or have a special procedure like an MRI or a CT scan, the wait is months, not hours.
Here’s another fun fact—as of this writing (February of 2019) there are more MRI machines in the city of Houston than in the entire country of Canada. Really.
The other form of rationing will be age-related. A government panel will do a cost vs. benefit analysis on the more expensive procedures, like chemotherapy and coronary bypass surgery. The panel will rule that if a patient is past a certain age, he is not eligible for the procedure. The cost of the procedure will be more than the economic benefit of keeping him alive.
People like me, retired and no longer working, will be eligible for almost nothing. If we get the sniffles we might get some aspirin or nose drops, but if we need open-heart surgery or chemotherapy, it will be denied.
What’s that? I heard someone say the American government would never allow someone to die just because there was no economic benefit to keeping them alive.
Need I remind you that the state of New York just passed a bill into law that will allow babies to be aborted (let’s be honest and say “murdered”) after they are born?
In Virginia an identical bill failed by only two votes. The Virginia governor supports the bill, and the proponents have vowed to keep reintroducing it until it passes.
Nine other states are considering identical or similar bills. Texas, I’m proud to say, isn’t one of them.
Do you really believe that a society willing to murder an innocent newborn baby would balk at withholding medical treatment from an eighty or eighty-five year old person who has already had a long life and will probably die within five or ten years anyway? I don’t.
- GUARANTEED JOBS FOR EVERYONE
If you’ve ever been unemployed, you know it’s a scary, humiliating experience. So the idea of the government guaranteeing everyone a job sounds, on the surface, like a pretty good idea.
But we need to recognize there’s another Democratic Socialist program hidden inside the guarantee of a job—the desire to give everyone a guaranteed minimum income. By guaranteeing everyone a job, they are guaranteeing everyone a paycheck.
As we think about it, several problems come to mind. For example, in a democratic, capitalistic, free-enterprise society, can the federal government go to General Motors, or Macy’s, or the local Pizza Hut store, and say, “We promised John Smith a job so you’ve got to hire him, whether you need him or not. And you’ve got to pay him at least fifteen dollars an hour.” (See #5 below.)
The answer, obviously, is “no.” The only way the government can do that is if the government owns all the businesses. That’s what the would-be socialists don’t want to say.
That’s the way the Soviet Union operated from 1917 to 1991. The local widget factory was owned by the government. It might only need three hundred people to operate at full capacity, but because the government had promised everyone a job, there might be seven hundred people assigned to work at the factory. On any given day, only a few of them showed up—but everyone got a paycheck, whether they went to work or not.
What about people who are unable to work because of some physical or mental handicap? Are they going to be required to work, or will they be given their guaranteed minimum income anyway?
What about people like me—people who spent forty or fifty years working, and are now retired? Are we going to be forced to go back to work? Will we continue to get our Social Security?
Finally, there are the people who choose not to work. Economists tell us that there are somewhere between four million and five million people—2.5% to 3.0% of the workforce—who simply refuse to work. They may be living on welfare, or they may be 35 years old, still living in their parents’ basement and eating at their parents’ table.
What do the Democratic Socialists propose to do about them? Tell them, “That’s okay. You don’t have to work if you don’t want to. We’ll pay you anyway.” If they do that, I predict the number of people who choose not to work will grow to twenty million, twenty-five million, thirty million, virtually overnight.
There’s no way to estimate what a program of guaranteed jobs would cost, since some of the jobs would be common-labor jobs and some would be as doctors, lawyers, and nuclear physicists.
- FREE COLLEGE TUITION FOR EVERYONE
It has been wisely observed that there’s no such thing as a free lunch. Whether you’re talking about a lunch, a public-housing project, or a college education, those things require materials, time, and effort, and none of that is free. The professors and administrators have to be paid. Buildings must be built. Books must be furnished. Laboratory supplies must be available.
The only thing the Democratic Socialists are really proposing is that instead of the costs being paid by the person who gets the benefit of them, they want the costs paid by the taxpayers.
