A version of this op-ed was originally featured in Real Clear Markets on July 16, 2019.
To win a presidential nomination, candidates in both parties often embrace policies tailored to win support of the party faithful. Not infrequently, these stands hamper later efforts to appeal to the broad electorate. Candidates for the Democratic nomination face an additional risk this year…that in fighting for the nomination they will make commitments regarding legislation so far beyond their capacity to deliver that victory must be followed by disillusionment.
Whether or not Democrats can overcome these obstacles, the outcome of the 2020 presidential election remains critically important. Presidential power is manifest in myriad dimensions. The differences between the two parties are larger than they have been in decades. Apart from legislation, a new administration can change executive orders, rules, and regulations. But Democratic candidates have this year put forward a roster of legislative proposals of quite unusual breadth and cost. To come close to delivering on their promises and to avoid voter disillusionment, any successful Democratic candidate will face obstacles more daunting than any recent president has encountered.
The first obstacle is the United States Senate. At first blush, the 2020 senatorial electoral map looks favorable for Democrats, as Republicans must defend 22 of the 34 contested seats. Even so, betting markets have made Republicans, who now control 53 seats, better than 2-to-1 favorites to retain control. For starters, Democrats have to win four seats for a majority, three to let a Democratic vice-president break a tie vote on which party should name committee chairs. But Democrats likely need to win five seats for a majority and four to tie, as Alabama Democratic Senator, Doug Jones, who won a 2017 special election in a normally Republican state against an extraordinarily weak Republican opponent is expected to lose.
Republican control of the Senate would mean that they continue to determine what bills come out of committee and which of those even get a floor vote. A Democratic president would find it hard to get Administration bills seriously considered and even to secure confirmation of cabinet officers. If Democrats beat the odds and won a narrow Senate majority they would still be far short of the sixty votes needed to overcome opposition filibusters.
With just 50 Senate seats and a supportive vice-president, Democrats could, if they wished, change Senate rules to end the filibuster, but have never done so—even when they had the votes—realizing that one day they would be in the minority. With 50 or 51 votes, Democrats might be able to use “reconciliation,” the procedure that allows the majority party to pass budget-relevant legislation by a simple majority in the Senate—provided that the often-fractious Democrats suffer no defections at all.
The second challenge to passage of the Democrats’ program is the budget. The CBO projects that budget deficits will total more than $12 trillion over the next decade. It is a safe bet that if Republicans return to minority status they will rediscover the sacred virtues of balanced budgets, conveniently disregarded when passing deficit-increasing tax cuts.
Economists may argue among themselves about whether burgeoning debt poses real risks, but the fact is that deficits foster legislative parsimony. Rising baseline deficits mean that the stunningly costly legislative agenda that leading Democratic candidates are proposing will face heavy sailing, even in a sympathetic Congress.
That agenda includes universal health insurance coverage—federal budget cost $1 trillion to more than $30 trillion over ten years. The lower number applies to measures that would build on the Affordable Care Act, the larger number to some variants of Medicare for All, depending on how much such a plan would boost use of health care services or lower their prices. The larger number would be largely, and perhaps entirely, offset by reductions in private spending.
The agenda also includes rebuilding U.S. infrastructure—roads, bridges, water and sewer systems, public transportation, railroads, and other public assets. The American Society of Civil Engineers in 2017 assigned a grade of D+ to U.S. infrastructure and estimated that spending would have to increase by more than $2 trillion by 2025 to raise that grade to B.
The combination of measures Democratic candidates have endorsed to relieve past borrowers of their student debt and provide free public college education would take another $2 trillion.
Dealing with global warming will be costly—$1.7 trillion is the public cost of Joe Biden’s proposals. There is, as yet, no reliable estimate of the cost of the Green New Deal, as it has not been described in sufficient detail to permit cost estimates. The campaign site of no leading candidate currently supports a carbon tax, the one way of discouraging global warming that would generate revenues, rather than use them. [Bernie Sanders supported one in 2016 but is not doing so at present.]
Then there are the long-term shortfalls in Medicare Hospital Insurance and Social Security. Trust fund reserves, projected to be depleted in 2026 for Medicare Hospital Insurance and 2034 for Social Security, now fill the gap between current revenues and outlays for both programs. The next president may be able to leave Social Security to his or her successor but will have to fix Medicare Hospital Insurance. If Congress began now to provide both programs enough additional income spread evenly over time to sustain benefits for the full seventy-five-year period used to determine program solvency, the cost over the next decade would be nearly $3 trillion.
