Deficits may save cities from
democratic socialist pipedreams
By Sarah Downey | January 23, 2026
In New York City, the newly elected mayor, democratic socialist Zohran Mamdani, has pledged to make free or subsidize everything from rent to groceries, straining the city’s deficit to a projected $12 billion in 2027. Mamdani is right that the problem predates his election, but he’s wrong to push for a massive new tax on the wealthy. Cumulative tax hikes send businesses and residents to the exits, further eroding the tax base and leading to a bigger budget hole.
This dynamic is not unique to New York City. Progressive jurisdictions throughout the West have failed to address their biggest challenges, namely soaring housing costs caused largely by government-imposed building constraints. That has led to a push for even larger government “investments,” with Seattle even setting up a bureaucracy to build public housing, now dubbed “social housing.” California has failed to make a dent in its problems using the same old tools of rent control and subsidies.
The latest Census figures show new apartment construction down year-over year in Los Angeles, San Francisco, San Jose and Sacramento, and flat in San Diego, even as more taxpayer money gets funneled to “affordable” housing. USC’s Mott Smith, a director with the Council of Infill Builders, has said the added costs, fees and controversial ULA tax aren’t the means to boost apartment production.
The Mandami campaign pledged to freeze the rent on 1 million rent-stabilized apartments, but there’s no firm timetable. But look at the lesson in California, where Gov. Gavin Newsom signed a rent control law early in his first term with net negative results. Are there fewer people in California experiencing homelessness? Not according to state Senate numbers, which show a 23.6% increase, from 151,278 (2019) to 187,084 (2024), although the numbers have fallen somewhat lately.
What is the construction pace on multifamily buildings? Steadily up? No, flat or down since 2019. California’s Housing and Community Development Department (HCD) states on its website: “Not enough housing being built: During the last 10 years, housing production averaged fewer than 80,000 new homes each year, and ongoing production continues to fall far below the projected need of 180,000 additional homes annually.”
Newsom and the Legislature have to their credit passed several noteworthy housing reforms, which provide limited exemptions to the California Environmental Quality Act (CEQA). That’s a better approach, but these laws haven’t worked as intended mainly because of the new rules these laws impose. For instance, Newsom signed Senate Bill 79, which was hailed as a landmark law to jump-start housing construction by providing by-right approvals to apartments and condominiums around transit stops. But it wouldn’t have passed without an agreement to mandate union labor on these transit-oriented projects, which imposes new costs on builders.
SB 79 went into effect on January 1, but previous major housing reforms have been in place for years and have had disappointing results. Per the pro-housing group YIMBY (Yes In My Back Yard) Law’s recent study: “Our analysis of five recent housing production laws finds that their impact has been significantly reduced by local resistance, lack of state enforcement and unrealistic requirements.” The California Legislative Analyst’s Office (LAO) found in its November 5 report that median rent is now almost $3,000. From January 2020 to September 2025, the rental cost grew by 42%.
To address these persistent problems, democratic socialists are outflanking Democratic leaders on the left. They are pushing what they call the “decommodification” of the housing market. Here’s how it’s described in a quotation published by the Sonoma County Tenants Union: “Communities are built on land, and we — as human beings — get most of our food, fibers and materials from it…However, the very concept of land ownership is problematic … It suggests that the Earth is essentially up for sale.”
The Democratic Socialists of America “Housing Justice” model includes land redistribution and guaranteed housing for all. The LA Housing Movement Lab is also pitching a Roadmap to Decommodified Housing 2050. This could be dismissed as the usual far-left silliness, but the DSA could make serious gains on the Los Angeles City Council in 2026, when it hopes to capture two more seats(which would give them six of 15). DSA member Rae Huang is challenging Mayor Karen Bass with a new agenda that includes Decommodified Housing, plus free transit.
Huang is deputy director at Housing NOW! California, a co-sponsor of Senate Bill 555, which requires the California Department of Housing and Community Development to produce California’s first ever Social Housing Study. Per SB 555’s analysis: “Social housing is simply publicly-subsidized housing, but within a specific framework, most commonly used outside of the United States. All definitions of social housing distinguish it in various ways from privately-owned, for-profit housing provided through market mechanisms.” It’s just a study bill, but the underlying idea would be disastrous.
Los Angeles isn’t the only city where democratic socialists are gaining power. Seattle’s new mayor is Katie Wilson, who has, like Mamdani, pledged to end homeless-encampment removals. S&P Ratings show Seattle’s debt at $1.2 billion, which could help save Seattle voters from themselves as democratic socialist politicians run up against the inevitable financial limits of their proposals.
When cities raise taxes just to balance their budgets, they struggle to provide the normal services on which residents rely. Adding “free” programs adds to the problem, but these ideas are so misbegotten that it’s surely best that there won’t be enough money to fund them.
