Against Slopulism, For Taxes? (Neon Liberalism #73, with Elizabeth Wilkins)

Samantha is joined by Elizabeth Wilkins, president of the Roosevelt Institute, to discuss the economic debate that's roiling the Democratic Party—whether to lean into Republican slopulism about tax cuts, or to embrace broad social programs funded by a broad tax base.

Along the way, they discuss the legacy of Bidenomics, the nuts and bolts of tax policy, the glaring problem of inequality—and ultimately, the question of what it means to all be in this together.

Neon Liberalism can be heard on Spotify, on Apple, on YouTube, on Amazon, and elsewhere via its RSS feed.

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Transcript

**Samantha Hancox-Li** [00:00]
Hi, welcome back to Neon Liberalism. I am Samantha Hancox-Li. There is a fight roiling beneath the surface of the Democratic Party. You can see it simmering in think tank land among pundits and analysts and politicians, and this is a fight about what the Democratic Party should stand for going forwards, what the flagship policies of our party should be. And the way I see this fight is — it's a complicated one, there are several different cross-cutting elements to what people are struggling with here. Some of this is debating the legacy of Bidenomics, of Biden's economic policies. Some of this is debates over populism and how to win back voters in the age of the second Trump administration. And looming on the horizon, occasionally talked about here and there, but I think growing in importance, are worries about the fiscal health of the United States. And this is another way of saying we are having fights about taxes and spending. In some ways, the hardest measure of what a government and a party stands for are questions about taxes and spending. And so to try and chart our way through these waters, to try and understand the stakes of what's going on, and maybe where we ought to be trying to steer the party, I'm really excited to have on the podcast Elizabeth Wilkins, President and CEO, I believe, of the Roosevelt Institute, and author of a recent essay — let me make sure I get this right — "Beyond Who Pays More: How Taxes Form the Foundation of Our Economy and Democracy." So yeah, Elizabeth, thanks so much for coming on the podcast.

**Elizabeth Wilkins** [02:05]
Thanks so much for having me.

**Samantha Hancox-Li** [02:08]
So I guess first question — do you agree that this is the right way to frame these kinds of debates that are happening in Democratic Party brain right now? I really like that way of framing it, that there's a level of this that's happening on a technical policy level — what works and what doesn't and how can we fix it — but there's also this kind of spiritual element to what we're talking about here, that you kind of get at in your essay, about how taxes in some way represent us buying in to a social contract, to all being in this thing together. I definitely want to keep that in mind, that there's these two halves to these questions. But I also want to ask you a little bit more about what you think the crisis situation is.

**Elizabeth Wilkins** [02:45]
Yeah, stepping back, as I look at the debates that are happening right now in policy circles and in movement circles — frankly, it is really a crisis of confidence moment about who we are as a people, right? What is the nature of the social compact? What do we owe each other? And what does it mean for the relationship between government and our economy to produce good outcomes for people and allow people to live the good, fulfilling, and rich lives that they want to lead? And I think we're here because we're coming to — well, I would hope we are coming to — a collective realization that we haven't delivered that for a very long time. This is not just a last year and a half problem. It's not a last nine year problem. To me, we are in this moment where we're reckoning with really 50 years of public policy, in which we have been kind of sold a bill of goods — that a set of policies around trickle-down tax policy, if we tax the rich less, that will redound to all of our benefit because it will increase investment in the economy. If we deregulate markets and let the markets run distribution of goods and services, that will be more efficient and everyone will benefit. If we run headlong into globalization, this will be good for everyone because all of our stuff will be cheaper and we will all become super consumers, right? And the promise was that that was going to deliver shared prosperity. And what I think we are seeing — it's been increasingly clear to me over the last 15-20 years, from the failure of government to really respond to Katrina, to the great financial crisis — those were really empty promises. And so we're kind of at a reckoning now with the deep-seated inequality that that set of policy commitments has saddled us with, and the fact that there is a real connection between how people feel about the economy and how they feel about democracy. When you are sold a bill of goods and when the social contract that you thought you were a part of turns out not to be true, it doesn't just make you feel crappy about trying to make ends meet at the end of the week — it is also a huge erosion of trust in the idea of democratic institutions to begin with. So to me, many of us are reckoning with not just one election cycle, not just a party conversation, but a really fundamental conversation about what have we been doing wrong to bring us to this point, both economically and democratically.

**Samantha Hancox-Li** [05:42]
Last week on the podcast, I had on Matt Darling — he's an economic analyst — to talk about the vibe session, as it's sometimes called. This sense that, if you look at the economic indicators, the big economic indicators in America — stuff like economic growth, employment, inflation — those all look pretty good, right? In many ways they look pretty good. They look a lot better than many of our peer countries. And yet people's opinions about the economy are absolutely in the toilet. They are much lower than you would expect given these kinds of big picture economic indicators. Whatever — you can measure it in all kinds of different ways — but people are just unhappy about the state of the country. They don't like how America is right now. They do not like the economic settlement that we've had for a long time now, it feels like. So I guess I'm curious — what's your read on that? Why are people unhappy about the economy, or what's wrong fundamentally with the economy here?

