Alexandria Ocasio-Cortez: Educated Moron, Starry-Eyed Ideologue, or Scam Artist—Pick One

February 10, 2019

Alexandria Ocasio-Cortez (AOC) surprised everyone when she won the Democratic nomination for Congress in New York’s 14th District. She defeated ten-term incumbent Joseph Crowley by winning 58% of the vote. In this heavily Democratic district, she was able to win the general election in a walk with 78% of the vote.

To her credit AOC won this seat the old-fashioned way. She knocked on doors, shook a lot of hands, kissed babies, and smiled a lot. In a low turnout election, that was enough. Also, she was very open about her socialistic views. She made it a point to support programs that would give “free stuff” to her constituents. Nothing sells like “free stuff.” The difficult part is paying for it. 

AOC is a self-proclaimed Democratic Socialist. I took a few minutes to look up just exactly what it means to be a Democratic Socialist. According to their website, it means “to have a vision of a more free, democratic, and humane society.” It doesn’t get more nebulous than that. I wonder if the Eastern Bloc countries of the old Soviet Union would characterize socialism in quite the same way. My guess is that their description would be the exact opposite.

As has been repeatedly demonstrated over the last hundred years, socialism has been shown to be the bane of human existence. It is responsible for the deaths of over one hundred million people and has enslaved entire societies. Is that what Democratic Socialists are referring to when they talk about a “more humane society?” As imperfect as capitalism is, it is far and away more humane than socialism will ever be. If this wasn’t true, there wouldn’t be thousands of illegal immigrants flocking to our southern border trying to enter our country. Have you noticed that there is nobody trying to enter countries like Cuba, Venezuela, Iran, or North Korea? These countries all have economies based on socialism.

Just in the last two weeks Ms. Ocasio-Cortez introduced her Green New Deal (GND). This resolution is being sold to the public as a plan to combat climate change and save the world from destroying itself. In reality it is a socialist manifesto of social and economic reforms designed to make our country “more humane.” One of the proposals included in the GND is to guarantee a job with a family sustaining wage to anyone who wants to work. This would include paid vacation, family and medical leave, and retirement security. As is the case in most giveaway programs, they promise a lot and give very few, if any, details on how to pay for it.

There are several questions that I have regarding this benefit. My first question is how much would this sustaining wage be—and also who would pay for it? Would private employers be required to foot the bill or would the government subsidize the wage? If the government does not subsidize this new minimum wage and the employer cannot afford to pay this wage, what happens to the employees? In all probability, they will lose their jobs.

Will the government revive the old New Deal and put people to work in public works projects like planting trees and collective farms? If the government is to put everybody back to work it needs to generate revenue to pay these wages. If history has taught us anything, it is that governments can only borrow or print so much money before they collapse. What happens to the family sustaining wage when the government runs out of money and collapses? The answer is people will not get paid. This is what government control of the economy will do. 

Another benefit promised in the GND is that everyone is entitled to safe affordable housing. Here again, there are a lot of questions that need to be answered. Will this safe affordable housing be owned and managed by the government? Will there be a new set of government standards and regulations? Who will set rent rates and will there be rent control? Will these new regulations apply to non-government housing as well? These are the type of questions that need to be answered. The answers to these questions will determine how much this giveaway will cost the taxpayers. 

Free tuition at all public colleges and universities is another benefit included in the GND. This particular giveaway has already started in some states. In New York, for example, free tuition at all SUNY schools is already the law. Just to be clear this entitlement is not available to students whose parents have an income in excess of $125,000 per year. My feeling regarding this type of entitlement is that if individual states want to provide this benefit to its citizens, by all means feel free. I would be against this policy at the federal level. The reason I would be against it is the same reason that I’m against all new entitlements and that is because the country is now $22T in debt and it’s getting worse. The reason it’s getting worse is because we are overspending. Programs like this won’t make it better; they will just make it worse. The other reason for being against free tuition at public schools is that if the government is paying the bills, they may want to have a say in the curriculum. That’s the way public schools are run when the government has control.

