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Alexandria Ocasio-Cortez says the theory that deficit spending is good for the economy should 'absolutely' be part of the conversation

16.01/2019

Rep. Alexandria Ocasio-Cortez has received one question more than any other during her short time in the political spotlight: How will she pay for her ambitious policy proposals?


The newly sworn-in lawmaker has largely shied away from specifics. And she described the question as "very disingenuous" in a recent interview with INSIDER, arguing that critics don't ask it when it comes to defense spending.

"It's not a question that is evenly applied across issues, and it's one that I actually don't think people genuinely are interested in," she said. "It's a question that is only targeted to healthcare and education expenditures." 

She argues there are myriad ways to fund free college, Medicare for All, a federal jobs guarantee, and the other bold policies she and other progressive Democrats have proposed.

"You can pay for it by saving costs on expenditures that we're already doing," she said. "We can do it by saving money on military spending. We can pay for it by raising taxes on the very rich. We can pay for it with a transaction tax. We can pay for it with deficit spending."

"You recognize that people still ask the question as though I didn't just answer it," she told INSIDER. "Because it's not an interest in the actual answer. It's an interest in the attack and it's an interest in debasing the agenda."

She said she was open to Modern Monetary Theory, a burgeoning theory among some economists positing that the federal debt is not an economic restraint for the US. She said the idea, which holds that the government doesn't need to balance the budget and that budget surpluses actually hurt the economy, "absolutely" needed to be "a larger part of our conversation."

Ocasio-Cortez staked out a more concrete position last week when she told "60 Minutes" that she supported taxing super-wealthy Americans' incomes — those above $10 million — at a rate of 60% to 70% to boost government revenue.

The comment generated outrage among conservatives, who characterized the proposal as radical, and received widespread support among progressive economists.

Many supporters pointed out that the US maintained a similarly high marginal tax rate on the ultrarich for nearly four decades after World War II, which included the most economically prosperous period in the country's history.

The economist and Nobel laureate Paul Krugman argued in a Sunday New York Times op-ed article that Ocasio-Cortez's proposal was "fully in line with serious economic research," pointing out that a host of leading economists think the optimal top tax rate in the US is at least 73% and possibly more than 80%.

President Donald Trump and the GOP lowered the top tax rate to 37% from 39.6% as part of their tax law, enacted in 2017. 

Source: Business Insider