**Elizabeth Wilkins** [07:09]
Great question. I think if you poll people over and over again, people will talk about affordability as their number one issue, right? And that's a dollars and cents issue. It's both about how much things cost and the other end of the equation — how much I make — and whether those two things add up. But I think just like looking at the aggregate economic numbers really misses actually how people feel, just going to the idea that people really care about affordability kind of misses what's going on underneath. To me, when people say they're worried about affordability, what they're also actually saying is, "stuff's not working for me." There is a level of precarity and uncertainty in people's lives that makes it hard to find the stability and the solid ground to plan, to lower levels of stress, and to increase levels of time you can spend with your family, with your community, or doing whatever you want — being a part of the creative economy, whatever it is. And I think there's something about that that you don't capture, like I said, either in aggregate economic numbers or in sort of first-order polling, that we will really mess up if we are limiting ourselves to those indicators as indicators of well-being.

And I do think — there's one poll I think the New York Times did, maybe four months ago, that sort of stratified out — if you're really low-income, yes, you're super worried about groceries, you actually can't make ends meet. If you're a little bit above that, there are different cost drivers, like housing, like education, which are real cost issues, but they're also kind of the American dream promise issues, right? They're the sort of — this should be a predictable equation. If I buy in and I work hard, then I will get these things. And that kind of promise is broken. To me, when we see the vibe session stuff, that's a little bit what we're seeing, right? That this isn't actually functioning the way it should. The other way to think about it, just from a slightly more economist perspective, is this is the K-shaped economy, right? You can have a ton of really great growth-looking economic activity at the top. There's a bunch of people who do have an enormous amount of disposable income, who can be consumers, and they're driving a certain set of markets, while a whole bunch of other people actually are not doing so well. And so those aggregate numbers really miss the fact that there's kind of two tracks here for how people are doing in the economy.

**Samantha Hancox-Li** [11:22]
I want to ask you a little bit more about that — about this two-track economy, something you talk about in your essay — which is the sense of a rigged economy, an economy characterized by inequality, by corporate power. And to me, I feel like one of the ways to bring out what we're talking about here is the rise of the scam economy and its corresponding grindset culture, right? Where you see these guys making videos about, "I can bench press 300 pounds, I have all these beautiful ladies, and I'm making a million dollars a day doing something, and if you just pay me $1,000 a day, you too can partake of this extreme wealth that I have." And of course it's kind of all fake, right? These are models that are rented out for a day, and a supercar that he's renting by the 20 minutes or whatever. But people are kind of desperate for that, because they feel like there's no other way to get ahead, right? They feel like, "I would like to partake of the good life, but I'm not going to get there just by working hard and paying my taxes and being a boring citizen. I got to get in on crypto, right? I got to get in on NFTs, I got to get in on betting markets, or whatever it happens to be." This sense that there is a good life out there, and you just can't quite be sure of getting it yourself.

**Elizabeth Wilkins** [12:50]
Yeah, it's interesting — when you talk about the scam economy, the first thing that I think of is the traditional economy works that way now, right? So you get your subscription for whatever. First of all, everything is a subscription now, because that's a way to keep you paying month to month to month rather than once. Second, you can't cancel it. Third, there's all kinds of junk fees that you can't figure out how to get around, right? None of these are the fundamental structure of the economy, and fixing them won't radically change people's life possibilities. But it is the kind of thing where every single day you are transacting in the economy and feeling like somebody is taking advantage of you, right? And not only that, but it is the normal mode of being. These are our major institutional banks. These are the biggest companies that are consumer facing. This is not your fly-by-night scammer who you're upset because you got defrauded, but it's unusual. This is the normal way of doing business — to try and trick your consumers into extracting a little bit more profit from them.

And I think, like I said, while these are not the structural underpinnings of the economy, they're the kinds of things that tell people over and over again: this economy is rigged, somebody is winning, and it's not you, and it's okay to kind of rob you of — death by a thousand paper cuts — bits of money and fees, or your time, and neither of those are valuable. And I do think that that is a culture of the market that feeds into — well, if I'm going to be tricked and scammed by even the most reputable large companies in the economy, why wouldn't I think that an alternative economy that is based on some version of gambling, essentially — that's a kind of reasonable conclusion to make. Plus the sort of, "whatever, I'm never going to be able to buy a home anyway because it's going to be too expensive."

