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What Might Have Been

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eye on the news

What Might Have Been

With Bernie Sanders’s likely failure to win the Democratic nomination, it’s worth reflecting on the implausible costs of his proposals. March 11, 2020
Politics and law
Economy, finance, and budgets

If last week’s Super Tuesday primaries put the nail in the coffin of Bernie Sanders’s presidential candidacy, last night’s primaries in Michigan, Mississippi, Missouri, Idaho, North Dakota, and Washington may have sealed the lid shut. Barring some stupendous developments—which, in 2020, can’t be entirely ruled out—Sanders will fall short, and Joe Biden will be the Democratic nominee.

Before closing the book on the Sanders campaign, though, it’s worth reflecting on the bullet that we would all dodge with his defeat. A visit to Sanders’s website serves as a vivid reminder, not only of the candidate’s sweeping, budget-breaking proposals, but also of what some people will believe when properly motivated by the promise of giveaways. According to Sanders, a small tax levy here and a fairer burden there will finance, among other things: Medicare For All, free tuition at public universities and colleges, the cancellation of all college debt, higher minimums for Social Security recipients, free pre-K for the entire nation, and the elimination of homelessness through a massive housing-construction program. In addition, Sanders would also seek to implement the Green New Deal, with its own flows of spending. The overall expense, even by the candidate’s own reckoning, would double the federal government’s size and—far from what the candidate describes as “modest” revenue increases—demand a relative tax burden twice what Washington imposes today.

Sanders has tried to explain how he planned to finance these grand ideas. He would, he said, rely on a financial-transactions tax, a wealth tax, and a fossil-fuels tax, along with a corporate tax hike and higher payroll taxes for those above middle income. In addition, he’d make major defense cuts. Any objective analysis raises reasonable questions about whether these levies could have delivered the sums needed to finance Sanders’s program. In the end, his only solution was to tax severely.

The alleged arithmetic is all there on Sanders’s website, which is rather forthright, except for failing to tally the costs of raising Social Security minimums and eliminating all medical debt. Sanders’s building program to eliminate homelessness, for example, would cost $2.5 trillion over a decade. Universal pre-K would cost another $1.5 trillion, while the cancellation of student debt and enactment of free tuition at public universities would involve an additional $2.2 trillion. In short, these proposals would cost $6.2 trillion, or about $620 billion of additional spending each year.

Meantime, Medicare For All—at an approximate cost of $47.5 trillion over a decade—would cover both the huge expansion in enrollment and the additional coverage that Sanders promised for dental, vision, hearing, and long-term care at institutions and at home. This price tag represents more than double the nation’s annual GDP, but Sanders argues that Medicare For All would eliminate the need for other federal and state safety-net programs, including Medicaid. Sanders’s policy advisors estimate these savings at $30 trillion, leaving the net cost of Medicare For All at a still-overwhelming $17.5 trillion over 10 years, or $1.75 trillion annually.

And then there is the Green New Deal. Sanders’s website claims that these programs would, on net, cost $16.3 trillion over a decade. This seems low. After all, the deal calls for, among other things: renovating every structure in the nation for energy efficiency, modernizing the nation’s entire power grid, eliminating all greenhouse-gas emissions within ten years, and ending the need for fossil fuels by converting the whole nation to renewables during that same time period.

At least two elements in these claims strain credulity. For one, the website estimates that the deal’s projects would create 20 million new “good-paying unionized jobs.” The income taxes from all these workers would, the website suggests, replenish Washington’s coffers to the tune of $1.3 trillion and reduce the net cost accordingly. But it’s not apparent from where these taxpaying workers will come. At last count, the entire labor force of the U.S. totals 164 million people. Some 96.5 percent already have jobs, leaving only about 5.8 million available for work. Sanders’s deal, then, is some 14.2 million workers short of what is needed. Perhaps he should have included plans on how to increase the nation’s workforce by the almost 10 percent needed to cover this gap or, alternatively, explain why the work people are currently doing can safely be neglected.

On the cost side, the campaign’s estimates leave much to doubt. Consider Sanders’s plan to renovate every structure in the U.S. According to the last count, the United States has approximately 136 million housing units nationwide. At $12,000 a house—a lean figure, by the standards of most renovations—just the residential part of the renovation program would cost $1.6 trillion. That’s already more than one-tenth of the amount that Sanders allocates for everything in the deal—and it’s surely a low estimate. Then there’s the expense of renovating all the industrial and commercial structures, plus grid modernization and the plan’s other ambitious aspects. Even when naively accepting Sanders’s figure—allowing for outlays to spread out over ten years—this part of his program would add another $1.6 trillion a year, bringing the annual spending total to some $4 trillion—doubling the size of the federal budget and imposing a huge financing burden on the public.

Combined with what Washington already spends, Sanders’s programs would raise federal financing needs to some 40 percent of the economy’s entire $21 trillion in annual income generated from GDP. By his own reckoning, his program would leave Americans with enough to pay for groceries and new shoes for their children but perhaps not enough surplus to travel to the next Sanders rally—though there may not be many more of those.

Photo by Scott Olson/Getty Images

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