One of the most costly programs in the GND is the so-called Medicare for All. The name Medicare when used in this context is a misnomer. The use of the word Medicare is there only to make the name Medicare for All more palatable to the general public. There are significant differences between the plan we currently know as Medicare and the plan being proposed by AOC, Bernie Sanders, and other liberal democrats.

First of all, the plan we call Medicare is not free. It is a health insurance plan for eligible senior citizens, for which we pay a monthly premium. In addition to this monthly premium, they and everybody else that works for a living has paid into this program during their entire working lives through payroll tax deductions. Along with your tax deductions your employer has matched every dollar that you have paid into this system. So, when you hear people like Bernie Sanders say that Social Security and Medicare are socialist programs, don’t believe it. These are insurance policies that each of us has paid thousands of dollars into over our entire working careers.

The medical insurance plan being proposed by AOC in her GND is universal, government-run, single-payer health insurance. It is being sold to the public as high-quality healthcare insurance for all. It will not be the same high-quality healthcare we currently enjoy today, nor will we have the availability that we have today. Healthcare is a commodity like anything else. Fortunately, right now there is enough to go around. For several reasons this will no longer be the case if the government takes over America’s current healthcare system. This Medicare for All proposal will result in a lower quality product and less availability of that product.

One of the main reasons for this is that private health insurance companies will be put out of business. The 180 million Americans who are currently covered under employer-paid private health insurance will be forced off their plans. Whether you like your current insurance or not—and want to keep it or not, you will be forced off your plan. Your only option at that point will be government-run, single-payer healthcare insurance. 

With the end of private healthcare insurance companies, the healthcare industry will be taken over completely by the government. If this were to happen healthcare providers would be reimbursed for services only by government-run insurance. These reimbursement rates will be set by the government. Since there would no longer be any competition from private insurance, the government will be free to set these rates at whatever level they choose. If and when this happens, healthcare providers can either accept these payments or close up shop and stop seeing patients. Some will choose the latter. This will result in less availability of healthcare services.

Another reason why the availability and quality of healthcare will not be at the level we enjoy today is because healthcare providers will lose revenue. The reason their revenue will be reduced is because private health insurance companies have reimbursed healthcare providers at a higher rate than government-run programs like Medicare and Medicaid. This was done so that healthcare providers would accept their insurance. If government-run healthcare were to become law, these higher reimbursement rates would end. This would result in a decrease in revenue and a corresponding decrease in the level of healthcare services. Lower revenue would force healthcare providers to cut costs. There would be cuts in personnel and other areas as well. Also, these healthcare providers would not be able to purchase the newest, most up-to-date, high-tech equipment used in the diagnosis of patients and in administering therapy. With new advances occurring almost daily it would be unfortunate if hospitals and doctors’ offices were unable to afford these new, modern, state-of-the-art pieces of equipment.

As is always the case with big government giveaways, there is not much said about how much these programs will cost or just exactly how they will be funded. With regard to universal healthcare there are several estimates that have been consistently around $3.2T per year over ten years. The same is true regarding free tuition at all public colleges and universities. The generally accepted cost estimate for that entitlement is about $50B per year. I was also able to find an estimate for the entitlement of giving a job, with benefits, to anybody and everybody that wants one. Also included in the estimate is the cost of safe affordable housing for everyone. The American Action Forum came up with an estimate of $4.4 T per year over a ten-year period. Assuming that these cost estimates are reasonably accurate, government spending would increase by 175% above the current level.

The other main goal of the GND is to lower greenhouse gas emissions to a level of net zero in the US. According to AOC this could be accomplished by eliminating the use of fossil fuels. This means that the country would generate 100% of its electricity from renewable energy sources such as solar, wind, and geothermal energy. For some reason, which I have been unable to find out, this grand plan does not include the use of hydro power or nuclear power. This is surprising because these two power sources are more densely packed with energy than the sources mentioned above. My understanding of the word “dense” when used in this context is that much more energy can be harvested from dense sources like nuclear and hydro power than with solar or wind power. This is why fossil fuels are so hard to replace: They are densely packed with energy.