Another old saying is, “He who pays the fiddler calls the tune.” I’ve read that our various colleges and universities around the U.S. graduate about 3500 people a year with four-year degrees in Art History. Those people compete for about three hundred jobs available to Art History graduates each year. The other 3200 end up making coffee in a Starbucks or stocking shelves at Walmart.
Are the Democratic Socialists going to allow those 3200 people to get useless degrees at taxpayer expense, or are they going to tell them they must get degrees in some useful field?
Once the government starts telling prospective students what they can’t study, how long will it be before they start telling students what they must study?
“We’re going to train you to be a chemist.”
“But I don’t want to be a chemist. I want to be an accountant. I’ve always wanted to be an accountant.”
“Sorry, but the nation has enough accountants. What we need are chemists. We also have a shortage of welders. You can be a welder if you’d prefer. Welders make more money, but a chemist has more social prestige. Take your choice.”
What about living expenses? It’s all well and good to have tuition, books, and fees paid by the government, but the student is still going to need the basics of food, clothing, shelter, and transportation. Are those things going to be furnished under the Free College program, or will the Free College program interface with the Guaranteed Jobs and Guaranteed Minimum Income programs to give the student those things? That question needs to be answered.
I’ve personally known one person who laughingly proclaimed himself to be a “professional student.” He had been in the Army and was going to college on the GI Bill. He had spent three years in the Army. At the time I knew him, he had been going to college for seven years. He was within a few credit hours of receiving several degrees, but he was careful never to graduate. Every time he got close to graduating, he changed his major and started over.
How many more professional students might we have if college is free?
I’m also worried about the fact that the Democratic Socialist candidates are only talking about “college.” Most of us have experienced the fact that it’s easier to find a competent lawyer or accountant than it is to find a competent auto mechanic or electrician. Will the Democratic Socialist program include trade schools, vocational training programs, and apprenticeship programs, or are those people on their own?
What would such a program cost? It’s impossible to estimate with any degree of certainty. Some research on the Internet turned up an estimate that there are about 20.5 million students registered in college at any given time. If we arbitrarily assume a cost of $5000 a year for tuition, books, fees, and other expenses, that adds up to about $100 billion a year added to the deficit and the national debt.
- FORGIVE EXISTING COLLEGE STUDENT LOAN DEBT
Under Barak Obama the student loan debt doubled, from about $700 billion to about $1.4 trillion. It now stands at about $1.5 trillion. Those loans are guaranteed by the federal government, but the loans are held by private banks—which means the government would have to pay them off. Since the government is already spending a trillion dollars more than they take in in taxes, the amount would have to be borrowed and added to the national debt.
What we do know is that such a program would add a one-time cost of $1.5 trillion (or more) to the deficit and the national debt.
- RAISE THE NATIONAL MINIMUM WAGE TO $15 PER HOUR
About fifty years ago we stopped teaching basic economics in our high schools and colleges. As a result, two generations have grown up without understanding the most fundamental relationship between employment and wages. That fundamental relationship is simply that an employee must earn more for his employer than he makes in wages. If the employer is paying him $10 per hour, for example, the worker must produce more than $10 in value for every hour he’s paid. If he produces less than $10 in value, the employer is losing money by keeping him on the payroll.
Without going into too much detail, the price structure at your local McDonald’s is predicated on paying that sixteen-year-old behind the counter the national wage of $7.25 per hour. When his wage more than doubles, to $15.00 per hour, the kid is no longer producing more than he’s being paid.
That leaves the business owner with several unpleasant choices. He can (1) raise his prices, which will drive some (or most) of his patrons to the mom-and-pop hamburger place down the street, (2) he can lay off half of his workers and tell the rest they’ve got to work harder, or (3) he can lose money, which means he will eventually go out of business and everyone will lose their jobs.