So I do think there is something really important and valuable about attacking some of that stuff as a way of signaling — no, that's not okay. We have gotten to a place of market norms that prize extraction and excess profits to the exclusion of all other values, in a way that tears at the social fabric, not only the economic one. And to bring it back to taxes — there's certainly a sense that somebody else is gaming the tax system, right? Rich people don't pay taxes. The phenomenal ProPublica investigation from a few years ago that actually looked at the effective tax rates of some of our wealthiest Americans shows that they don't really pay that money in taxes because they have so many workarounds. And that isn't called cheating — that's called being a smart steward of your resources, right? There's something really, really wrong about our underlying societal values if we have gone from "everybody should pay their fair share" to "you're a sucker if you actually pay the effective tax rate that you owe." I think all of those things are signals to people that — why should I play by the rules if the rules aren't made for me and nobody else is?

**Samantha Hancox-Li** [14:39]
Yeah, there's — in Thomas Piketty's *Capital in the Twenty-First Century*, it's actually quite a dry book, you don't need to read it — audience out there, just read the executive summary — but there's some really interesting stuff in there where he talks about fiction from the time period, from the Belle Époque and the marriage plot. And why *Pride and Prejudice* is all structured by this — by a romance, but also a marriage. And he kind of basically says, well, let's actually break down how much money Mr. Darcy has and how long you, as a well-educated, well-paid person, would have to work in this time period to amass that much money, and the answer is — you can't. You could work your entire life in the best compensated profession, as a well-paid lawyer in London or whatever, and you would never even approach the amount of money that Mr. Darcy has, right? And so the marriage plot becomes really important, because you will get farther ahead by marrying well than you could ever get by working honestly. And you can see a kind of similar parallel in the scam economy.

But I don't want to ask you about that. What I want to ask you about is how Republicans have kind of responded to this. And to me, the way Republican sloganism kind of works is to say, "Well, yeah, the economy is rigged, and we're going to rig it for you, right? We are going to carve you out your own little special tax thing." We're going to have no tax on tips, or no tax on overtime. There's one that's really great — it's no tax on boat loan interest payments. That's a real gem, right there. But all these little carve-outs for whatever little constituency — I'm curious what you think about that.

**Elizabeth Wilkins** [16:30]
Let me say the thing I appreciate about that game, and then the problem with it. The thing I appreciate about it is — I do think, putting aside partisan politics, one thing that people want in their leaders is symbolism that they're being fought for. One of the things that I think we miss sometimes is it's not enough to have extremely technical policy proposals that will help a lot of people if they don't demonstrate leadership — "I'm going to stand up for you. There are powerful interests that don't have you in mind. I'm one of the only people who has the power to fight for you, and here you go." I do think it's really important to get out of our uber-technocratic mindset as policymakers and say, what are the things that are going to make a difference for people that also allow us to demonstrate that we are on their side and we are fighting, and how do we both describe and implement them? It's not just a messaging thing, it's really a policy design thing. How do we message and implement in a way that people actually feel the impact? I do think there is a way in which we can get so technocratic and so "let's carve out the exact right way to do this" that we really lose the symbolism that policy can play in leadership.

Okay, so that's the thing that those proposals — like no tax on tips — have right. They have the symbolism. They have the "I'm going to do something big, and I'm going to fight for you, and you're going to understand it." So, credit where credit is due — there is something to getting that formula right.

The problem is, you have to actually do two things. One, the actual policy should be something that truly does help people. And two, you need to know the difference between the small thing that's going to put down your values and the true big things you've got to follow it up with to really deliver on changing people's lives. And the "no tax on tips" type policies do neither, right? No tax on tips creates incredibly perverse incentives overall for how people will actually be employed. It's a terrible — and everybody knows that working in the restaurant industry is the absolute best, most solid, upwardly mobile job, so that's exactly what we want to have happen for lots of people, right?

**Samantha Hancox-Li** [18:10]
Yeah, here at Liberal Currents, we are all transferring ourselves to — we're going to be servers, and yeah, we're going to be paying ourselves entirely via tips. It's totally a reasonable business decision and is not merely trying to game the tax code.

**Elizabeth Wilkins** [18:25]
So that's one thing — the policy itself is not on the right side. And then the second is, like I said, it's good to have a few policies that have the ability to demonstrate whose side are you on, but you have to do the real work to follow it up with hard structural things where you really are fighting for people. And to follow "no tax on tips" up with the worst tax bill we've ever seen, that creates the greatest upward redistribution of wealth of any tax bill ever, is not actually following up on those values at all, right? It is putting a little fig leaf in front of what is, in fact, an offensively — to my mind — immoral overall tax policy.

Or, anything else you can think of about workers — is this Department of Labor doing the kind of enforcement that you would want to see to create good workplaces? No. Is the NLRB going out there, making sure to protect workers from unfair labor practices, to make sure that they can raise their voices at work and collectively organize? No. So those two things — is the policy on its own actually pointing in the right direction, and then is it followed up by putting your money where your mouth is and doing the really hard stuff of taking on entrenched interests to really change power structures of the economy — neither of those things is happening.