This list excludes additional funding that will be necessary to maintain other government services, including national defense.
The candidates have embraced higher taxes on the rich, such as a wealth tax or higher estate and gift taxes, and a tax on financial transactions. But revenue from these taxes will not cover the cost of the full Democratic agenda.
The point of this list is not that these measures are undesirable. On the contrary, each would deal with real and urgent problems. But they cost money, and without higher taxes most will remain pipe-dreams. The candidates have embraced higher taxes on the rich, such as a wealth tax or higher estate and gift taxes, and a tax on financial transactions. But revenue from these taxes will not cover the cost of the full Democratic agenda. For perhaps understandable reasons, no candidate has stated the simple fact that paying for the Democratic agenda will require increased taxes on the middle class.
Meanwhile, in Congress large numbers of Democrats are on record to cut taxes, not to increase them. More than 300 Representatives from both parties have co-sponsored a bill to repeal a tax on high-cost health insurance plans, enacted to help pay for Obamacare. Dozens of Democrats have co-sponsored legislation to restore some or all deductions for state and local taxes, the benefits of which would go overwhelmingly to high-income filers. Many have indicated in general terms that they would repeal part of the Republican sponsored tax cuts of 2017, but not on ‘the middle-class.’ And no leading Democrat has publicly expressed any interest in enacting a tax on value-added, which could raise enough money to pay for much of the Democratic legislative agenda. Unless and until Democrats are prepared to fight for, and are able to win, enactment of enough added revenues to pay for most of the cost of the ambitious agenda they and their activist supporters seek, the aspirations of progressive Democrats will remain just that—aspirations.
Even if Democrats win control of both the executive and legislative branches of government and figure out how to pay for their very ambitious agenda, they will face one more obstacle: the courts. After a series of decisions in the 1930s striking down important segments of the New Deal, the Supreme Court reversed course and broadened the power of the federal government to pass social and economic legislation resting on the Constitutional provision authorizing Congress to regulate interstate commerce. The Court also allowed Congress to write broadly worded legislation that left to regulatory agencies and executive departments the job of fleshing out those laws through rules and regulations. A unanimous Supreme Court decision stated in 1984 instructed lower courts to grant deference to administrative agencies whenever clear Congressional intent does not conflict with such rules and regulations. Congress also used financial incentives to induce states to implement national policies.
These pillars of government action are all now under threat. When opponents of the Affordable Care Act sued to invalidate the law, the Supreme Court ruled that Congress could not justify its requirement that people carry health insurance under the Commerce clause. This decision came after other decisions limited the reach of the Commerce clause. The Court also ruled that the Constitution barred Congress from cutting off federal support for Medicaid if states did not expand Medicaid eligibility, raising questions about whether Congress could use fiscal incentives to encourage state action as much as in the past. At least four and possibly five justices seem ready to narrow the authority of executive branch and independent agencies to draft detailed rules and regulations implementing broadly worded legislation. When Congress cedes these powers, the argument goes, it violates the separation of legislative and executive powers. In addition, several justices think the Courts should stop deferring to the interpretations of Congressional intent by these organizations, on the ground that Constitution vests this power in the courts.
Should these views prevail, large swathes of existing federal regulations could be swept away. Interpretations of those rules and regulations that remain would emerge through case-by-case litigation, a slow and costly process that would render much current government action infeasible.
These obstacles to future government action are currently speculative. But they could quickly become all too real, based on incidental comments in decisions or dissents by sitting Supreme Court justices. Conservative legal scholars and lower-court judges, from whose ranks President Trump would likely choose to fill any Supreme Court vacancy that might emerge, have expressed similar views. And, even if such vacancies occur at the very end of the Trump administration, Senate majority-leader Mitch McConnell has said he will try to confirm them—notwithstanding his refusal for eleven months at the end of Barack Obama’s presidency to allow a vote on the nominee to fill a Supreme Court vacancy.
Democrats who think that winning the presidency in 2020 will enable a rapid transformation in social and economic policy should understand how formidable the obstacles they face actually are. Winning control of the Senate is vital, but the odds of doing so are long. This challenge is generally understood. But Democrats have been unwilling to call for large, broad tax increases—ones that go well beyond proposals to tax the rich—that are a precondition for their legislative program. And they must be prepared to deal with a risk of judicial nullification of their program not seen since the 1930s. However, as I noted at the start, there remain vast swathes of public policy that non-legislative action can affect and despite the challenges, these goals are worth the fight.