America Cannot Afford Bernie Sanders
Unlike the other Democratic presidential candidates, Bernie Sanders describes himself as a Democratic Socialist. True to the word, he is campaigning on a radical, massive expansion of government, which includes, among other proposals, the creation of a single-payer healthcare system, free tuition at public universities, and an expansion of Social Security.
Because he comes off as a political outsider immune to the patently obvious corruption of Hillary Clinton, Sanders has gained significant support among the increasingly far-left element of the Democratic party, particularly among college students. At Cornell and in Ithaca he is likely the most popular candidate, as shown by the many likes on the Big Red for Bernie Facebook page and the fact that he has raised about three times as much money as any other candidate from Ithaca residents.
Although his redistributive and freebie-laden proposals sound appealing to many, the question remains whether they are actually viable, and perhaps most importantly, whether we as a country can afford them.
Last month, the Wall Street Journal published an article that estimates Sanders proposals will cost an additional $18 trillion over the next decade. The bulk of this new spending would come from his proposed single-payer healthcare system, with an estimated cost of $15 trillion based on a study conducted by economist Gerald Friedman of a 2013 congressional bill that would have created a similar single-payer system.
As much as the article was used to criticize Sanders, it was scorned by his ardent supporters. Friedman criticized the article and insisted that Sanders’s healthcare plan would “save nearly $5 trillion over ten years in reduced administrative waste, lower pharmaceutical and device prices, and by lowering the rate of medical inflation.” His argument is vague and misleading. He claims, for example, that the savings would be felt by businesses who would “no longer be paying for health insurance for their employees.” This is false, as businesses would have to pay higher payroll taxes in replacement of covering their employees through insurance companies. As the WSJ points out, Sanders has not proposed nearly sufficient tax increases to pay for his plans. His proposed tax hikes, which are plentiful as they stand now, amount to $6.5 trillion over a decade, which fails to cover even half the cost of his healthcare plan. Just as there is no such thing as free lunch, there is no such thing as free healthcare.
True to his credo of giving everyone what they want without regards for the confines of reality, Sanders has also proposed to make all public colleges and universities free for all. He argues that high tuition is the main obstacle preventing low-income families from sending their kids to college. However, this is not the case. An article in the Daily Beast points out that the cost of public colleges is not what prevents most poor kids from going to college. The most important factor is high school preparation, which is not addressed by this proposal. Most of Sanders’ proposed college subsidies would not benefit low-income families, as about $56 billion out of the proposed $70 billion in college subsidies would benefit families with above-average income. This proposal therefore flies in the face of Sanders’ goal of helping families in need by soaking the rich.
Yet, the Vermont Socialist doesn’t stop there. He insists that he will pay for free college with a financial transactions tax on Wall Street. Taxing Wall Street is clearly a popular way of raising revenue, as the public has largely negative opinions about big banks and other large financial players, but this tax would be largely ineffective. According to a report from The Institute for Economic Affairs, a financial transactions tax would produce no net revenue due to its negative impact on the economy at large. Unfortunately, the prospect of the endless flow of goodies and freebies from Sanders clouds voters’ minds from considering the unintended consequences of proposals such as this one.
It should be no surprise that Bernie Sanders’s popularity is rising. The Democratic frontrunner, Hillary Clinton is seen as a dishonest establishment politician. Sanders has come across to voters as an honest man challenging the political establishment. However, voters should choose a candidate by their actual policy positions, rather than empty rhetoric. Sanders has taken common soak-the-rich rhetoric to a new extreme. He has promised a massive expansion of government benefits paid for only by the richest Americans. In reality, this is impossible. If the top 1% were taxed at 100% (Sanders has suggested 90%) and the military budget was eliminated, Sanders’s proposal still could not be paid for. Even Sanders himself is starting to realize that he cannot only tax the rich to pay for his proposals. He recently admitted that his proposed payroll tax “would hit everyone”. It is not impossible to implement what Sanders has proposed, but it would be paid for primarily by the middle-class which Sanders believes he is representing.
What America needs is less government, not more government. No system has done a better job of increasing the standard of living and lifting people out of poverty than free-market capitalism has. Higher taxes, like Sanders has proposed, have always been correlated with less economic growth.
Sanders has good intentions. However, we must pursue policies based on their results, not their intentions. Policies like a $15 dollar minimum wage and a nationalized single-payer healthcare system may sound like they will help average Americans, but they are doomed to fail.
“One of the great mistakes is to judge policies and programs by their intentions rather than their results.” – Milton Friedman, Nobel Prize-winning economist
