Dan O’Donnell shows how events over the past week expose the inevitable triumph of capitalism over socialism in America.
August 1, 2018
Special Guest Perspective By Dan O’Donnell
American socialism has had a rough week. Less than a month after Democratic National Committee Chairman Tom Perez called socialist Congressional candidates like Alexandria Ocasio-Cortez “the future of the party,” he was spotted carrying an $1,850 Louis Vuitton bag.
He claimed that he was merely holding it for a (presumably very well-paid) staffer, but the image was at once amusing and insightful: Socialism’s cheerleader-in-chief holding the very symbol of free market capitalism.
And it couldn’t have come at a more perfect time, since rarely has there been a week that more clearly illustrated the difference between supply-side conservative governance and the neo-socialism of the modern left; and rarely has there been a week that exposed the triumph of one over the other.
On Friday, the Labor Department announced that America’s gross domestic product grew at a robust 4.2% rate – the inevitable result of the Trump Administration’s aggressive deregulation combined with individual and corporate tax cuts that passed without a single Democrat vote in either the House or Senate.
The impact of deregulation on the private sector was swift and significant, as private business investment grew by 6.8% in 2017 after growing by just 1.8% in 2016. This year, with the tax burden dramatically lower, private business investment is growing by 9.4%.
This, in turn, is leading to a boom in hiring – thus proving the theory derided for years as “trickle down economics” that when the cost of doing business is reduced, business will pass those savings on to workers in the form of jobs and increased wages. America is essentially at full employment, and its jobless rate is at the lowest level it’s been this century. The black, Hispanic, and Asian-American unemployment rates are all at their lowest levels in recorded history.
Not only are more people working than ever before, they’re earning more, too. Wages have grown by 2.0% since October, and the only reason that they haven’t grown by more is that more people are entering the workforce at presumably lower rates. The 3.5 million people who have gotten off food stamps and obtained work might have been unable to in a slower economy, but because business is expanding at such a phenomenal rate and companies are hiring to keep up with the increased demand for their services, they are bringing on those – such as felons or those with lower levels of education – who might not otherwise be employable.
On top of that, hysterical predictions of a fiscal apocalypse of lower tax revenues following last year’s tax cuts never materialized, and four months ago the government even recorded a record surplus for the month of April.
In short, tax cuts and deregulation have generated more tax revenue for the government, more operating revenue for business, and more jobs for everyone; culminating in a national economy growing at a higher rate than it has in years.
Conversely, just days after the GDP figure was released, universal health care – the crown jewel of neo-socialist liberalism – was proven to be a budget-busting fantasy.
The Mercatus Center at George Mason University estimated that Democratic Socialist Bernie Sanders’ “Medicare for all” plan would cost $32.6 trillion over the next decade. The average cost to the federal government of $3.26 trillion per year would consume nearly all of the government’s $4 trillion budget.
In response, Senator Sanders did not take issue with the study’s findings, but rather derided it as “a Koch brothers-funded attempt to trash Medicare for All.” While the Mercatus Center does accept funding from the Kochs, the left-leaning Urban Institute projected a nearly identical $32 trillion cost for Sanders’ plan over the next 10 years.
Laughably, when The Associated Press asked Sanders’ office for its own cost estimate, a spokesman admitted that the office had not done one.
Perhaps that’s why Ocasio-Cortez, the future of Sanders’ movement and Perez’s Democratic Party, struggled so mightily to explain how she would pay for universal health care in a softball interview with The Daily Show’s Trevor Noah on Thursday.
“I sat down, ummm, with a Nobel Prize economist last week. I can’t believe I can say that! It’s really weird,” she said while making an exaggerated face that seemed to foreshadow the uncomfortable word salad that would follow.
“But one of the things that we saw is, if people pay their fair shore — share,” she stammered, “if corporations and the ultrawealthy… For example, as Warren Buffett likes to say, if he paid as much as his secretary paid, 15%… If he paid a 15% tax rate, if, uh, corporations paid… If, uh, we reverse the tax bill but raise our — our corporate tax rate to 28%, which is not even as high as it was before. Um, if we… If we do those two things and also close some of those loopholes, that’s $2 trillion right there.”
That’s all well and good, but universal health care would cost $3.2 trillion per year. And that’s just one program. How exactly does Ocasio-Cortez plan to pay for universal basic income, free college tuition, rent and mortgage assistance, and any number of other massive spending programs?
Had she thought any of this through, she would realize that the combined net worth of Warren Buffett and every other American billionaire is approximately $2.7 trillion. That means that she could confiscate every cent from every single billionaire in this country and still be unable to pay for her health care program for even a single year.
What Tom Perez calls the future of his party would be unable to fund the future of her own ideas for more than a few months.
Back in reality, America is riding a wave of prosperity churned up by free market capitalism. Never before has the contrast been more clear, and never before has it been more apparent which economic model is the only one that works for this country.
Heck, it might even allow Tom Perez to buy a few more designer bags.