It has never been a better time in America to be a socialist. We aging Gen Xers who thought that socialism had been decisively refuted by the fall of the Berlin Wall have been refuted ourselves: Democratic socialists now run Seattle and New York City, and come January, probably D.C. too, where Janeese Lewis George won the Democratic primary that generally decides the district’s mayoral elections.
It is a heady moment for the left, because socialism’s tainted brand has recovered from the vivid failures of the Soviet Union. Fully 66 percent of Democrats tell Gallup they view socialism favorably, while 42 percent say the same of capitalism. This makes the left see a revolution marching toward victory, because it can promise something that the center left cannot: a disruptive break with an unsatisfying status quo.
The challenge is that socialism’s rise is spiky, concentrated in blue cities where affluent (but often downwardly mobile) college graduates cluster. That’s a problem for the Democratic Party, where the excesses of progressive governance are helping to make the party’s brand toxic in the less true-blue areas. But it’s also a challenge for the socialists, because cities are the hardest place to execute big plans for new taxing and spending.
That reality was less evident during the last decade’s urban boom; city coffers overflowed and services became easier to fund as those young, affluent residents displaced older and needier residents. But that boom has weakened, especially in D.C., where the population remains below its pre-pandemic peak.
Without the exuberant demand from an oversize millennial generation, mayors are rediscovering the hard reality of urban governance: It is much easier to leave a city than it is to leave a state or a country, so the tax base is more constrained, and the scope for punitive business regulations much smaller. That has always been true, but it is even more so in the era of remote work, because proximity to a downtown office is no longer as valuable as it was before we could Zoom into meetings.
Even if the traditional downtown office culture hadn’t changed, socialist mayors would find it challenging to deliver truly disruptive change. The last time socialists were a force in American politics was a century ago, when government was tiny, and a practically virgin tax base was ripe for the plucking. A hundred years later, the government already does a lot, funded with a progressive tax structure that places much of the burden on the high-income taxpayers the socialists want to tap to pay for their programs.
Those services are often absurdly expensive for what they deliver. American infrastructure costs, for example, are a scandal. But every excessive cost is someone else’s income, and that someone will fight like a cornered tiger if you try to reduce their income by one thin dime. This eats up fiscal capacity that might otherwise be used to fund new services. New York, D.C., Seattle and Chicago are wrestling with major structural budget gaps.
The progressivity of the tax code also complicates things on the revenue side. Socialists may wax lyrical about a Nordic-style welfare state, but those states are paid for by heavily taxing the middle class, an idea that is unlikely to gain much purchase with the educated base of the Democratic Socialists of America; today’s college-educated elite is voting for more public services, not less disposable income.
Unfortunately, New York City already gets roughly a third of its income tax revenue from “millionaire filers,” who face a combined state, local and federal marginal personal income tax rate that can exceed 50 percent. D.C. also has one of the highest combined marginal tax rates in the country, at roughly 48 percent. There is probably some additional tax capacity there, but how much is an open question, given how easy it is to move. If socialist mayors get it wrong, the first warning sign will be falling revenue. Nor is there much likelihood of new federal funds, given that the national debt sits at around 100 percent of gross domestic product, and a Republican president sits in the White House.
New York Mayor Zohran Mamdani, Seattle Mayor Katie B. Wilson and Lewis George are already struggling with these issues. Mamdani has scaled back his ambitions in the face of a $5.4 billion deficit that was only closed with substantial state aid, while Wilson is pondering layoffs to patch her own budget hole. The D.C. Council, where Lewis George sits, is wrestling with a $1.1 billion gap that will make it tricky to deliver on her big promises, such as an expensive child care subsidy.
Ironically, these dismal fiscal realities are part of what is boosting socialist fortunes. The parlous state of federal finances reduces the scope for a bold new national agenda, and may also be contributing to higher interest rates and inflation. That’s an opportunity for socialist politicians. But the reality for those politicians is that once in office, they will find it difficult to maintain the status quo, much less improve on it in the way their supporters expect.
The post It’s a great time to be a socialist. Until reality sets in. appeared first on Washington Post.
