He may not be realistic, but he’s certainly bold.
Sen. Bernie Sanders launched his presidential campaign nine months ago with big ideas about empowering the little guy and ending “the collapse of the American middle class.” He had few detailed proposals, but as his message caught on and his campaign raised millions of dollars, he began to fill in the blanks. With the primaries underway, Sanders now has a thorough list of specific plans that would remake the whole U.S. economy were they to go into effect. Here are the biggest elements of his plan, along with cost estimates:
“Medicare for all,” or single-payer healthcare funded by the government. This would be a gargantuan change that would put health insurers (which employ more than half a million people) out of business, end employer-provider insurance and disrupt many other elements of the healthcare system. It would cost the government somewhere between $1.4 trillion and $2.8 trillion per year, according to the Center for a Responsible Federal Budget. The government spends about $4 trillion today, so Sanders’s plan would add sharply to that.
Sanders would pay for this new spending through a series of tax increases: on companies, workers, investors, heirs and the wealthy, with the idea being that most people would save more on healthcare costs than they’d pay in new taxes. Sanders says his tax hikes would be adequate to cover the costs, but CFRB estimates that the Sanders plan could come up short by as much as $1.4 trillion per year. That’s a ton of money and would be a tough hole to fill.
The “Rebuild America Act.” This would fund the sort of infrastructure development President Obama is a big fan of, even though he’s been unable to get such a bill through Congress. Sanders wants to spend about $100 billion per year constructing or shoring up roads, bridges, ports, runways and other types of facilities. To pay for it, he’d tax corporate money being held in offshore tax havens—which would require a new law forcing that money back home, plus aggressive enforcement.
College for all. This isn’t exactly “free” college, as some reports suggest. But Sanders wants to make tuition free at all public universities, leaving students to pay for room, board and other living expenses. Public schools would have to help students from low-income families meet 100% of their financial needs. (Wealthier kids could still pay exorbitant fees to attend private schools.) The cost to the government would be about $75 billion a year in additional grants and loans. He’d pay for this through a new tax on financial transactions, also known as a “Robin Hood tax” because, in theory, it would snatch money from the wealthy (who buy and sell securities) and divert it to the needy.
The Tax Policy Center estimates that a Robin Hood tax could raise up to $50 billion per year, so it might cover the majority of the cost of such a program. But it could also increase volatility in markets (something investors certainly don’t need right now), while depressing the value of assets and creating an incentive to find ways around the tax. And it would probably affect enough ordinary Americans—through pension and 401(k) plans—to garner significant opposition.
Massive tax hikes. Sanders would significantly raise the personal income-tax rates for households with more than $250,000 in income, with the top federal rate going as high as 58%. He’d cap deductions for the wealthy, raise the estate tax and kill the “carried interest” loophole that mostly benefits private-equity firms. Tax rates for lower earners would stay the same, but their taxes would still go up because of the 2.2% increase in payroll taxes employees would pay to cover the cost of “Medicare for all.” Overall, Sanders’ tax hikes would amount to around $1 trillion a year. “It is hard to grasp the enormity of the tax increases Bernie Sanders is proposing,” Howard Gleckman of the nonpartisan Tax Policy Institute wrote recently.
Sanders’ fresh-start approach, of course, is a big part of his appeal. But Hillary Clinton—and many others—contend that Sanders’s proposals are so radical they have zero chance of ever going into effect. Given that at least one house of Congress seems sure to be controlled by Republicans for the foreseeable future, a President Sanders would probably meet a brick wall at the other end of Pennsylvania Ave.
Clinton’s proposals, in contrast to Sanders’, are mostly incremental. She’d improve upon the Affordable Care Act, instead of scrapping it and starting over. Her tax plan includes targeted tax cuts for some ordinary families, along with modest tax increases on the wealthy, while leaving most of the current tax code in place. She’d make college more affordable by lowering the interest rate on student loans and limiting the maximum payback to 10% of income, a plan that would cost less than half of Sanders’ $75 billion-per-year proposal. Clinton’s Wall Street reforms mostly involve stronger enforcement of rules already on the books.
Clinton is undoubtedly right when she says she’s the more pragmatic candidate, with policy proposals designed to improve the system instead of blowing it up. The question is whether voters want that. Sanders’ surprising strength suggests a lot of people wouldn’t mind seeing the next president govern with dynamite, whether it’s practical or not.
Rick Newman’s latest book is Liberty for All: A Manifesto for Reclaiming Financial and Political Freedom. Follow him on Twitter: @rickjnewman.
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