Medicare for All

Alexandria Ocasio-Cortez Wants Democrats to Drop the Pretense of Fiscal Responsibility

The fight over PAYGO is about whether Democrats will pretend to care about the deficit.

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KEVIND DIETSCH/UPI/Newscom

Perhaps the biggest question looming over the progressive economic policy agenda is how to pay for it. Rep. Alexandria Ocasio-Cortez (D–N.Y.) and a handful of other left-leaning Democrats appear to have settled on an answer: Don't.

As Democrats take control of the House this week, Reps. Ocasio-Cortez, Ro Khanna, and other progressives have come out against the reinstatement of a House rule known as PAYGO, or pay-as-you-go.

Broadly speaking, PAYGO would require the House to offset expansions of mandatory spending (which mostly means entitlements) with either tax hikes or spending reductions, making the spending deficit-neutral. PAYGO would replace CUTGO, a rule adopted by the Republican House in 2011 requiring spending reductions to offset increases in entitlement spending; CUTGO does not require deficit increases stemming from a tax reduction to be offset.

Speaker of the House Nancy Pelosi included the rule in a package of changes intended to signal a sharp break from her Republican predecessors. The message she wants to send is that Republicans, who in 2017 passed a deficit-increasing tax-cut bill on party lines and then followed up by agreeing to a bipartisan spending increase, were fiscally irresponsible. This is a political promise that Democrats won't be.

Granted, it's not much of a commitment. House Democrats could waive the rule any time they wanted to, and if doing so was necessary to pass big-ticket legislation they likely would. Some Democrats appear to support the rule changes only on the understanding that they won't really be binding.

And in a larger sense, it doesn't matter anyway, since PAYGO is encoded in statute, which requires the Office of Management and Budget to implement across-the-board spending cuts under certain conditions. But even statutory PAYGO has limits: Programs like Medicaid, food stamps, and Social Security are exempt from those across-the-board cuts; reductions to Medicare spending are capped on annual basis; and no cuts have actually gone into effect since 2010.

So the fight over the House PAYGO rule is almost entirely symbolic. At heart, it's a debate about whether Democrats will maintain the pretense of self-imposed fiscal responsibility. Ocasio-Cortez and others who oppose the rule are arguing, essentially, that Democrats should drop it entirely, because maintaining even the pretense could make it prohibitively difficult to pass expensive legislation like single-payer health care.

On Twitter, Ocasio-Cortez, who campaigned on Medicare for All, singled out health care legislation as a reason to oppose PAYGO:

In some ways, this is a response to Republicans running up the deficit over the last two years. Rep. Tim Ryan (D–Ohio) tells Vox, "Critical investments in education, infrastructure, and health care should not be held hostage to budgetary constraints that Republicans have never respected." Other PAYGO opponents are making a pro-growth argument that mirrors the Republican argument that tax cuts pay for themselves. Khanna tells Vox, "We should make it clear that our policies will lead to growth and that's how, long term, we will avoid uncontrollable deficits."

Republicans certainly haven't done themselves any favors by enacting legislation that has caused debt and deficits to rise, and this response from the Democrats was entirely predictable. Ambitious progressives were nearly certain to seize on Republican deficit hypocrisy as a way to advance their own agenda.

But this isn't just political tit-for-tat. It's a response to the question of how to pay for progressive policies that rejects the premise. Underlying this intra-Democratic dispute is an admission on the part of the progressive faction that they not only are unlikely to find a politically workable way to pay for their agenda, they don't believe they should even have to try.

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91 responses to “Alexandria Ocasio-Cortez Wants Democrats to Drop the Pretense of Fiscal Responsibility

  1. >>>In some ways, this is a response to Republicans running up the deficit over the last two years

    in more ways, it was the Elite shoving our noses in it.

    1. ” a deficit-increasing tax-cut bill”

      Tax cuts cannot increase the debt because no money is spent cutting taxes. Only spending can increase debt.

      Suderman is no libertarian, and a serious drag on the Reason podcasts. Can him KMW.

      1. I believe he said “deficit-increasing” not debt-increasing.

        1. Debt is merely accumulated deficits.

          1. And distance traveled is merely ‘accumulated speed,’ but they’re still completely different things so it made your comment an even more nonsensical objection than it otherwise would have been.

