Co-authored by Luke Hogg, the program coordinator for FreedomWorks Foundation.
Recently, Rep. Alexandria Ocasio-Cortez (D-N.Y.) announced a new legislative initiative, dubbed “A Just Society.” Some are calling this her most ambitious legislative initiative since the so-called “Green New Deal.” Of course, the “Green New Deal” was a nonbinding resolution, rather than something that carried the weight of law behind it, and the rollout was nothing short of a disaster. That doesn’t mean the “Green New Deal” was any less significant, given that the far-left rallied behind such an extreme proposal for a costly, massive takeover of large portions of the economy.
Unlike the “Green New Deal,” Ocasio-Cortez’s “A Just Society” does involve five pieces of legislation that, if passed, would carry the force of law. Another part of this initiative is a nonbinding resolution related to a United Nations treaty. There are real policy implications for almost every aspect of “A Just Society,” and those implications show that those who push “democratic socialism” don’t understand economics.
Recognizing Real Poverty Act: Federal poverty thresholds are published every year and are generally used as a data point, although they are used to determine eligibility for some federal programs, most notably Medicaid and the Affordable Care Act (ACA). The poverty line in 2019 for a one-person household is $12,490. For a family of four, the poverty line is $25,750 and is further adjusted by family size.
In the cases of Medicaid and the Affordable Care Act (ACA), eligibility is determined by income, which may be affected depending on how close an individual or family is to the poverty level. For Medicaid, in most states, if an individual or family earns less than 138 percent of the federal poverty level (FPL), they are eligible for Medicaid. Under the ACA, an individual or family is eligible for subsidies if the individual or family earns up to 400 percent of FPL.
The war on poverty began more than 50 years ago, but little has changed. As the Census Bureau noted, "Even after recent declines, the 2017 poverty rate of 12.3 percent is not statistically different from the rate in 1970. Since 1970, the annual poverty rate has increased 14 times and decreased 17 times." The poverty rate in 2018 was 11.8 percent.
Of course, increases in the poverty rate are cyclical. When we experience a recession, the poverty rate rises, just as the unemployment rate rises and incomes decline. The poverty rate peaked around 15 percent following the Great Recession.
The Recognizing Real Poverty Act would update poverty guidelines to include a number of factors, such as family size, geographic location, expenses goods and services, healthcare, childcare, and Internet access. The policy ramifications would be quite large. As Brad Polumbo of the Washington Examiner explained, “This would triple poverty overnight, classifying many working-class, self-sufficient Americans as if they were in dire need of government intervention.” Spending for programs tied to the poverty level would also rise, likely significantly.
The linking of the poverty level to geographic location also is an issue because of the consequences of local governmental decisions. Currently, the poverty level for Alaska and Hawaii is different because of geographic location. Local ordinances, rent and wage controls, and other policies can drive up the cost of living in certain geographic locations, such as New York, San Francisco, and Seattle. The better idea is to promote upward mobility through economic freedom, which would mean reducing burdens that drive up costs in urban and metropolitan areas.
Place to Prosper Act: The cost of housing has become a minor issue in national politics, with far-left Democrats claiming that there is a “right to housing,” much like they say there is a “right to healthcare.” The issue is largely concentrated on urban and metropolitan areas. It’s true that rents have risen faster than inflation.
The most obvious factor here is supply-and-demand, the higher the demand, the higher the costs, particularly when there’s a limit in supply. Regulation is also a contributor, as Mark J. Perry of the American Enterprise Institute recently explained when comparing new housing units, average rents, median home prices, and homeless populations in Houston and Dallas to Los Angeles.
The Place to Prosper Act would establish a national increase cap on rents of 3 percent and create a fund for access to counsel for any renter in the country who is facing eviction. The bill would also provide a private right of action against a landlord who increases rent above 3 percent or evicts a tenant for nonexempted reasons. There are other provisions of the bill, including regulation of market-dominate landlords and a prohibition of discrimination based on the source of income.
Many local governments have established rent controls, which are price controls, limit how much landlords can increase rents, but such policies have consequences. “[R]ent regulations are counterproductive,” writes Peter Van Doren of the Cato Institute. “Though the rules aim to address a lack of affordable housing, setting the rent below market rates creates a supply shortage that exacerbates the problem.”
This is not simply an economic theory. A Stanford University study of San Francisco’s rent control policy found that landlords pulled units from the market in response to rent controls. “[L]andlords actively respond to the imposition of rent control by converting their properties to condos and [tenants in common] or by redeveloping the building in such as a way as to exempt it from the regulations. In sum, we find that impacted landlords reduced the supply of available rental housing by 15%,” the authors explained. “This reduction in rental supply likely increased rents in the long run[.]”
As one can see from what we know of the impact of rent control, the Place to Prosper Act would turn bad local economic policy into bad national economic policy.
Embrace Act: The Embrace Act would end the federal prohibitions for public benefits based solely on immigration status. This could have the effect of overriding existing public charge language that prevents the distribution of benefits to those aliens likely to depend on those benefits (8 U.S. Code § 1601), but it is unlikely that the distributors will begin to blanket immigrants with benefits. Current law allows officials to deny entry if they determine they are “likely to become a public charge.”
Currently, undocumented immigrants, including Deferred Action for Childhood Arrivals (DACA) recipients, are ineligible for most benefits like Temporary Assistance for Needy Families (TANF), Supplemental Nutrition Assistance Program (SNAP), Medicaid, Supplemental Security Income, ACA healthcare subsidies, and are prohibited from purchasing unsubsidized health coverage on ACA exchanges. They may be eligible for benefits “necessary to protect life” like emergency Medicaid, emergency room access, or certain parts of Special Supplemental Nutrition Program for Women, Infants, and Children (WIC). Legal immigrants are heavily restricted for all means-tested benefits including a “five-year bar” that requires the individual to have maintained Lawful Permanent Resident (LPR) status for five years before becoming eligible – or you have to work 40 quarters under a visa.