In addition to transitioning our power generation from fossil fuels to renewable sources of energy, it would also be necessary to rebuild or retrofit every building in America. This would include every residence and every commercial building as well. The cost of converting the infrastructure of the electrical grid would be in the trillions. According to an article published by Bloomberg News, the cost of converting the electric grid is estimated to be $400B per year over ten years. The cost of rebuilding or retrofitting every residence in the US in order to make them more energy efficient is estimated to cost $1.4T per year over ten years. This estimate assumes a cost of $100K per single family home and a lesser amount per unit for multi-family buildings. My opinion regarding this estimate is that it is a bit high. In some parts of the US you could almost build a brand-new house for $100K. It is estimated that rebuilding and retrofitting all commercial buildings in the country will cost $300B per year over ten years. Assuming these numbers are accurate it would cost $2.1T per year over ten years to convert our energy grid over to renewables and also make every building in America more energy efficient.

When you add the cost of all the social programs plus the costs of transitioning the entire country from the use of fossil fuels to renewables, it comes to a total of $9.5T per year over ten years. In addition to the costs borne by government, there are also hundreds of billions in other costs that will have to be shouldered by individual citizens. These include the purchase of new electric vehicles, and also the financial loss incurred because their gas-powered vehicles will become obsolete and therefore worthless. These losses could average as much as $15K per vehicle.

The $9.5T yearly cost of the GND when added to the current federal budget of $4.5T would more than triple federal spending with no significant increase in government revenue. It is forecasted that the total amount of individual and corporate tax collections for FY 2019 will be $3.422T. If this amount were tripled the amount of tax collections would be $10.3T. This would leave a yearly deficit of $3.7T. Of course, we all know that tripling yearly tax collections is unrealistic thus making actual deficits in the eight or nine trillion-dollar range. This would be economic suicide for the US. The national debt would skyrocket as would interest expense on that debt, making yearly deficits even larger. 

The four largest polluters on this planet are China (30%), America (15%), Russia (7%), and India (4%). These four countries account for 57% of the world’s greenhouse gas emissions. The other 43% of the world’s pollution is scattered among the other 190 or so nations of the world. The reason I bring this up is because over the last ten years the US has been lowering its greenhouse gas emissions while the other three major polluters have been increasing their emissions. Although I am unable to recall the source, I do remember a statement made by John Kerry regarding this very issue. What he said, in effect, was that if the US were to lower its greenhouse gas emissions to zero, the effect on climate change would be negligible if the other three major polluters and the rest of the world at large did not take steps to lower their greenhouse gas emissions. In other words, the US cannot do enough by itself to counteract what the rest of the world fails to do. If the US were to do this unilaterally, it would be just like disarming unilaterally. The country would be unable to compete economically in the world market.

The GND is nothing more than another socialist scam. It is portrayed as a plan to lower greenhouse gas emissions in the US and therefore combat climate change. In reality it is just another thinly veiled socialist plan to redistribute wealth, through tax policy, from people in higher income brackets to those in lower income brackets. If cost is used as the main criteria for determining the main purpose of the GND, and only about 20% of the total cost is spent on combating climate change, it becomes quite obvious that advocating for social justice was the main goal of the GND.

The very fact that AOC would even propose a plan which spends over $9T per year with absolutely no significant new revenue to pay for it shows a complete lack of economic reality and fiscal responsibility. Her ideas on how to pay for these large government giveaways border on idiotic. When asked during an interview on how she would pay for “Medicare for All,” her answer was “just pay for it.” In another interview she was asked how she would pay for this GND. Her answer was to raise the individual tax rate on incomes above $10M to 70%. She called this income level the “tippy top.” This new tax on individual incomes above $10M, according to an analysis done by CNBC would raise approximately $75B. (That’s $75B vs $9.5T.)  Well, it’s a start. She also had the idea to cut military spending in half. This would save about $350B per year. At a time when China is expanding and improving its military and spreading its influence around the world, this would be moronic. The irony here is that the Democrats think Trump is incompetent. Maybe they should start looking for incompetence on their own side of the aisle. So, we have progressed from “just pay for it” to putting up about $425B towards the $9.5T expenditure. That’s real progress.