            If you cut revenue and leave spending constant, you increase the deficit. spending – revenue = deficit. It’s simple math.

  2. Its amazing how this socialist keeps spouting the same message as a supposedly hypercapitalist.

    Resources exist to be consumed. And consumed they will be, if not by this generation then by some future. By what right does this forgotten future seek to deny us our birthright? None I say! Let us take what is ours, chew and eat our fill.

    CEO Nwabudike Morgan “The Ethics of Greed”

    She embodies the massive greed she assumes exists in her ideological opposites and decries it in them while embracing it herself..

  3. they don’t believe they should even have to try.

    Now we’re getting to the root of socialism.

  4. Yeah, man. Why don’t you learn some real economics and economic history from Paul Krugman and Robert Reich?

    1. She brings deep expertise in the Austerian School of Economics. Which is the wrong one, by the way.

      1. Or is that the Autistic School?

      2. The definition for the term “austerity” has been degraded to mean no more than spending a little less than you’d like.

  5. It doesn’t truly matter if the empty promise of “paygo” is made or not. The progs will still have to explain how they’re going to pay for free healthcare, free college, “green” energy, etc. And they’ll need more than vague hand-waving about the “rich paying their fair share”.

    1. The progs will still have to explain how they’re going to pay for free healthcare, free college, “green” energy, etc.

      Why? We don’t pay for anything now.

      There has been zero consequences to any of our excess spending, pretty much ever. Until the shit hits the fan, I mean REALLY hits the fan, there’s simply no political need to have a plan to pay for anything.

      1. Yep. Depressing.

        1. I see what you did there

      2. Medicare for all might take up something like 70% of the budget, and I’ve read that it could take up as much as 90%. Not even the United States can fund projects like that by simply printing more money. At least not without being hit by a wave of inflation.

        The money might be a secondary issue to access and quality. There’s no way the nation’s hospitals are ready to offer quality healthcare to 340 million people. Americans can sort of ignore military spending because most of them don’t fight in wars. Most people didn’t buy ACA healthcare plans. Something like medicare for all will definitely start hitting their pockets.

        1. Don’t worry. Medicare would be a downgrade for most Americans, with fewer choices and more restricted access. The riots would begin way before the clinics run out of bandaids.

          1. Much easier to just get rid of the progtards.

        2. David Goldhill, author of “Catastrophic Care; How American Healthcare Killed My Father” figured out that seniors now getting their “free” Medicare, actually pay a higher share of their income on health care than seniors did before Medicare existed. That suggests abolishing Medicare would save seniors money, and it tells you how much the government has screwed up the marketplace for healthcare.

          We obviously need less government involvement in health care. It’s simply an immoral use of government to get involved in health care, because force is used to take peoples’ money to pay for it, when that use of force and taking of money isn’t needed and from a utilitarian point of view makes things worse overall.

          The solution is more freedom and responsibility, which is less government.

      3. As long as we own the Printing Press & the world accepts our fiat dollars this can go on forever!!!!

      4. Exactly correct! So here’s a ?novel idea. Our debt is $21 trillion, which doesn’t include all the unfunded mandates like social security, Medicare, government pensions, etc. estimated to be $50 to $150 trillion. Obviously there is no possible way that this amount can ever be paid, except possibly via some uber hyperinflation scheme. Other wise, the US will ultimately default on its debts. Either way, the dollar becomes worthless.

        But so long as the world still believes in the value of the dollar (made easier by the fact that all other nations are also in severe debt with relatively crappy economies), then our debt remains irrelevant (it seems to have remained irrelevant so far, despite having $21,000,000,000,000 + unfundeds).

        So I say let’s just go ahead and deficit spend like there’s no tomorrow- military, complete infrastructure rebuild, health care and college for all, cell phones and computers for all, federal income and capital gain tax holidays, free housing, solar panels for every roof, electric cars, thorium reactors for nearly unlimited energy, you name it.

        After all, what’s the difference between $100 trillion and $900 trillion? Neither can ever be repaid. Dollar collapse in inevitable. So let’s get while the getting’s good. Finally a unified Congress and Administration. Everyone gets what they want and need- at least for a while.

