Remember when I wrote about a week ago that I was somewhat optimistic about entitlement reform?
Well, given what just happened in New Hampshire, I must have been smoking crack. It would now be more accurate to say something will happen with entitlements, but it will be deform rather than reform.
That’s because a Bernie Sanders nomination victory followed by a win in November might pave the way for a massive expansion of government. Much of this would be a result of a single-payer healthcare scheme (oh, and don’t forget that the Republican victor in New Hampshire also has endorsed government-run healthcare).
Now that we have to take Senator Sanders seriously, let’s investigate his agenda.
Holman Jenkins of the Wall Street Journal is not a fan of the Vermont Senator’s statism.
His socialism is farcical in a country that can’t afford the entitlements it already has. …Mr. Sanders, far from being a radical departure, is merely a perfection of what Democrats have offered since the Clinton era, namely denial. Ignore the problem. If forced to acknowledge it, insist there’s no problem because the rich will pay. In the meantime, savage every reform proposal as an attack on “unmet needs.” Collect the political rents from serving as defender of every spending interest in our overcommitted republic. …Bernie…, for all his exotic pretenses, is just another machine Democrat.
I think Holman nails it. Sanders’ socialism is just a gimmick. He just a standard-issue redistributionist, and he doesn’t even have any idea of how to finance those empty promises.
Like many other leftists, Sanders presumably knows that “taxing the rich” doesn’t work because they can alter their behavior.
As Europe demonstrates, the only way to finance large government is to have big tax burdens on ordinary people.
Yes, Sanders endorses a few tax hikes on the middle class, but mostly he relies on unicorns and fairy dust.
Consider, for instance, his very prominent proposal for a single-payer health system. Avik Roy of Forbes digs into the details.
In Sanders’ eight-page campaign white paper, entitled “Medicare for All,” the self-described “democratic socialist” outlines his plan’s core principles. The plan would effectively abolish the private health insurance industry… Berniecare would also abolish cost-sharing by patients; i.e., no co-pays, deductibles, or coinsurance payments, and minimal premiums. …Berniecare would also abolish cost-sharing by patients; i.e., no co-pays, deductibles, or coinsurance payments, and minimal premiums.
And what would all this cost?
Citing estimates prepared by Gerald Friedman, an economist retained by the Sanders campaign, Avik finds the numbers very unconvincing.
…even by Friedman’s own optimistic projections about what single-payer health care could save, Berniecare would increase federal spending by $28.3 trillion over ten years. If Friedman is wrong, and the plan fails to reduce the growth of health care spending, it would result in $32.7 trillion in new federal spending. The Congressional Budget Office projects that total federal spending from 2017 to 2026, under current law, will exceed $51 trillion. So, under Friedman’s rosy scenario, Sanders’ health care plan would increase federal spending by an astounding 55 percent. If the promised savings fail to materialize, it would increase federal spending by 64 percent—or more.
That’s a huge expansion in the burden of government, even by Washington standards.
But Avik may be an optimist.
Also writing for Forbes, Professor Chris Conover of Duke thinks the spending increase would be even larger.
…the actual cost of the Sanders health plan will be at least 40% more than he claims. In the worst case, it will be 49% higher….In short, the Sanders health plan would require a 71% increase in federal spending over the next decade. …everyone with even a passing knowledge of economics knows that if you lower the cost of something, demand for it will increase.
Based on a RAND Corporation study, he looks at behavioral responses.
So the empirical question is how much of an increase in demand to expect from this expansion in coverage. …The HIE demonstrated convincingly that among those with “free” health of the sort being proposed by Senator Sanders–i.e., zero copays or deductibles–health spending was 32% higher compared to those who had been randomly assigned to a cost-sharing plan having no deductible but required patients to pay 25% of every bill up to a maximum out-of-pocket limit of $1,000 (about $1,972 in 2016 dollars. …the RAND study showed the actual figure will be more than 10 times that amount. Correcting this error adds $12 trillion to the cost of the Sanders plan (whoops!).