**Samantha Hancox-Li** [19:45]
I'm kind of struck — a few weeks ago on the podcast we were talking about Hungary and Orbán. And Orbán comes into power and he sells himself as this nationalist — he's going to fight for you, ordinary Hungarian, we're going to keep away all these corrupting influences, blah blah blah. And what is actually happening is him and his cronies are getting rich and you're getting screwed. And I think that is maybe starting to be a familiar pattern in America, and for this current administration especially.

But I want to ask about — okay, given everything you just said, what do you think of some of the similar proposals, maybe similar proposals, coming out of Democrats, right? Proposals from party luminaries like Cory Booker or Katie Porter or Chris Van Hollen or Marie — everyone's doing them these days, right? It's like, "Oh, if you make $75,000 you're going to have no income tax at all." Someone says, "No, if you make $100,000 you're going to have no income tax at all." Or no income tax on teachers, or no income tax on cops. There's again a whole plethora of these proposals. What do you think about that?

**Elizabeth Wilkins** [21:00]
So, good part first. I think it is totally right for our leaders to be laser focused on the actual granular economic concerns of their constituents — that is not a given, we have not done that for a long time, so that's the right place to start.

The thing I fear is that tax relief like this buys into the frame that we were just talking about — that there's something wrong about paying taxes, that the rich don't pay their fair share so we shouldn't either — as opposed to: this is the wrong frame for us to be in at all. We are working in a Reaganite frame which says we should have fewer taxes because that will be good for investment in the economy, et cetera, et cetera, which we know doesn't work, right? And we have to figure out how to flip that script to say: we start from the same premise, we understand people's economic pain, and we're going to be laser focused on it, and we're going to figure out meaningful ways to attack that — but not by blowing a hole in our overall revenue picture, because taxes are so important for the things that we actually need to fund to deliver good lives for people. Both the muscular public power to regulate corporations and the funding for social programs and social insurance programs that actually deliver that for people.

So I really worry about buying into a kind of tax revolt frame, right? The anger and the frustration is real, the focus on it is right, but I think the solution is wrong for so many reasons. If we're going to raise the revenue that we need to deliver for people, that's not the right way to go.

And let me say the other thing I really worry about — there's a vicious cycle here, right? Tax relief for people, which means that our government institutions are underfunded, which means that they under-deliver, which means that people continue to feel like they're getting a bad deal for their money when they pay taxes. And so figuring out where the point is to start reversing that vicious cycle is super, super important. And I worry that going down a rabbit hole of competing on tax relief for people cuts off our ability to do the opposite, which is to reverse that trend and make people feel better about it.

Let me be long-winded for a second — professional hazard — I really like to talk about FDR. People talk a lot about how much higher the marginal tax rates were under FDR. He raised them enormously. We had marginal tax rates on the richest Americans in the 70, 80, and 90 percents. We also saw the beginnings of corporate taxes and the idea that we should tax — we should put in a special tax on bigness, that we should put in a special tax on excess profits. And by the end of the war, our income taxes were extraordinarily progressive, but we also saw the need to raise taxes on everybody, because we were in the middle of a collective war effort, right? Talk about the sort of — what kind of shared project are we in?

And we are so far — that was just the norm. Taxes were a part of buying into an economy and a democracy where prosperity and power could actually be shared, right? Where the CEO-to-worker pay was more like 20-to-1 than the 300-to-1 that we have now. And people thought that was worth paying for, because they got something pretty good out of it. They got actual economic opportunity and prosperity, and they got extraordinary social insurance — the beginning of Social Security.

So it's hard to figure out where in that wheel to start changing the direction, right? What's the chicken and egg? Do you pay more taxes and then get more services? Do you have to prove that government can deliver for people first, so people can trust? But whatever it is, we've got to figure out where on the wheel to grab on to and reverse the direction, rather than accelerating it by buying into that "we don't like to pay taxes" frame.

**Samantha Hancox-Li** [24:15]
Okay, so I guess — I mean, this is maybe an obvious question I should have started with, right? You're saying we should pay taxes to fund social programs that are good for everybody and kind of ease the precarity that we're feeling. What social programs are we talking about? Not in general, like social insurance or whatever, but what do you think we should be — if we're not going to be cutting taxes, if we're going to be raising taxes, what do we want to spend that money on?

**Elizabeth Wilkins** [24:50]
Yeah, well, I think people are telling us pretty loudly what's not working for them when you ask. The costs of the things that people really do think are core to the American dream — housing, education, health care — are all going way up, and there's a bunch of ways to deal with that. I would not say that you have the same kind of set of programs for each of them, but there's an enormous possibility set for the role of government in each of these things. Whether it is a universal public option for childcare — the Congressional Progressive Caucus just came out with a proposal, it's been kicking around for a while, $10 a day for childcare. Let's make sure people don't have to pay any more than $10 a day for childcare. That's both economic and real agency and choice for people, right? It frees people up in terms of time and possibility in all kinds of ways.

