A prominent libertarian financial analyst says the $3.5 trillion social spending bill proffered by President Biden and congressional Democrats would move the United States closer to a classical socialist economy.
Iain Murray, vice president for strategy at the Competitive Enterprise Institute, notes that the $3.5 trillion figure represents a compromise from the $6.5 trillion that Sen. Bernard Sanders of Vermont, a self-described democratic socialist, had sought as “a starting point.”
“When you look at the $3.5 trillion proposal, you can see the intent is to transform America into a Western European-style democratic socialism, massively expanding the welfare state with lots of costly provisions,” said Mr. Murray, who also directs CEI’s Center for Economic Freedom. “It’s getting us closer to the classical definition of socialism, as worker control of the means of production.”
He says progressive Democrats have not been fully honest with voters about the reality that European nations typically pay for democratic socialism — namely, raising taxes on the middle class and deregulating the market economy.
“The Democrats want to avoid that back part of the debate, saying it will all be paid for by a lot of accounting gimmicks and increased taxes on the upper class, while at the same time bringing in many strict regulations on the market economy that will reduce the wealthy they must tax to pay for it all,” said Mr. Murray, a former researcher with the nonprofit Statistical Assessment Service.
He says the Democrats’ proposals, which often involve passing the costs indirectly to working people, will hardly pay long-term for expansive welfare programs like single-payer health care.
“It looks like some sort of sleight-of-hand,” Mr. Murray said. “Their answer seems to be taxing businesses, which will have a chilling effect on the economy and reduce the amount of wealth that is the basis of how you pay for the welfare state. I don’t know how they’re going square that circle”
As for Mr. Biden, he notes that the people around the president make it clear that “the socialist wing of the Democratic Party is currently in charge.”
“I think you have to look at the people he’s nominated,” said Mr. Murray, author of the 2020 book “The Socialist Temptation.” “President Biden got nominated as a moderate and ran as a moderate, but these are very radical people, much more radical than any nominees in the Obama administration.”
Mr. Murray said young Americans seem increasingly attracted to socialist ideas because they do not know from history what it costs, creating a real danger that the country could drift further toward it in the future.
But he pointed to the cautionary example of democratic socialism in his native Great Britain, which nationalized most industries as it plunged into an economic malaise in the 1970s. It created the impetus for Prime Minister Margaret Thatcher to reduce government economic regulations in the 1980s.
“I think the danger there is that innovation grinds to a halt,” Mr. Murray said. “Currently, America outstrips the rest of the world as the center of innovation, but that starts to dry up as you pile state regulations and taxes onto the free market.”