Social Security benefits for both retirement and disability require both the 5 years and 40. Furthermore, “Certain additional categories of immigrants, specifically refugees, asylum seekers, and victims of human trafficking or domestic violence have the same eligibility requirements for federal benefits as LPRs. Individuals on non-immigrant and temporary visa holders are ineligible for benefits.”
The restriction for benefits only started around 1996 with the Personal Responsibility and Work Opportunity Reconciliation Act, the landmark welfare reform bill. As of 2009, when Congress reauthorized the Children’s Health Insurance Program (CHIP), they allowed states to provide benefits to “lawfully residing” children and pregnant women regardless of date of entry. As of 2015, twenty-nine states take advantage of this.
This bill would practically require an entire restructuring of all federal benefit programs whose policies are largely based on the 1996 law. There’s no telling how much it would cost, since we have terrible data on illegal aliens. Most importantly, the bill makes no distinction between lawful and unlawful entry, painting genuine refugees and illegal aliens with the same broad stroke.
Uplift Our Workers Act: The Uplift Our Workers Act would create a Leadership in Energy and Environmental Design (LEED) certification-style score for all federal contractors and directs federal entities to do business with those who are the “friendliest” to workers. Consideration for such a score would include paid family leave, a living wage, healthcare, and other unmentioned criteria.
Obviously, this is a big gift for labor unions. The score would also include considerations regarding labor organizations that would, in practice, result in top-down federal incentives to unionize and strike. The legislation would essentially force any company seeking a federal contract to completely abide by Ocasio-Cortez’s moralistic view of economics, greatly damaging competitiveness in an increasingly global market.
It also adds an extra level of red tape that disincentivizes smaller companies from seeking federal contracts. It would disproportionately affect small businesses that don’t have a huge legal and human resources team to comply with all the bureaucratic requests.
Most importantly, the proposal also requires that the scores be considered “approximately equal in importance or significantly more important than cost or price.” In an era of ballooning budgets and rampant deficits, considering whether or not a company gives enough vacation days should never be secondary to fiscal responsibility.
Most of these pillars are already in federal law, and breaking federal law makes you an ineligible company for federal contracts. Most importantly, we already have labor standards for federal service contracts. Ocasio-Cortez is trying to raise our labor standards with a circuitous bill rather than trying to change the actually relevant statutes like Title 29 Subtitle A.
Finally, and perhaps most oddly, the bill allows non-contractor firms to request a score so they can feel all warm and squishy about how well they treat their workers. This essentially translates to wasting federal dollars to provide private firms with marketing tools showing that they abide by Ocasio-Cortez’s moral code.
Ratify the UN Covenant on Economic, Social, and Cultural Rights: This is a sense of the House resolution that the Senate should ratify the United Nations Covenant on Economic, Social, and Cultural Rights. The United States signed this treaty in 1977, but the Senate hasn’t ratified it. There are several tenants to this treaty; it touches on labor issues, social insurance (Social Security in the U.S.), an adequate standard of living, health, housing, and so on. The ratification of this treaty by the Senate would be, more or less, an endorsement of socialism.
The Covenant espouses the primacy of “economic, social, and cultural rights” derived from the “inherent dignity of the human person.” This presents a positivist view of human rights that is contrary to our constitutional underpinnings that invoke a sense of negative rights.
There are many parties to the Covenant that simply do not abide by the principles, including Afghanistan, China, Democratic Republic of the Congo, Cuba, Iraq, Lebanon, Morocco, North Korea, Pakistan, Palestine, Russia, Serbia, and Syria have all ratified. Furthermore, most of the major signatories (the United Kingdom, China, France, Russia, etc.) only ratified with reservations, so it’s not even in effect in its original form in most of the world.
Needless to say, the House has no jurisdiction, so the resolution has no binding effect and is unlikely to result in any real change, even if passed.
The above tackles most of Ocasio-Cortez’s "A Just Society" initiative. It may all sound good on the surface, but when one take more than a cursory look, it’s more of the same failed policies disguised as "democratic socialism." Economic freedom brings is a better approach to boost upward mobility and lift people out of poverty. Indeed, capitalism has lifted hundreds of millions of people out of poverty. There is one aspect that we held back on, and we’ll tackle that below.
Mercy In Re-entry Act: Admittedly, this is a tough one. A criminal record is, more often than not, a barrier to a productive, law-abiding lifestyle. Recidivism reduction doesn’t end once an offender exits a prison. The goal is that the offender finds a good job and becomes productive, contributing to society in a positive way. At the state and local level, as well as the federal level, lawmakers are pushing for second chance initiatives to help those who have served time in prison. Businesses, too, are hiring more individuals who have a criminal record.
Most of the criminal justice reform policies that are discussed at the state and federal levels are almost entirely focused on nonviolent offenders. For example, the First Step Act was entirely focused on nonviolent offenders. Little attention is paid to violent offenders, and that’s understandable given the nature of those crimes. It’s a conversation that needs to be had, but the time isn’t right for it.
The Mercy In Re-entry Act would prohibit the denial of federal public benefits, including welfare and loan programs based solely on a criminal conviction. This is not limited to nonviolent offenses. The bill seeks to address a real problem, but it’s too broad. Last year, Florida passed Amendment 4, with 64.5 percent of the vote, to restore voting rights to felons. Even this constitutional amendment made exceptions for violent offenders and sex offenders.
Although the Mercy In Re-entry Act seeks to address a real problem, it goes too far.