Democratic congressional candidate Alexandria Ocasio-Cortez, a self-proclaimed socialist running to represent the 14th District in New York, insists that federally funded Medicare for All, free college tuition, and free housing aren't "pie-in-the-sky" proposals. But when asked yesterday where the tens of trillions of dollars to pay for these programs would come from, she wouldn't provide an answer.
Ocasio-Cortez was appearing on CNN's State of the Union to discuss a variety of issues, from the aftermath of Hurricane Maria in Puerto Rico to the allegation that Supreme Court nominee Brett Kavanaugh committed a sexual assault. When the conversation turned to her domestic policy ideas, CNN anchor Jake Tapper noted that Ocasio-Cortez's proposals, "including Medicare for All, housing as a federal right, a federal jobs guarantee, tuition-free public college," and "canceling all student loan debt," would cost the federal government more than $40 trillion over 10 years.
Tapper got that figure by adding up cost estimates for some of her bigger ideas. According to a cost analysis in Vox, the main democratic socialist policies would actually cost roughly $42.5 trillion over the next decade. The biggest culprit is the single-payer health care plan (Medicare for All), which the Mercatus Center says would cost taxpayers $32 trillion.
Tapper then cited a July interview in which Ocasio-Cortez claimed that hiking the corporate tax rate would raise $2 trillion over the next decade. But what, Tapper asked, about "the other $38 trillion"?
Ocasio-Cortex responded by defending her most expensive proposal. Medicare for All "would save the American people a very large amount of money," she said. Then, she explained that "these systems are not just pie-in-the-sky," since they exist in other countries as well. "What we need to realize is that these investments are better and they are good for our future," she said.
The candidate went on to call her proposals "generational investments" and "really profound decisions about who we want to be as a nation." But as Tapper pointed out, she didn't answer his question. "You say it's not pie-in-the-sky, but $40 trillion is quite a bit of money. And the taxes that you talked about raising to pay for this, to pay for your agenda, only account for two [trillion]," he said.
Ocasio-Cortez again failed to provide a specific answer, instead arguing that current health care costs prevent people from spending money "in the private sector." The fact that millennials are hesitant to buy cars and houses "is a cost" that her proposals will seek to eliminate, she added.
Realizing she wasn't going to answer his question, Tapper gave up. "I'm assuming I'm not going to get an answer for the other $38 trillion," he said. "But we'll have you back and maybe we can go over that."
Ocasio-Cortez's refusal to explain where the money would come from isn't surprising, because the answer doesn't help her cause. She claims that raising taxes on just the super-wealthy will pay for her proposals, but as Reason's Christian Britischgi explained earlier this month, that's not true. Just look at Denmark's welfare state:
According to a 2015 Tax Foundation study, Denmark's top marginal income tax bracket of 60 percent kicks in for income earners making over 120 percent of national median income (which would be about $70,000 here in the United States), and the country charges a 25 percent value added (sales) tax. In the U.S. one has to make about 700 percent of the national median income ($400,000) before they're subject to top marginal tax rates. The U.S. also has no value added tax, with the steepest sales taxes in the country barely cracking 10 percent.
As Reason's Eric Boehm argued in July, it's crucial for the public to grasp the trade-offs before implementing socialist proposals—particularly single-payer health insurance. Of course, it's lot easier for politicians to convince people they deserve free stuff than it is to explain who's really going to pay for it.