    2. Pay for it with tax cuts. Its how we paid for the global war on terror. Seems to work fine.

      1. Tax cuts can’t pay for anything. The increased tax receipts – as in 2018 vs 2017 – do help pay for things. Boo Moo.

  6. Cortez is a major Lefty socialist… At least Trump is getting things done.
    https://aladyofreason.wordpress.com/

  7. Also, you know you can just ignore her. She’ll be gone by next election.

    1. You really can’t. She got elected in the first place – that means there’s millions of people who think like her. That’s a massive problem.

      1. >>> that means there’s millions of people who think like her.

        something like 110k total votes cast for AOC

        http://www.nytimes.com/electio…..istrict-14

        1. Alas, there literally are millions of people. How many exactly, I am not sure, but it is easily millions. What’s the population of coastal California?

          The problem is too vast. Everyone going to public school is purposefully being turned into a moron that does not question the state. I went to public school and never learned anything remotely libertarian there. Zero economic history; history was the evil Nazis and before that, the evil Industrialists, and before that, the evil Settlers.

          1. I once asked in the 11th grade where the founding fathers got their ideas from. I was serious too. It just seemed like this must have been something that had been talked about for a while. Even as a 16 year old, I knew there had to be something more. My teacher probably didn’t have any idea but I’ll never know because I got in trouble for being impertinent.

            1. I don’t even remember what exactly was taught regarding the Framers. I’m pretty sure they covered that in elementary school, so 5th grade or before. The reason for that is obvious: they can say they covered the topic, when everyone is way too young to give a shit, or grasp the importance of the history.

              1. I remember well. We were taught that the English were bad (repeating the phrase “taxation without representation”) and that the Founding Fathers got rid of them because they were selfless saviors. They then obviously had to make a new government (that just so happened to be comprised of themselves).

                The key fact, covered over 2-3 years, was that their first try was good but the government wasn’t strong enough. They had to go back and “start over” to give the government more power. We were explicitly taught one year that “a weak government is bad.” The power to tax was specifically mentioned.

                But by golly they got it right the second time and everything has been perfect since.

                The people designing and repeating that curriculum are either just that stupid or just that evil. Either one is sufficient reason to avoid government schools.

          2. The herd must be thinned. Best to start with the marxists.

      2. Yeah, hard to ingnore OC just like Trump. Something between watching a car crash and sleazy reality TV populated by human end members.

    2. She represents a section of Bronx, even though I’ve probably spent more time on the lower east side than she has. It’s a safe district for her, she’s going nowhere.

    3. She’ll be gone by next election.

      I strongly doubt that. She’s the future of the Democratic party.

      1. You mean the Progressive Othodox Party. A larger version of CPUSA.

    4. That’s the usual jibe against anyone on the Left who breaks ranks and looks popular. No doubt it was said about Tony Benn here in the UK back in the 1960s. We’ll see.

  8. Third-world representatives supporting third-world economics.

  9. …CUTGO does not require deficit increases stemming from a tax reduction to be offset.

    Not a thing.

  10. Ah….Socialism

    The Democratic Party is continuing its spiral downward into political powerlessness.

    1. Yeah, Democrats are so powerless after that “Red Wave” election happened exactly as you predicted.

      LOL

      1. Why was Rep. Pelosi handling that gavel today? We were assured Republicans were going to hold the House!

        Speaker Pelosi, that is.

      2. So the Republicans did not pick up 2 seats in the Senate?

  11. So, “Democrats urge massive increases in deficit spending. Republicans to blame.”

    Because, of course, before Donald Trump and the tax cuts, Democrats weren’t making a peep about free college and universal healthcare.

  12. LET THEM EAT POOP, LIKE ME!

    OCCASIONAL-CORTEX EATS THREE BOWLS A DAY!

