How do you pay for it? (pt. 1)

Accounting for a $20 trillion leftist paradise

The left has many dreams of what an ideal society includes and excludes. An ideal society includes community, solidarity, equality, and equal parts happiness and rainbows. The same society excludes things like poverty, bigotry, and war.

All of these priorities, in one way or another, intersect with how we organize the economy, none more directly than poverty and inequality. Leftists, when describing their ideal economy, are met with skepticism at best and mockery at worst, in no small part due to a question that plagues leftist advocacy—How do you pay for it?

You’re asked this a lot as a leftist. Poverty and inequality are big problems, and they seem expensive to fix. A universal basic income? Universal healthcare? How could we possibly do all of these things without destroying the economy? After all, you could tax all of the money and wealth of the top 1%, and we wouldn’t come close to covering the various left-wing ideals. Perhaps, as leftists, we should be more realistic.

I say we can still dream big. In this two-part series, I’d like to describe a basic framework for what a possible ideal society would look like, how much it might cost, and what we could do to afford it. In doing this, I hope to provide leftists hope that a society without poverty and unjust inequality is possible.

This society isn’t for some unimaginable future. We have the policies to build these things today. We only lack the will and knowledge to start.

To begin, let’s outline, with as little generosity (or too much generosity?) as possible, a rough sketch of what an ideal word looks like.

A basic framework

No pop-economics article is complete without its rules and caveats.

1. All numbers will be in U.S. 2024 terms (with inflation adjustments as necessary).

2. Cost estimates are a ballpark, but I will err on the side of overestimation.

3. As a frame of reference throughout, total Gross Domestic Product in the U.S. was $29.724 trillion in 2024.

4. A left-wing society may or may not include the things I will describe. These are in part my own preferences, though I do my best to include the largest ordinary line items a leftist might desire.

Join me on a trip paradise

Ah, paradise, where the economy grows, technology advances, and your needs are met. Let’s talk about the big bucket items that make a society like this possible.

Universal Basic Income | $6.4 trillion | 21.6% of GDP

Universal basic income (UBI) is a minimum cash payment to all adult citizens of a country regardless of status. That means from rich to poor, sick to healthy, worker to nonworker, if you’re at least 18 years old and a citizen, you receive it, and you can do with it as you please.

In practical terms, some adults might not receive the benefit, or they might receive the benefit in kind. For instance, the imprisoned might not receive UBI, or their UBI might be reduced, and someone with a history of drug addiction might have their UBI sent directly to their landlord instead of receiving cash. However, in the spirit of assuming the highest possible cost, let’s assume it goes to all adults, no matter what.

As for the math, let’s assume the following:

• The UBI is $2,000 per month for each adult.

• 266.97 million adults in mid-2024 (Let’s round up to 268 million).

• This gives us a total of $6.432 trillion in 2024.

Medicare for All | $4.9 trillion | 16.5% of GDP | $11.3 trillion total | 38.1% of GDP total

People need healthcare, and those on the left lean towards socializing this cost. Although various proposals exist, none stand out quite as much as Medicare for All. It’s as comprehensive as it is expensive. Healthcare providers bill the federal government instead of insurance companies, patients, or other government programs (a single-payer for healthcare). Everyone gets the care they need when they need it, and this care is at almost no cost at the point of use.

An analysis from the Urban Institute found that a broad single-payer healthcare plan would cost the federal government $4.4478 trillion in 2020. I took the number from a sensitivity that assumed higher hospital reimbursement rates.

Let’s bump this number up by 10% to account for inflation. This brings us to a grand total of $4.89 trillion in 2024. Let’s round up to $4.9 trillion and call it a day.

The Family | $0.93 trillion | 3.1% of GDP | $12.3 trillion total | 41.2% of GDP total

Any proper left-wing society cares about children, students, and families at large. People shouldn’t face financial calamity on account of having children because it’s bad for both the family unit and the children.

Children don’t choose where they’re born, so they should receive adequate social support from birth to early adulthood. This means a society should offer (1) a child allowance, (2) parental leave, (3) universal pre-K, (4) universal child care, and (5) free technical education and university.

A child also deserves free public education from kindergarten to high school, but I’ll include current federal spending at the end. For now, let’s talk about each of these policies in turn.

Child Allowance

A child allowance is a payment to parents in order to assist them with the expenses of parenthood. Children require money to maintain themselves, yet children don’t work. Therefore, they are reliant on either their specific parents or the public at large for assistance. Since no child chooses to be poor, the public should support children with direct cash payments.

Let’s assume the following:

• $700/month per child (more here for how I arrived at that number)

• There were 73.1 million children in 2024 (Let’s round up to 73.2 million).

• Bringing us to a total of $614.880 billion in 2024

Paid Parental Leave

Parents and workers should receive time off from work, assuming they have a child or require medical care. This is good for families and those struggling with ailments. Therefore, let’s require and subsidize this benefit for all workers.

• The CBO estimated that a similar proposal would cost $200 billion from 2022 to 2031.

