Jared Bernstein: The real reason conservatives are suddenly freaking out about ‘socialism’

FILE - In this Dec. 6, 2018 file photo, Democrat Alexandria Ocasio-Cortez, who won her bid for a seat in the House of Representatives in New York's 14th Congressional District, asks 2014 Nobel Laureate Malala Yousafzai a question at the Kennedy School's Institute of Politics at Harvard University in Cambridge, Mass. Ocasio-Cortez campaign has been fined $1,500 for not having the required workers' compensation for a month last year. A spokeswoman for the New York state Workers' Compensation Board, Melissa Stewart, said Friday, Jan. 11, 2019, that Ocasio-Cortez's Democratic campaign lacked coverage from March 31 to April 30. (AP Photo/Charles Krupa)

One of the only things President Donald Trump said in his State of the Union address that had a half-life over a nanosecond was his assertion that "America will never be a socialist country." His comment, which attempted to tie a spate of progressive policy ideas to the terrible conditions in Venezuela, signaled how conservatives will fight back against ideas like a Green New Deal, universal health coverage and much more progressive taxation. Treasury Secretary Steven Mnuchin echoed the point, averring that "we're not going back to socialism."

That may be a successful political strategy (though I expect it to backfire). But it's also a thoroughly false dichotomy. Questions about our economy aren't about socialism versus capitalism. Every economy exists on a continuum, with markets on one end and government on the other. We may be closer to the former pole than other nations, but every economy redistributes some part of its growth - and not just from the rich to the poor but in both directions.

The real debate is about who gets to write the rules, and Trump and the conservatives are legitimately scared that a growing group of diverse, progressive politicians, backed by a diverse base that's fed up with its lack of political representation, is threatening to take the pen.

A way to quickly spot the vacuity of the socialism scaremongering is to look at spending on safety-net protections like public health care and retirement security as a share of GDP across countries. Data from the Organisation for Economic Co-operation and Development data show that at about 19 percent, the United States is below average, right in between Estonia and the Czech Republic, and far down the continuum from the social democracies of Scandinavia.

There’s no question that Rep. Alexandria Ocasio-Cortez, D-N.Y., Sen. Bernie Sanders, I-Vt., Sen. Elizabeth Warren, D-Mass., and many other progressives want policies that push us up the continuum — and, to put my own cards on the table, I hope to help them. But what’s at stake is not the ownership of the means of production, as the Wall Street Journal’s editorial board ominously warned. When you look at the actual proposals, it’s clear that the goal is simply, as Paul Krugman wrote Feb. 7 in the New York Times, to have “a market economy, but with extreme hardship limited by a strong social safety net and extreme inequality limited by progressive taxation.” That is not “socialism.”

Single-payer health care provides an instructive example. I have seen no progressive plans for universal coverage that turn the private health-care delivery system — the nurses, doctors and hospitals — into a public system, where those who deliver health care are employed by the government. I have seen plans that cut out or highly regulate private insurers (some gradually, some quickly), but that is an extension of existing public insurance programs (namely Medicare and Medicaid). It’s a shift up the continuum — a difference in degree, not in kind (though I grant that ending private insurance would be a large shift, making it politically unlikely; note, however, that numerous countries with universal coverage have highly regulated private insurance sectors).

An informed debate about such choices would examine the costs, benefits and feasibility of these ideas. Much higher taxes on the very wealthy, as proposed by Ocasio-Cortez and Warren, are not costless, as the targets of such taxation will go through great lengths to avoid paying what they owe, requiring significantly ramped up enforcement. Depending on its magnitude, a guaranteed jobs program could require a large expansion of public sector jobs by a federal government that can barely manage to keep the lights on for more than a few weeks at a time. Even with higher tax revenue, these ideas could well add to our fiscal deficit.

Any such costs must be weighed against benefits, including widespread access to affordable health care, reduced poverty, employment for those still left behind and, not to put too fine a point on it, the sustainability of the environment.

When someone screams "socialism!," they're signaling they don't want to have that debate. And it isn't just because they're against the downward redistribution of income and wealth. It's also because they're protecting its upward redistribution.

The Trump tax cut is the most recent giveaway of the strategy. At a cost to the 10-year fiscal debt of $1.9 trillion, the cuts largely redistribute income up the scale, to corporate shareholders, inheritors of rich estates, outsourcing firms and high-end, "pass-through" businesses. Then, when diminished revenue begins to swell the budget deficit, the tax cutters argue we must cut social insurance and safety net programs.

This is socialism for the rich, capitalism for everyone else.

That's why, even amid the dysfunction of government shutdown, endless gridlock, and presidentially induced chaos there is excitement in the air, as some extremely smart and compelling policymakers, both newcomers and older hands, are both exposing these ploys in real time and offering up a counter-agenda, one that polls show to be well-received. A video of Ocasio-Cortez talking about campaign finance quickly became the most-viewed clip on @NowThisNews on Twitter, racing to more than 22 million views in under 24 hours.

The phony cries of socialism are not going to stop some of these ideas from taking hold or thwart the political aspirations of politicians elevating them.

| Courtesy Jared Bernstein, op-ed mug.

Jared Bernstein, a former chief economist to Vice President Joe Biden, is a senior fellow at the Center on Budget and Policy Priorities and author of “The Reconnection Agenda: Reuniting Growth and Prosperity.”