    SEVEN + RIGHT = UP

    1. Good job, Mikey. We knew you’d come around sooner or later.

    2. I’m not convinced you’re the real Michael Hihn. He’s usually more eloquent than that.

      1. I can’t believe you’re CYBERBULLYING Hihn like that!

      2. So wait… Now one of our resident fake personalities is criticizing one of our resident crazies?

    3. Now that you bring up the subject, just exactly how high is ‘up’, anyway?

      1. Higher than down

  13. Deficit spending might be the least of what AOC does

    1. Wouldn’t mind seeing a home video of her using a vibrator.

      1. Wood not. Can’t do animal porn.

      2. +1 as long as they tastefully censor out her mouth-breathing with her horse teeth bulging out

  14. Welcome to the United States of Venezuela…..

  15. I’m glad she’s honest. Maybe republicans can stop pretending to care about the deficit too so we know who to vote out

  16. Democratic socialists like AOC might disagree with us Koch / Reason libertarians on certain minor economic issues. We are united, however, on the most important issues of the day ? unlimited immigration and unrestricted abortion. I’m glad she’s in Congress ready to #Resist the Drumpf regime and #AbolishICE.

  17. God Bless Alexandra Ocasio-Cortez!
    Money means nothing to a socialist and justifiably so.
    Hopefully, with the grace of Saint Karl Marx, she and her closet socialist democrats will tax and spend all our excess capital to the point where our ugly and evil capitalist state becomes bankrupt, and the we can all experience the joys of living off the land, have caves and underpasses as our shelters, avoid the trappings of clean water, electricity, indoor plumbing, libraries, literacy, contemporary medicine and finally love the poverty and despair our ruling elites have taken the time and trouble to ensure it is a reality.
    So let’s get on Ms. Ocasio-Cortez’ bandwagon and spend, spend, spend!

    1. You’re describing a socialist’s paradise, Jay — the rich will be brought just as low as the rest of us!

      1. You may look the word “sarcasm” in the dictionary.

    2. “tax and spend all our excess capital to the point where our ugly and evil capitalist state becomes bankrupt”
      Tell, me if I’m wrong, but isn’t it mainly the Right that supports spending $760bn a year on your bloated, unnecessary and hugely oppressive military? You have spent all that for no good reason whatsoever, and you have the gall to call Cortez out.

      But, plainly, you and your friends on the Right know one thing, like the proverbial fox: governments don’t need tax revenue to fund spending. You only pretend they do for political purposes, and that lie has been enormously successful for you while devastating your country (and mine, here in the UK).

  18. She should also give every American woman a Pontiac.

    1. The indian chief?

      1. Lizzy Warren?

  19. Thank god someone out there understands all this wonky budget stuff. Now I will go and worry about something else.

  20. a dark political maneuver

    Mwahahahahahahaha!

    *rubs hands together in diabolic glee*

  21. Pete, not a single $ of any deficit or debt has ever been caused by taxing too little. Everyone of them has been caused by spending too much.

    Tax cuts never need to be “paid for”, because allowing people to keep more of their own property doesn’t deprive the state of a nickel of anything it has a right to…

    1. Amen.

      1. You two are gonna end up in re-education camps.

        1. Hearty laugh…best comment of the day 🙂

    2. At some point, tax cuts will decrease tax revenue. There’s a theoretical point for tax rates where you can maximize revenue. However, since no one know where that point is, it’s preferable to err on the side of taxing too little than taxing too much.

      1. Is maximizing revenue a goal of anyone but statist assholes?

  22. Pretending to pay for things like the Democrats did with Obamacare is stupid…I can’t believe I agree with AOC!?!

  23. Now if only the Republicans will do the same thing, drop the pretense of fiscal responsibility, as they are just as fiscally (un)responsible as the Democrats.

  24. Its sweet how you regurgitate proggy statist talking points that tax cuts raise the deficit. A century of tax data shows that tax revenue is a static percentage of gdp regardless of tax rate. The only way to grow tax revenue is to grow gdp….which is the very premise of the corporate tax rate cut, bringing it more in line with global average.

    Spending is the problem, not taxes. But your lazy efforts would rather link to CNN.

    1. We have been cutting taxes most of my adult life. If lower taxes really brought in more revenue we should have a surplus and not a deficit. When I learned economics we studied Supply and Demand. Somehow the Demand side got dropped in theory but it remains in fact. The fact remains that there is government spending and it is not going away. Taxes needed to be balanced against that spending. PAYGO at least addresses that fact. CUTGO is simple a dream. If you don’t believe that ask yourself this question. What government program do you like, that you benefit from, and that you would cut.

