Do we need billionaires? Ocasio-Cortez forces a conversation on the place of the superrich
From the annual gathering of the elites in Davos, Switzerland, to the talk show sets of New York City, a new conversation is taking place about the role of the superrich in America, and Rep. Alexandria Ocasio-Cortez, D-N.Y., is largely responsible.
Shortly after being sworn in earlier this month, the congresswoman who represents parts of Queens and the Bronx suggested a 70 percent top marginal rate on the wealthiest Americans. Many mainstream pundits scoffed at the idea, but it has proven popular, winning support from economists writing in the New York Times and a 59 percent approval from respondents in one survey.
(It also required commentators to clear up misunderstandings about what she was proposing. Only income in excess of $10 million would be taxed at 70 percent; lesser rates would apply to the first $10 million. Currently, the top marginal federal income tax rate is 37 percent, but the very wealthy usually manage to get much of their income treated as capital gains, which are taxed at either 15 or 20 percent.)
The wealthy have noticed, and they don’t care for the idea. Scott Minerd, global chief investment officer for $265 billion Guggenheim Partners, told CNBC the proposal was “scary” and worried that it might gain traction among legislators.
“By the time we get to the presidential election, this is going to gain more momentum,” said Minerd, who added that he would probably be personally affected by it. “I think the likelihood that a 70 percent tax rate, or something like that, becomes policy is actually very real.”
“No, I am not supportive of that, and I don’t think it would help the growth of the U.S. economy,” said billionaire CEO Michael Dell of the proposal. Estimates on how much additional revenue the Ocasio-Cortez tax hike would raise vary because it’s assumed the wealthy would work to find ways around it, but economists have suggested between $291 billion and $720 billion over a 10-year period.
On Thursday, the Washington Post reported that Sen. Elizabeth Warren, the Massachusetts legislator running for the Democratic presidential nomination, planned to propose an additional wealth tax on those with assets above the $50 million and $1 billion marks. Dell’s reported net worth is around $31 billion.
Ocasio-Cortez’s staffers are weighing in. Dan Riffle, her policy director, wrote on Twitter earlier this week, “My goal for this year is to get a moderator to ask ‘Is it morally appropriate for anyone to be a billionaire?’ at one of the Dem primary debates.” (Riffle has changed his Twitter display name to “Every Billionaire Is a Policy Failure.”) Ocasio-Cortez was asked that question on Monday at an event honoring Martin Luther King Jr. and responded that she thought it was immoral that billionaires could co-exist in a country where poor children are still being infected by hookworm.
A few hours after answering the question on the morality of billionaires, Ocasio-Cortez was discussing raising the marginal tax rate on The Late Show With Stephen Colbert. It was a casual conversation on network television in which the congresswoman addressed massive income inequality and talked about her status as a Democratic Socialist.
Ocasio-Cortez was born in the Bronx but attended a high school in an affluent Westchester County suburb, an experience that has informed her views. “Contrary to former New York City Mayor Michael Bloomberg’s contention that an influx of billionaires would be ‘a godsend,’ Ocasio-Cortez sees downsides of such extraordinary wealth,” the website City & State tartly observed.
“At what level are we really just living in excess?” said Ocasio-Cortez. “And what kind of society do we want to live in? And do we want to live in a city where billionaires have their own personal Uber helipads when people are working 80-hour weeks and can’t feed their kids?”
The appearance gave Colbert his best rating for a Monday night ever and scored higher than interviews with Sens. Kirsten Gillibrand, Kamala Harris and Bernie Sanders.
And the friendly Colbert set is not the only place where Ocasio-Cortez’s ideas are being discussed. Fox News host Sean Hannity spent part of his Wednesday evening broadcast replaying her comments on wealth inequality and attacking Riffle’s comments on billionaires. After Ocasio-Cortez posted an image of Hannity’s broadcast to Twitter with the comment: “Tempted to frame this and put it on my desk.” After a commercial break, Hannity interpreted this to mean the congresswoman was watching his show and welcomed her before offering to come to D.C. to sign the screen grab and talk about the issue with her for an hour. It was not the first time Hannity has publicized Ocasio-Cortez’s agenda.
The congresswoman has accomplished two things in recent weeks: She’s managed to penetrate the media cycle generally dominated by President Trump with policy ideas and shifted the Overton Window — a term for the range of ideas that are at any given time considered worthy of public discussion — to the left on issues from tax rates to climate change policy.
“The Democratic Party has become calcified and inward-looking, misleading its supporters so it can sustain the approval of billionaires and bankers,” suggested progressive writer Matthew Stoller in a recent Washington Post op-ed. “Ocasio-Cortez is grabbing attention because she is young and cool, yes, but also because she is grappling with genuine questions of economic and political power. She has demonstrated that there is a hunger for a more open and populist kind of politics. That’s also why she is uniquely jarring to insiders. She has fused a cogent political and ideological critique with theatricality. It’s important not to make premature conclusions about where this is all leading, but Ocasio-Cortez is channeling public hunger for a genuine restructuring of our society’s power arrangements.”
Anand Giridharadas, an author whose book “Winners Take All” serves as a critique of income inequality and elite philanthropy, has said that Ocasio-Cortez’s stances have changed the Democratic Party in her brief time in Congress.
“She has managed to explain to the American public concepts like marginal tax rates that I’m not sure anybody has tried to explain in my lifetime watching politics,” said Giridharadas in an interview this week. “And she’s used Instagram and Twitter to do it and you want to laugh at her as many people do, she’s changing poll numbers on an issue like that.”
The conversations about addressing inequality come amid the government shutdown, which has resulted in daily reminders of the difficulties facing many Americans as federal employees are set to miss their second paycheck. A May 2018 Federal Reserve report stated that 4 out of every 10 Americans could not cover $400 in emergency expenses without taking on debt or selling something, and the paycheck-to-paycheck living has been seen with long lines for food banks and stories like the one of a federal employee pawning her wedding ring to cover bills.
A 2017 study found that the richest 1 percent of Americans held 40 percent of the nation’s wealth, while the top 20 percent hold 90 percent of the nation’s wealth.
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