Sen. Bernard Sanders’ health and other spending plans would cost a whopping $33.3 trillion over the next decade, and his massive tax increases would still pay for less than half of it, leaving a gaping hole that would be a “substantial drag on the economy,” the nonpartisan Tax Policy Center said in a new report Monday.
The poor would end up far better off in the near term, netting an additional $10,000 in federal assistance a year — or more than twice their annual incomes. Most of that assistance would come in the form of health care benefits under Mr. Sanders’ “Medicare for All” universal health plan.
Wealthy Americans would foot the bill in the near term, with the top 5 percent paying an average of $111,000 more in taxes than they’ll get back in new benefits, the report said.
But Mr. Sanders’ tax increases would still raise only $15.3 trillion over the next decade — less than half the cost of his ambitious spending plans, which, in addition to his health plan, also include expanding Social Security benefits, paying public college costs for all Americans and imposing mandatory family leave policies.
The more than $18 trillion in cumulative new deficits, and $3 trillion in additional interest costs on that deficit, would send government debt soaring to more than double its current rate, crippling the economy.
“The dramatic increase in government borrowing would crowd out private investment, raise interest rates, further increase government borrowing costs, and retard economic growth,” the Tax Policy Center said. “In combination with the dramatically higher tax rates, which would reduce incentives to work, save, and invest, the negative macroeconomic effects of the plan could be severe.”
Ignoring the cost problem, Mr. Sanders would achieve his goal of a massive transfer of wealth from rich to poor, the analysts said. Indeed, almost everyone outside of the top 5 percent would get more back in new benefits than they would pay in higher taxes.
But the cost problem will be tough for Mr. Sanders to overcome.
Without even more tax increases, the debt level he’d leave would be unsustainable in the long run. But if he were to try to fully pay for his plans, he’d have to broaden the tax base because the wealthy would already be nearly taxed out, at between 60 and 70 percent of their incomes, the authors of the study said.
Instead, Mr. Sanders would have to broaden the tax base, raising rates on the poor and middle-class families he says he’s trying to help.
Their report was an update of a similarly grim analysis the institute did earlier this year, but which drew pushback from the Sanders campaign, which said it didn’t properly account for the benefits the poor and middle class would be collecting.
The Sanders campaign didn’t respond to a request for comment but has insisted the Tax Policy Center is overestimating the cost of Mr. Sanders’ plans by assuming the federal government would replace state spending, and ignoring potential savings if federal agencies are negotiating for better prescription drug prices.
Analysts, however, said they did calculate a 25 percent discount for drug prices, and said it’s unclear whether the federal government can force states to keep spending on health programs. And even if they could, it’s still just only about one-eighth of the $32 trillion in new health care costs under Mr. Sanders’ Medicare-for-all plan.
As part of the updated calculations, the Urban Institute studied the full effects of Mr. Sanders’ health plan to cover all U.S. residents — including illegal immigrants, though the Sanders campaign hasn’t specified whether they would benefit or not.
Universal coverage would spark people to use services at a higher rate, leading to an overall surge in health costs of more than 16 percent — and it could run much higher if doctors demand bigger reimbursements from the government than they currently get under Medicare, the analysts said.
On the campaign trail Mr. Sanders has insisted his plans will be a good deal for the poor, who will welcome paying higher taxes because of all the benefits they’ll get back.
He portrays his transfer as a matter of fairness, saying the wealthy must do more to help those on the lower rungs of economic advancement.
• Stephen Dinan can be reached at sdinan@washingtontimes.com.
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