Housing — we used to have not only traditional public social housing, the way that folks think about it, but New Deal institutions that were really robust in terms of the financing that they gave to build more supply. There's incredible scientific research we could be investing in. The productivity of the construction sector hasn't moved in a very long time — we could have such a larger role for directed public-purpose scientific research to invest in the stuff that drives costs for people.

And then social insurance — FDR talked about being protected from the vicissitudes of life. Social Security is only going bankrupt if that's the choice we make, and it's one of the most popular programs in this country. So the idea that we would actively make a choice to underfund it is insane. And similar programs.

So there is both the social insurance programs that you think about, the kind of public options — thinking about what investments we should be making in health care or childcare — and then there's industrial policy strategies, like an industrial policy strategy for housing, industrial policy strategies for building out a clean economy, that can just represent a different kind of role for government in driving the investments in public goods that we need, that the private sector, without either a full public option or a catalyst, will just under-invest in for what's optimal. And that's to have a good life today, but also investment in our future. So I think we can have a both-hands approach.

**Samantha Hancox-Li** [27:15]
Okay, so I guess I have to ask, right? You've come back several times now to housing, healthcare, education as these core components of, in many ways, the American dream — of feeling like you're going to have a secure life for yourself, your family, your children. And I think that's in many ways accurate. But I am also not sure that the problem is we don't spend enough money at the federal level on housing.

So, for example, a few years ago — actually might be close to a decade now, I'd have to double-check this — Los Angeles passes Measure HHH, which is exactly what you're talking about. It says we're all going to pass by referendum, we're all going to pay a little bit more in sales tax, and we're going to spend that money on affordable housing. We're going to do something about this homelessness problem, we're going to do something about the affordability problem in LA. And this is not chump change, right? We're talking about a billion dollars over the scale of 10 years. That's a lot of money on the scale of a city — on the scale of the federal government maybe not so much, but on the scale of a city, a bit of money.

And does it really do anything about the affordability crisis in LA? Not really. It builds a few units of housing, they're pretty expensive to build, but they are so far underwater in terms of the mismatch between supply and demand that it doesn't really help them.

And there's another similar program out of California that's not for affordable housing exactly, but it's for first-time homebuyers — I think it's called the California Dream program, something like that — and they allocate half a billion dollars for first-time homebuyer assistance. That pot of money is claimed in about a week by about 1,000 or so families who use it to raise the price that they're paying for housing — in other words, to put it right into the pocket of incumbent homeowners.

And I could tell a similar story, make a similar argument about education, about health care — that the problem isn't that we're not pouring enough money into demand, but that there's artificially restricted supply. That we have created these barriers that ensure that the pipeline for all these things is real narrow, because that benefits certain people who like to benefit. So it's not even exactly a problem of taxes and spending, but a different kind of regulatory problem that we're facing. What do you think about that critique?

**Elizabeth Wilkins** [29:30]
On the one hand — so you noticed I spent a lot of time talking about housing supply rather than demand, because I don't disagree with you that there are some places here where it's the supply side that we really need to focus on.

The other thing is, I think we need to think about what pipes we're sending money through. So this gets a little — it's not just whether or not we have the right level of spending. You could imagine we need more spending and we need to fix the pipes. But imagine pouring a whole bunch more money into the healthcare system — the healthcare system is now characterized by a series of actors that are extraordinarily extractive. If you think of the vertical integration — just to get a little bit wonky for a second — the vertical integration between health insurers, pharmacy benefits managers, who are the middlemen who figure out the drug prices, and then pharmacies — there's an enormous amount of self-dealing that can happen in paying the prices of drugs. Just more money into the system is not going to fix the fact that we are paying too much, and that there is an enormous amount of rent-seeking by a bunch of pretty powerful corporate actors, right? So the answer should not be "let's just throw more money on that fire," or, to your point, depending on what your local housing market looks like, depending on the developer stack, depending on the regulations for building, you might be pouring money into the middlemen who navigate that system rather than putting the money into the lowest-cost way of building that housing consistent with some of our values, like good jobs.

So there absolutely is a pipes problem. I think there's a vibe right now in New York City with Mayor Mamdani that I really like, which is extraordinarily progressive policy, really bold policy, and some of which takes a lot of money — childcare takes a lot of money — but also a recognition that, if we're the folks that believe in government as the actor that needs to intervene in these markets, whether through funding or through actually acting, financing things, directing an industrial policy strategy, then we need to be better than the best government-skeptical waste-fraud-and-abuse people at the sort of unsexy guts of governing. The cutting through red tape, the talent — the talent issues of getting the right people into government to do the right jobs — all of this stuff. And even, really — he has sort of said, "I'm finding places to cut." That's like, "Oh, big government progressive wants to cut waste, fraud, and abuse — my ideological priors are scrambled." But actually, that's exactly the right way to be thinking.