      1. If we were cutting taxes your whole life wouldn’t they be zero by now?

      2. “When I learned economics we studied Supply and Demand”

        Apparently you stopped there.

        It’s far more complex then you appear to understand, but the historic data is unambiguous that tax revenue is stable at around 19-20% of GDP, regardless of the tax rates, even going back to the early 1900s when highest rates were up over 50%.
        The reason for this is human perspectives of what is fair and what is not. Higher tax rates just lead to greater efforts to avoid paying taxes. Corporations, individuals, etc, will manipulate their finances to lower their tax burden to what they consider ‘fair’. On average that is ~20% and has been so for a century.

        I certainly know from a personal standpoint that if my taxes go up, I look harder at the loopholes whether IRAs, 401Ks, mortgage interest etc etc. And with a high enough rate, either my wife or myself would stop working a normal W2 submitting job. No different then Apple holding assets overseas or Amazon shifting things to Bermuda.

        Higher tax rates accomplish absolutely zero, except to punish the middle class, who have the least flexibility within the tax code.

      3. I benefit from no government program. Cut them all in my opinion.

        I am not poor enough to qualify for handouts.
        I am not rich enough to manipulate the system.

        I pay into SS and will not see the benefits of that, because I have a 401K that will likely disqualify me under any means-based assessment.
        My children gain nothing from the government because our family is above threshold for means-based educational support. I have the privilege of funding my childrens’ higher education on my own….which is priced to support the other 95% of attendees that receive financial aid. Not to mention the taxes I pay that also support that broken system.

        So FYTW

      4. The thing about government spending is that if the government had not taken in those taxes, that same money would still have been spent, only by the individual from whom the government took the money to begin with instead of the government itself. Also, the efficiency and effect of the spending on the economy is reduced by having to pay for the bureaucrats and processing of the taxation. It’s like monetary friction.

        1. Err… what? Do you think the government gets its money from the taxpayer? What gave you that idea? In the USA, it’s the other way around.

      5. No spending needs to be balanced against tax receipts, not the other way around you idiot. You don’t demand a raise because you spent 5x what you brought in, you spend more AFTER you get your raise.

      6. “Taxes needed to be balanced against that spending” is the lie the Right has been profiting from for a very long time. FDR knew full well that his New Deal didn’t need tax receipts before the government did all that good stuff. He admitted that the pretence was needed for political reasons.

        But, since Reagan, austerity economics means that your country’s infrastructure has not been seriously regenerated since the 1930s, and it’s starting to show.

  25. Not like socialism left us with much better….

    1. What socialism are you meaning? The USA has never tried it.

  26. I essentially started three weeks past and that i makes $385 benefit $135 to $a hundred and fifty consistently simply by working at the internet from domestic. I made ina long term! “a great deal obliged to you for giving American explicit this remarkable opportunity to earn more money from domestic. This in addition coins has adjusted my lifestyles in such quite a few manners by which, supply you!”. go to this website online domestic media tech tab for extra element thank you……

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  27. Did anyone else ever see that word, “austerians,” before? It’s new to me, but memorable. “Austerian economics” has a certain ring to it.

  28. The situation here in the UK is the same as in the USA. Neoliberals such as reason.com support all kinds of government spending when it suits them, such as for the military, and for those projects, the deficit is irrelevant – and they know why.

    The Left, unfortunately, thinks it has to project an image of fiscal responsibility, so it ties itself in knots looking for ways to fund the revitalisation of a society devastated by neoliberalism’s combination of austerity for the poor and largesse for the wealthy. it should know better and it’s long past time that it made this clear to its supporters and to the rest of the public.

    But, of course, as anyone who looks into the system of government finance realises, tax revenue does not fund government spending. Governments create all money. Taxes are merely a repayment.

    See (obviously) Modern Monetary Theory.

  29. Well, Republicans always seem to find a way to give back money to the rich without worrying about where the money will come from, so why should Democrats worry about it?

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