There are only three ways to pay for a plan like this. They are all bad. Choice number one is to triple the tax collections projected for FY 2019 and borrow the remaining $4.5T. This would tank the economy and raise the national debt. I would be a no vote on this. Choice number two would be to borrow the entire $9,5 T. This would raise the national debt by $9.5T plus the amount of the additional interest incurred on that debt. I would also be a no vote on this. Choice number three would be to have the Federal Reserve print the $9.5T and loan that money to the federal government. In essence we would be printing money and loaning it to ourselves. If this were to go on for ten years, the federal government would owe well in excess of $100T. Payment of the interest would eventually become untenable. There would also be a significant possibility that inflation would become a serious concern. I shouldn’t really have to say this, but I would also be against this plan. Venezuela printed a large amount of its currency and released it into its economy. This resulted in hyperinflation. The inflation rate in Venezuela is now approaching ten million percent.

It is the purpose of this post to show that Ms. Ocasio-Cortez, in spite of being a well-educated person, does not have the experience, the judgement, or the decision-making ability to be a productive member of Congress. Recent events in New York show, in no uncertain terms, that Congresswoman Ocasio-Cortez is incapable of making rational, competent decisions.

The recent event that I’m referring to is the attempt by the State of New York and the City of New York to entice Amazon to locate a two and a half billion dollar building in New York. This new building, which would have served as its second headquarters, was to be located in Long Island City, New York. Amazon planned to hire 25,000 people at this new facility. The average salary was reported to be in the range of $150K per year. Both the City and the State of New York would have benefited greatly from the billions upon billions of tax dollars generated by this new venture.

The annual payroll of this facility was estimated to be well over three billion dollars per year. The income taxes collected by both the city and the state would have been in the hundreds of millions of dollars per year. There also would have been tens of millions of dollars or more in sales taxes generated every year, not to mention the real estate taxes that would have been assessed on a building worth about $2.5B.

In an effort to convince Amazon to locate their new facility in New York, the City and the State of New York put together a package of tax incentives. These incentives were reportedly worth approximately $3B. In her ignorance, this $3B in tax incentives was portrayed by Ocasio-Cortez and a group of protesters as a giveaway to a multibillion-dollar company. In reality this $3B was an investment that would have returned a hundred billion dollars or more over the life of the building. There would have been a payback period as there always is in any business investment. This is a prime example of the old adage: “A little bit of knowledge is dangerous.” In her ignorance, she almost single handedly cost the City and the State of New York, as well as the local economy, over a hundred billion dollars. The fact that AOC was unable to grasp the basic premise that sometimes you have to invest money in order to make money shows a level of incompetence that only a socialist could have.

It is now after the fact and the Amazon deal is dead. Amazon has stated that it will locate these new jobs in other facilities in other states. The $2.5B building, the 25,000 new jobs, $3B per year payroll, and all the tax revenue have disappeared like intestinal gas in the wind. The bad news isn’t over yet. AOC is still the Congresswoman from the 14th district of New York, and she is in a position to make other incompetent decisions. To put this decision in perspective, a first-year accounting student could have made a more informed decision than this.

AOC has a college degree in economics. You would think with this kind of a background she would be more knowledgeable and have better judgement regarding economic issues. She recently made a statement regarding deficit spending and the national debt. I’m paraphrasing here, but her comment was that the level of national debt didn’t matter. This statement puts on display for the entire country to see just how ignorant Ms. Ocasio-Cortez is in her chosen field of study. This mindset is not only dangerous from an economic standpoint, but it creates a substantial risk in the area of national security. Speaking from an economic standpoint, I have mentioned many times in previous posts that if our insatiable appetite for deficit spending is not curtailed, it will eventually lead to our undoing. As Federal Reserve Chairman Jerome Powell said during an interview, and again I’m paraphrasing: Borrowing trillions of dollars to fund Medicare for All and other social programs is absurd. As a matter of fact the GND is the most extreme case of America Has Unlimited Resources Syndrome that I’ve ever seen.

The Green New Deal is not new. It is the same old tired socialist rhetoric and propaganda that the Left has been spewing out for years. It is also not green. It is actually quite red—as in red ink. It will, in time, bankrupt this country and put us at the mercy of our enemies. Bankrupt countries are unable to defend themselves. Finally, it’s not a good deal. This is the kind of situation where no deal is better than this deal.