We, the folks who really believe in government, should be the first folks lining up to say: what are the ways in which technology can actually cut down on waste, time, and enhance the productivity of our workers? So I do think there is a — if I have sometimes said I have a tough love letter to government. I am a great lover of government and what it can do, and I spent most of my career in government. And it needs a tough love letter right now — where we are in terms of proceduralism, slowness, and also just hollowed-out capacity. There are some places where we actually need more government because we don't have the know-how or capacity to deliver the way we want to. We've got to be the ones who are first in line to say these are the ways in which government should work differently.

And then there is this question of — when you are pumping money into a sector of the economy, know what market structure you're pumping that money into. Are you subsidizing already-large companies that exercise monopoly power and can extract rents so that your program dollars get diverted? Or are you pumping money in a way that disciplines that market in a useful way? I think that is a crucial question to be asking.

And the Biden administration did an enormous amount of industrial policy, right? Most of it was through corporate loans and subsidies to incentivize certain types of build-outs, whether it was the CHIPS Act or the IRA, or whatever. And I do think there's some real reflection to do about — well, when we want to catalyze certain types of development, what is the right way to do that? Is it through subsidizing or incentivizing the existing set of corporate actors? Sometimes yes, and maybe sometimes no. Maybe sometimes there's a regulatory framework where you don't have to spend more money, but you can unlock innovation. Maybe sometimes it's a public option that is not funding the whole thing, but that is disciplining the market with a low-cost option so the rest of the market has to come down.

So I do think we need to be a lot more disciplined about both the governmental pipes we're putting money through and the market structures that we're putting money into, to make sure that our dollars are going as far as they can in achieving the outcomes that we want.

**Samantha Hancox-Li** [33:46]
Yeah.

**Samantha Hancox-Li** [33:56]
No, go for it, go for it.

**Elizabeth Wilkins** [34:00]
So I think — I like the way that you contextualize that, because there's a way in which big tax proposals can be sort of labeled as "big government," but if you reframe this either with respect to our peer countries or with respect to our history, what feels big to us feels pretty in line and normal, except for where we are now today, right?

**Samantha Hancox-Li** [37:13]
My father worked in government basically his whole life. He worked for the New York State Comptroller's Office, which — the job of the Comptroller's Office is to look at the books of all of the rest of New York state government. And he took that job really seriously. He would say that he was serving the public trust, to make sure that the people's money was being well spent — not just that it wasn't being stolen or wasted, but that it was being spent well.

And I think, honestly, yeah, if we want to be the party of government, then we have to commit to being the party of government reform, right? We have to be like, yes, there are problems with how the government delivers things. Everybody has their own favorite example of whatever — we could go on and on about this government program didn't work, or this isn't working right now, could talk about California high-speed rail, that's a classic, or whatever it is. And you can't say to the American people, "I'm going to take half a trillion dollars out of your pocket," and not also commit to being like, "I will spend that money well." I will actually discipline government, I will make sure that the bureaucracy works and delivers these things efficiently and effectively and quickly, et cetera, et cetera.

And I think you're right that Mamdani is a sewer socialist in the greatest, in the great tradition of sewer socialism in America. That commitment to making the government work — and to get back to something you said earlier, to messaging to the people of New York that he's making the government work — you kind of have to have all of these components working together. So I think that's a very important part of this message, right? If you want to be the party of government, you have to be the party of making government work.

I do want to ask you a different question, though, which is just to get a sense of scale of what we're talking about here. When we talk about, "yeah, we want to spend more on various kinds of social programs" — let me look at my notes so I get all these numbers correct. It might surprise some Americans to know that the United States is kind of a low-tax country right now. It's already a pretty low-tax country. We're not a tax haven — we're not some tiny island in the Caribbean that is a beach and a bank or whatever — but if you compare the United States taxation regime to some of our similar countries, we're pretty low.

The way to compare — one way to do this, the way that I think is kind of intuitive — is to compare the total tax burden with GDP, right? What share of the total economy is being collected in taxes? In the United States that's something like 25%, which maybe sounds like a lot, but then you look at the OECD average — which is, broadly speaking, Western Europe — they're closer to 34%. And that's the average. Countries like Denmark that finance a very substantial social welfare state, they're closer to 45% of total economy that's collected in taxes.

So when you talk about "we need to re-embrace broad-based taxation, broad-based social programs," what kind of scale are we talking about here in terms of reshaping the balance of the American economy?