As of this writing, 29 states and the District of Columbia have mandated that employers must pay more than the federal minimum of $7.25 per hour. The result in all those places has been the same. Many small businesses have simply gone out of business. In an effort to stay in business, others have laid off some workers and told the remaining workers they will have to work harder.
Some businesses are finding ways to eliminate the minimum-wage workers altogether. Many grocery stores are adding self-checkout lanes. Banks are using ATM machines instead of tellers. McDonald’s and other fast-food stores are going to touch-screen kiosks where customers can order their food and pay for it without talking to a human at all.
You can order a pizza online and do the entire transaction without any human interface. Select your size, your sauce, your toppings, and any extras like drinks. Pay for it and order it delivered to your house, all by clicking a few options. You can even add the tip for the delivery person.
If raising the minimum wage was the solution to “lifting people out of poverty” (Okay, I’m showing my age. That was a Lyndon Johnson term.), the solution would be obvious. Raise the federal minimum wage to $25 an hour, or $50, or even $100. That works—until you go back to that fundamental truth that the employee has to produce more than he earns.
- REPEAL THE TRUMP TAX CUTS ON INDIVIDUALS AND BUSINESSES
This one I absolutely don’t understand. Both individuals and businesses are paying less in taxes, which means they’re keeping more of what they earn. Wages are going up, more people than ever are working, and many companies are paying bonuses for the first time in a decade. If I were a Democrat who wanted to be President, I’d be trying to find a way to take credit for the tax cut, not promising to repeal it.
- ESTABLISH A “WEALTH TAX” ON HIGH NET-WORTH INDIVIDUALS
In my opinion, (standard disclaimer), this is the most bizarre idea that any politician has ever come up with. It’s rooted in the “redistribution of wealth” concept. Basically, they’re proposing that anyone with a net worth of more than $10 million would be required to surrender two percent of their net worth to the federal government every year. Mind you, this is in addition to any income tax that individual might pay. (See #10 below.)
Wait, it gets worse. Anyone with a net worth of more than $1 billion would be required to surrender three percent of it. Every year.
- ABOLISH I.C.E.
I’m not going to comment on this proposal beyond saying that it’s not going to happen. I don’t know if President Trump is going to get his wall, but the various border patrol, immigration, and customs agencies aren’t going away.
- GIVE AMNESTY TO ALL ILLEGAL ALIENS CURRENTLY IN THE U.S., AND GIVE THEM A “FAST TRACK” TO CITIZENSHIP
There are no reliable estimates of how many illegal aliens are currently in the U.S. I’ve seen estimates ranging from twelve million to twenty-two million illegals. Democrats see them as future Democrat voters, since they are beginning to lose the black vote.
The “fast track to citizenship” they’re proposing is to put the newly-amnestied illegals at the head of the immigration line, ahead of the legal applicants who have patiently waited five, six, or more years for their citizenship hearing to come up.
The Democrats’ argument for doing that is that many of these people have been in the U.S. for twenty, twenty-five, maybe thirty years. That means they should go ahead of people who have only been waiting for less than ten years.
Of course, they’ve been here all those years illegally, but hey—it’s an imperfect world.
- RAISE THE MARGINAL TAX RATE ON THE HIGHEST EARNERS TO 70%
There’s nothing to be gained by repeating myself. Please see my Commentary No. 27, issued in April of 2017. I’ll only add two things. One is that (as I predicted in Commentary No. 27) net tax revenues to the government have increased since the tax cuts went into effect.
The other comment is to point out that raising the marginal tax rate to 70% on even the top twenty percent of earners would come nowhere near paying the additional trillions these programs would add to the budget, the deficit, and the national debt every year. The heaviest part of that burden would (as always) fall on the Middle Class earners. The Democratic Socialists know that, but they aren’t going to say it.
I’ll close this Commentary with another prediction. I don’t believe any of the Democratic Socialist wanna-bes will be successful in winning the nomination in 2020. However, the 2024 nomination may be a different story. By that time, many of us Baby Boomer Generation people will be gone, and the millennials will have a solid voting majority.