• This is $20 billion a year on average. Let’s boost this by 20% to get 2024 numbers and double it to assume more universality.

• This amounts to $48 billion in total.

Universal Pre-K

Pre-kindergarten is an uncontroversial good in the literature. Children who attend pre-k have better social and learning outcomes long beyond their pre-k years, and since many parents can’t afford private kindergarten, it makes sense for the public to provide it to all children.

• Wharton estimates this would cost $35.1 billion per year on average in 2022.

• Let’s boost by 8% to get to 2024.

• This comes to $37.96 billion in 2024. I’ll round up to $38 billion.

Universal Child Care (under 5 years old)

Children require care. Since parents are often unable to provide this care (either through work, competing family obligations, or incapacity), parents rely on the community or the market for childcare. However, this assumes parents have a community and/or enough income to provide childcare.

All children should receive the care they need, despite the conditions of their childhood, so let’s create a universal childcare system.

• Moody’s estimated that such a plan would cost $70 billion to cover 60% of kids in 2020.

• Let’s assume we cover all kids, and then boost it by 30% to get the cost in 2024 numbers and adjust for an increased number of children.

• This brings us to $152 billion (rounding up) in 2024.

Free College and Technical Training

Lastly, there are adult students. Adult students are doing something good. They’re acquiring the skills and education needed to produce, and innovate on, the things society needs and desires, all while hopefully obtaining personal fulfillment.

The unfortunate part about being a student is that it’s very inconvenient, assuming you don’t have enough money to attend school without working. Financial pressures complicate the education process and cause uneven graduation rates and results.

A small part of evening out this playing field is making university and technical education free at the point of service.

• The Education Data Initiative estimated it would cost $58 billion in 2024 to make college free.

• Since many more people attend college than vocational training, let’s boost this to $75 billion to encompass all vocational training as well.

Boosted Unemployment | $0.2 trillion | 0.7% of GDP | $12.5 trillion total | 41.9% of GDP total

The U.S. unemployment system is a cruel joke, and the conservative arguments regarding unemployed people are similar. Unemployed people often find themselves unemployed due to circumstances beyond their control.

The market might tank, their boss might be abusive or toxic, their company might restructure itself, etc. This isn’t to say there aren’t firings for legitimate, merit-based reasons, but even if that’s the case, does that mean impoverishment is a reasonable punishment? I don’t think so.

Only about a third of unemployed workers receive unemployment benefits. This is because 43% of unemployed people aren’t eligible, and 39% of eligible workers don’t even file to claim their benefits. Let’s boost unemployment eligibility by universalizing it to all unemployed people and expanding benefit amounts.

This doesn’t mean someone can infinitely claim unemployment benefits, but it does mean unemployed people will have extra breathing room. Keep in mind, the nature of unemployment insurance is that it’s a lumpy cost, so I will rely on an ordinary year.

• Fred pegs unemployment benefits at around $36 billion in 2024 (annualized).

• Let’s say we expand coverage to all unemployed, and this more than quintuples the cost, bringing us to $180 billion a year.

• Let’s round up to $200 billion per year for our final, very generous unemployment insurance assumption.

The Other | $7.5 trillion | 25.1% of GDP | $19.9 trillion total | 67.0% of GDP total

And then there was everything else. The government already spends money on a lot of stuff, and this should be accounted for in an ideal system. I will make several generous assumptions to stretch the challenge of funding left-wing priorities.

• Although members of the left would likely cut military spending, let’s assume we don’t, and the $1.4 trillion in 2024 for military spending remains.

• We’ll include the current $1.1 trillion in 2024 on interest as a necessary expense.

• Let’s assume we spend $3.5 trillion in 2024 on other general spending that isn’t subsumed by the programs we’ve already described (i.e., we don’t count Medicare funding because it’s already covered by the Medicare for All proposal).

• And since we’re lefties and we want to spend money on everything, let’s add $1 trillion in extra spending on top. This might include expanded research grants, subsidies for renewable energy, public funding for elections and the media, etc.

Lastly, let’s address Social Security.

Since everyone in this ideal world gets $2,000/month in UBI, it doesn’t make as much sense to keep current cash transfers at the same level. Social Security has three main categories of adult beneficiaries for this exercise: retired workers, disabled workers, and survivors.

The average benefit for these three groups in December 2024 was $1,975, $1,581, and $1,546, respectively. Reducing this by 65 cents per dollar of UBI means all beneficiaries are better off, and we only allocate $461 billion to these programs in 2024. Dependents receiving Social Security only got $35 billion in 2024, so let’s hold that the same, bringing Social Security cost in our ‘ideal’ system to $496 billion. Let’s round up to $500 billion to be generous.

Closing Remarks

Wow, that sure sounds like a lot of spending. Almost $20 trillion worth of spending programs (67% of GDP), and in 2024 the federal government collected less than $5 trillion in revenue, around a quarter of what’s required to fund our leftist utopia.

In part two, I will outline how a leftist government could fund such a program without destroying the economy. In the future, I hope these two articles showcase what’s possible if we dream big (and have a decent understanding of tax and production policy).