**Elizabeth Wilkins** [41:02]
So I think the recent proposal — I don't have it in front of me — from Ro Khanna and Bernie Sanders on a wealth tax would raise like $4 billion or something like that, right? That's just a wealth tax, just on the 900 billionaires. Another thing that I like to point out is right now our highest income tax bracket for a married couple starts at $750,000. FDR's income tax had an income bracket that started at $750,000, but it had three more above that — it had $1 million, $2 million, and $5 million. And that was 80 years ago, right? So the idea that we don't have significantly graduated taxes as you go up the income scale, before you even get to the question of how much the ultra-rich save in having their money in wealth rather than income, is pretty significant. There's a whole lot there — per our earlier conversation about who gets taxed — there's a whole, whole, whole lot there before we even get to folks farther down the income scale.

That said, like I said, FDR, during the war, maintained a very progressive income tax but still made everybody pay, because the collective goods we needed to pay for were pretty substantial, and I think that's the mindset that we need to get back into pretty significantly. And I do think — to this point about what were the tax brackets — the fact that, I think this is right, in Washington and in Massachusetts we're now seeing basically millionaire surcharges, that folks over a million dollars are paying more — we really have a very long way to go to actually tax at rates that are, I think, well within reason, although they would raise a whole lot of money.

**Samantha Hancox-Li** [43:30]
Well, I actually kind of want to push back on this a little bit. Where you said, okay, we have a wealth tax just on billionaires, that's going to raise $4 billion — I don't know, a year, 10 years, whatever — a year, I'll assume it's a year. For me personally, that would be a lot of money. I would not say no to $4 billion. On the scale of the federal government, that is not a lot of money, right?

The United States right now — just because I happen to look up these numbers earlier — military spending, we're something like $800–$900 billion. Trump is proposing $1,500 billion. We're already spending, want to make sure I get this right, something like a trillion dollars on debt service — on payments on the interest on the national debt. So on the scale of the federal budget, $4 billion isn't really very much money.

I've written about this for Liberal Currents — I think we should tax billionaires. We should tax the highest tax brackets. We should have more, higher tax brackets. We should tax them at higher rates, in part just because, as we have seen, these extremes of wealth are dangerous. They warp the economy. Elon Musk bought himself functionally a cabinet seat and used it to wreck part of the federal government, and is probably going to kill hundreds of thousands of people, or at least people abroad, as a result of this. Wealth inequality is extraordinarily dangerous, and we should do something about it by taxing it. But when it comes to funding broad-based social programs, I'm not as convinced that the money is actually there to fund programs on that scale.

**Elizabeth Wilkins** [45:20]
Well, I will push back on that. We — I've got to get this right because we haven't put it out yet — but we are working on a paper that does get to that scale. How would you get to the point where you're raising somewhere between $5 and $12 trillion? Right — this is huge. That requires a lot. Yes. And you have — there's a lot of work to do, not just on wealth taxes, but on corporate tax rates. And this gets to — I don't think we can really have an attitude of exempting more people at the bottom from taxes, because they do need to pay in. Everybody needs to pay in if we're going to get there. But there are ways to get closer to the $10 trillion level. That's actually what you need to be able to fund a government that we would believe in. But it takes a lot of will. And it won't — you're right — it won't just be on the top 900 billionaires. And you brought up the point that I was going to make about the other function of taxes, which is to discipline ultra-wealth and concentrated power. But we do need a sort of broad-based buy-in if we're going to get to the levels of revenue that we need.

**Samantha Hancox-Li** [47:02]
Yeah. Okay, one last question I kind of want to ask about here. There's something that I suggested is lurking in the background of some of these debates, which is questions about the fiscal health of the United States. And it's a little awkward to bring these up, because — to look back over my own life, sometimes it kind of feels like Republicans are the dad party and Democrats are the mom party, right? Dad gets a hold of the credit card and he buys a boat, and we all go out on the boat for a weekend, and he crashes the boat, and the boat sets on fire, and we have all these parties. And at the end of the month there's this enormous bill on the credit card, and we're like, "Man, Dad, what are you doing? We got to give the credit card to Mom." And Mom scrimps and saves and is responsible and gets the family's finances all back in order, and we're like, "Man, Mom, you're really boring. We should give the credit card back to Dad."

And that's kind of how it feels sometimes, where when Republicans are in office they run up the bill on wars — it's always wars, somehow — they run up these huge bills on wars or on tax cuts or on other kinds of things. And then as soon as they leave office and Democrats come in, they start screaming about austerity and balanced budgets and the national debt, and so forth.

That said, I think people are also legitimately worried about the future fiscal health of the United States, right? I don't want to get into weird scaremongering about the Reinhart-Rogoff debt cliff or whatever — that's a bugbear from days past, a blast from the past if you've been around that long — but as I talked about, debt service turns out to be a huge chunk of the federal budget, right? If interest rates keep going up, it's going to keep on going up. We're looking at a big retirement crunch as the nation gets grayer, as there are more older people and fewer younger people, blah blah blah. So people worry sometimes that we're just not going to have the fiscal headroom to pay for ambitious social programs. I'm curious — can you just say a little bit about where you stand on that?

