Rare News Desk
Economic populism is a dead end and should not be the guiding star for Democrats, argue Jon Cowan, president of the left-leaning think thank Third Way, and Jim Kessler, a policy analyst also from Third Way.
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Cowan and Kessler point to New York City’s Bill de Blasio and Massachusetts’s Elizabeth Warren’s progressive policies as not only politically infeasible but disastrous for the country.
“The movement relies on a potent ‘we can have it all’ fantasy that goes something like this: If we force the wealthy to pay higher taxes (there are 300,000 tax filers who earn more than $1 million), close a few corporate tax loopholes, and break up some big banks then—presto!—we can pay for, and even expand, existing entitlements,” the two write in a Wall Street Journal op-ed titled “Economic populism is a dead end for Democrats.”
The problem with the liberal dream of taxing the rich to pay for entitlements and investments for the future is that the math just simply doesn’t add up.
“Social Security is exhibit A of this populist political and economic fantasy,” the write.
“A growing cascade of baby boomers will be retiring in the coming years, and the Social Security formula increases their initial benefits faster than inflation. The problem is that since 2010 Social Security payouts to seniors have exceeded payroll taxes collected from workers. This imbalance widens inexorably until it devours the entire Social Security Trust Fund in 2031, according to the Congressional Budget Office. At that point, benefits would have to be slashed by about 23%.”
Still, the Warrens and de Blasio’s of the world would expand senior benefits. Union groups have gone so far as to threaten Democrat politicians that they will destroy them should they move to change social security in any way.
“Let me just say this one for the record. No politician — I don’t care the political party — will get away with cutting Social Security, Medicare or Medicaid benefits. Don’t try it. And this warning goes double for Democrats. We will never forget. We will never forgive. And we will never stop working to end your career,” AFL-CIO leader Richard Trumka said in October.
But as many have warned, including the nonpartisan Congressional Budget Office, along with many conservative leaders, these entitlement programs are running out of money, some as quickly as with in the next decade.
“As for the promise that unrestrained entitlements won’t harm kids and public investments like infrastructure, public schools and college financial aid, haven’t we seen this movie before?” Cowan and Kessler ask.
“In the 1960s, the federal government spent $3 on such investments for every $1 on entitlements. Today, the ratio is flipped. In 10 years, we will spend $5 on the three major entitlement programs (Social Security, Medicare and Medicaid) for every $1 on public investments.”
“And that is without the new expansion of entitlement benefits that the Warren wing of the Democratic Party is proposing,” they warn.
Pragmatic Democrats acknowledge that the progressive entitlement society envisioned by Sen. Warren and mayor-elect de Blasio is simply not possible, both in the political sense, and in reality.
