Adventures in Slopulism

When asked to articulate his political aims, Bernie Sanders likes to point to the Nordic social democracies. Whatever you think of this vision, it has the advantage of being an actual vision: not just a grab bag of vague promises, but a coherent agenda. Here’s how he summarized this agenda in 2013: “In Denmark, social policy in areas like health care, child care, education and protecting the unemployed are part of a ‘solidarity system’ that makes sure that almost no one falls into economic despair. Danes pay very high taxes, but in return enjoy a quality of life that many Americans would find hard to believe.”

The key word here, I believe, is “solidarity.” In the Nordic social democracies, everyone contributes to the greater whole; in exchange, the state automatically insures them against the vicissitudes of circumstance. Per Albin Hansson, one of Swedish social democracy’s founding fathers, described his ideal state using the word folkhemmet, or “the people’s home.” As he said in a 1928 speech, “The foundation of the home is community and solidarity. The good home knows no privilege or neglect, no favorites and no stepchildren.”

Solidarity both protects and obliges you. As Sanders noted, Danes across the economic spectrum are taxed at a much higher rate than their American peers. That’s the price of the Danish social insurance system, and Sanders is correct that it’s a good trade.

Which is why it was a little bewildering to discover that Sanders is now apparently a fan of middle class tax cuts. He is one of the cosponsors for a new Senate bill that would slash federal income taxes for people making up to $80,500 a year. The list of endorsers and cosponsors also includes Senators Jeff Merkeley, Brian Schatz and Ed Markey; major labor organizations like AFL-CIO and AFT; and other progressive groups including Indivisible, Demos, and MoveOn. Katie Porter, who is currently running for Governor of California, has proposed her own state-level version of this policy that would eliminate state income taxes for anyone who makes less than $100,000 annually.

Unlike the Norquistian Republicans of a bygone age, these Democrats aren’t promising to commensurately shrink the size of government; in fact, Porter has vowed to create a single-payer health care system in California. Instead, the implicit bargain behind these proposals seems to be that Democrats can build a social democratic insurance state that is basically free to most Americans (and/or most Californians), because it will be primarily funded by higher taxes on millionaires and billionaires.

This is more or less already the model in California, albeit largely by accident. The state’s taxation system is still broken as a result of the 1970s suburban tax revolt; leaders of the revolt, most notably Howard Jarvis and Paul Gann, successfully campaigned for a series of amendments to the state constitution that slashed taxes and constrained the legislature’s ability to raise them again. Their most famous victory came with the 1978 passage of Prop 13, which, among other things, did the following: it capped property taxes at 1 percent of a property’s assessed value, prevented these taxes from rising more than 2 percent per annum, and barred reassessment unless the property was either redeveloped or changed hands.

In the year immediately following Prop 13’s passage, property tax revenues fell 60 percent, which set off a scramble for new income streams. The state compensated for the loss of all that tax revenue by becoming increasingly reliant on income taxes. Income taxes in California are pretty progressive, meaning that wealthy households pay a larger share of their income than most middle- and lower-income households. Though California is widely believed to be a high-tax state, a 2024 report from the Institute on Taxation and Economic Policy found that “[o]nly the top 5 percent of California families pay tax rates that are more than 2 percentage points higher than the national average.”

Which sounds nice, especially when combined with California’s fairly generous social safety net. But incomes for the top five percent are volatile; the state can be flush one year and deep in a hole in the next, depending in part on whatever’s going on in the tech industry. It would be an exaggeration to say that the difference between a massive surplus and a massive deficit depends on the health of tech executive Christmas bonuses in any given year, but it’s an exaggeration that gets uncomfortably close to the truth.

A more evenly distributed tax burden might smooth out some of the volatility, because middle-class incomes tend to be a bit more stable. Property values are also more dependable than executive compensation. But broad-based income tax hikes are politically unpalatable and property tax hikes are constitutionally impossible, so state and local government mostly need to muddle through a succession of short-term fixes to budget problems. On the revenue side, that means asking the voters to authorize bond issuance, levying steep impact fees on new housing development, and coming up with ad hoc policies like a one-time billionaire tax levy. On the spending side, it tends to mean addressing long-term social problems through a succession of time-limited fixes—except when it comes to constitutionally mandated spending (the state constitution sets a floor on annual education funding) and federally supported programs (Medi-Cal).

As for single-payer health care: good luck. According to legislative policy committee staff, single-payer at the state level could cost hundreds of billions of dollars—possibly as much as twice the cost of last year’s entire $226 billion spending plan. I don’t know if there’s any scenario where the state could realistically raise that sort of revenue, but I know they can’t do it in a sustainable way by only taxing the top income brackets.¹

Of course, the federal government can run deficits, unlike California. But that doesn’t mean that federal policymakers can simply ignore the question of where the money for a social democratic safety net would come from. Unfortunately, I think the left is probably going to need to become more attentive to that question in the coming years. Creating enormous new social programs without funding them through taxes is a recipe for inflation—and we’ve seen how voters respond to inflation, even when it’s more than offset by wage growth. Further, the next president is going to have to deal with a truly dire fiscal situation: a massive hole in the federal budget thanks to Trump’s tax cuts, a federal bureaucracy that is in tatters, and an international community that has lost faith in a US-centric global financial system. In the face of these pressures, I don’t see how we can sustain (1) a truly comprehensive social insurance system, (2) low taxes for all but the wealthiest Americans, and (3) a stable dollar. At best, we can have two out of three.

I’m not saying that Democrats should campaign on a vow to raise everyone’s taxes; just that they shouldn’t make irresponsible promises about how they’re going to pair Medicare For All with tax cuts for the middle class. That sort of thing may poll well, but at some point whoever wins the next election is going to need to govern. What happens when all the goodies you said were coming after November turn out to be unworkable? How do you prevent a fascist resurgence in the election after that one?

In my view, Democratic policymakers and consultants have been devoting far too much time to coming up with appealing soundbites, and not enough time to coming up with a real governing vision. Vision is what we really need right now. And if that vision includes some sort of aspiration to resuscitate representative democracy and foster an ethic of true solidarity, then it is probably going to mean taking voters somewhat seriously instead of trying to sell them magic beans. If what Sanders et al really want is social democracy, then they should make a real case for it.