**Elizabeth Wilkins** [49:00]
Yeah, well, first of all, it's a very funny analogy that you use. We've been talking about how people feel about paying taxes, woven in and out of our conversation, and I don't think you can ask people to pay a significant — a significantly large portion of their income or wealth in taxes for something that they don't see or understand. The contract can't be "pay significantly more and get something very esoteric that you don't understand, that you will never see," right?

We have to talk about raising taxes with respect to what it is that is going to be delivered to people in return. That, like I said, is part of turning this wheel from vicious to virtuous as a cycle — in terms of how people feel about their government institutions and what they do for them, right? So I do think it's right to say — I don't think we can say this all goes to deficit reduction.

I also think we have shown — I mean, there may in fact be a limit somewhere — but we have shown that the worst deficit hawks are wrong. We're still okay, right? So that has been used for a long time for a kind of austerity politics that I think was not that real.

It's not generally a good practice to try and compare the federal budget to a household budget, but I do think this analogy is kind of useful: people think about how much they want to pay for various types of insurance all the time, right? It's like, "Am I going to pay for an extra vacation, or am I going to get more home insurance, am I going to buy more car insurance?" And you wouldn't pay for so much insurance that you couldn't pay for the things that you have to pay for, right? You wouldn't pay for so much insurance that you wouldn't have the home to begin with, or you couldn't make your car payments. I think about paying down the debt as some kind of — obviously it's hard to figure out the risk — some kind of insurance. And we shouldn't just only pay for insurance. We've got to pay for our lives, you know? It doesn't mean you pay for no insurance — that's not the right thing to do — but you have to think first about the things that you've got to pay for, for your livelihood, for your family.

And I think that's the way we want to talk about taxes — what is it going to pay for that is meaningful to people, that is going to make people want to buy back into the shared social contract, and that can visibly show people that there's a reason to be interested in and attached to these democratic institutions?

**Samantha Hancox-Li** [51:50]
I want to be clear — I do not endorse metaphors of the federal budget as if it were a household. This turns out to be a very destructive way of thinking about the federal budget. I just like the story. It captures a vibe.

We're coming up on the end of our time here, so I guess I kind of want to ask you this last question to get back to some of the spiritual stuff. We live in a country that feels pretty divided in certain ways right now, pretty torn apart on what the meaning of America is. How do we get back to a place where we can all buy in to that shared project — to say, "Yes, I will pay my part of this thing that we are all in together, and I'll be happy to pay it." How do we get back there?

**Elizabeth Wilkins** [52:31]
A couple of things. I do think we are in a moment where policy and politics shouldn't be thought of as left versus right, but rather as top versus bottom — as who is this economy rigged for and against. And there's a lot more of the "it's rigged against me" than "it's rigged for me." And to lean into creating solidarity in that way.

This is way off the topic of economics, but I will say one of the things that I have found most hopeful is the community response to what has happened in Minneapolis. There's this way in which economic precarity and scarcity is a breeding ground for racism, xenophobia, all kinds of other -isms that are pretty heinous and tear people apart, and they're easy fault lines to push on. But it turns out also that there is some sense for people of basic fairness. And when pushed too far, there is a basis for building solidarity and a mindset of possibility versus scarcity that's possible.

So figuring out how to tap into that bottom-versus-top moment, but in a way that isn't only about anger — that is about anger channeled into hope and building, that's channeled into a sense of possibility — that's why we talk about what it means to live a good life and what it means for government to deliver the building blocks of that good life. Yes, we talk about the ultra-rich. Yes, we talk about breaking up big corporations. Yes, we talk about the ways in which you're being scammed. But we also talk about what it would look like if we unrigged the economy, what life we could live together.

And I think we need leaders who can channel that frustration and that anger into a sense of possibility, into a sense of what we could build together, rather than into this kind of divide-and-conquer strategy that we are seeing now. So — maybe I'm unique or whatever, but I have some hope that in this moment we have the opportunity, from some emergent leadership, to create some more solidarity out of this fractiousness.

**Samantha Hancox-Li** [54:49]
I would like a future of greater solidarity, but I do have to end on a dissenting note, right? I'm trans, right? It's not cool. Corporations that are trying to take away my health care — it's Republicans, right? It's not Target that's snatching people off the streets of Minneapolis, it's ICE, right, and directed there by Republicans. So just a dissenting note to end on. But unfortunately we are out of time, so yeah — Elizabeth, thank you so much for coming on the podcast. This has been a great conversation.

**Elizabeth Wilkins** [54:59]
Thanks so much for having me. Thank you.

**Samantha Hancox-Li** [55:31]
All right, cheers. Bye.