In effect, Conover is generating more accurate numbers based on dynamic analysis (in the same way advocates of dynamic scoring try to fix mistakes in revenue estimates that assume no behavioral responses).
He includes a pie chart is his column so readers can get a sense of proportion.
By the way, guess what? All the new spending will mean lots of new taxes.
…the actual increase in federal taxes required by the Sanders plan is $28 trillion over 10 years, not the $13.8 trillion originally estimated by Prof. Friedman. When we further adjust this figure to more realistically account for higher demand due to moral hazard, the figure comes to $36.3 trillion
Yet if you look at all the new taxes proposed by Senator Sanders (including those designed to finance other expansions of government), the total is nowhere near $28 trillion or $36 trillion.
So when you look at this horrifying list, which the Washington Examiner estimates is a 47 percent increase in the tax burden, keep in mind that the actual increase would be larger and more pervasive.
And we shouldn’t forget that Senator Sanders wants lots of spending in other areas, not just government-run healthcare.
So everything you’ve already read is actually the best-case scenario.
P.S. These images (here, here, and here) tell you everything you need to know about socialism/statism vs markets/liberty.
[…] he was able to impose his policy agenda, I think Bernie Sanders – at best – would turn America into Greece. In more pessimistic moments, I fear he would turn the U.S. into […]
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Then again its almost humorous ohhh all those new taxes . Do you mean like the trillion and a half rich tax cut that you and i will pay for ? Or the tariffs ( lets call them what they are ) taxes on you and I the consumers . Certainly corprations that now pay less then they did in 1938 need mire breaks . That is taxes we get nothing for but still end up paying for you and I
I will take it you realize most of your followers wont even read the post just take the point your trying to desiminate which of course is not true . In your own sourcing before you started pulling numbers out of the air or elsewhere number your citing state that is the cost under existing law . So who is paying you insurance or pharma ?
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Economic policies promoted by liberals are bad for economic growth.
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[…] you follow the contest between Hillary Clinton and Bernie Sanders, most of the tax discussion is about who has the best plan to squeeze the rich with ever-higher tax […]
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We’re all pontificating on this issue to each other (and some of you are damned articulate at how you describe it). So what to do? The distrust has obviously been shown on both sides of the aisle. No one trusts the politicians and now no one trusts the bureaucrats (for good reason), nor the Fed (for very good reason). The potential is, angry people typically end up getting manipulated.
So, where to turn? It appears the best thing one person can do is VOTE. Don’t avoid the polls because you don’t like what you see. Choose the least offensive who represents the most conservative values, and convince your neighbor(s) to do the same. And become involved so we can eventually change the super delegate manipulation one day as well.
We need to re-engage as a people and find effective ways to better educate ourselves while weeding out political indoctrination from our schools (public and private). This is a generational thing. Please don’t say we don’t have time to right this ship. The answer is: We must have and we must do.
it’s interesting that Bern’s support springs from Obama’s failures… democrat blessed Obamanomics has created the current economic situation… and granny Clinton and the Bern are both claiming they are blessed with the progressive wisdom and hard core socialist values to fix the current problems… the solution as they see it… is of course more government… more government control… and more government spending… and dare I say it… the end free enterprise… none of this crap is new… but in this election cycle it is more obvious that it ever has been… we have a neo-communist being taken seriously as a presidential candidate from a major American party… that’s new… and just one more indication of how much trouble we are in… if the Bern were elected… how much different would his policies be from say Venezuela?
perhaps we should stock up on toilet paper…………………………….
There is no entity big enough to bail out the United States. Voter-lemmings will get to live in the result of their actions, faster than the Greeks.
The more the economy slides into a secular slow growth rate, the greater the voter malaise, the greater the perceived electoral need for empathetic politicians that will distribute free stuff. Sanderses will come and go but the voter-lemming will have irreversibly morphed into a supporter of pitchfork style democracy. The vicious cycle closes. It won’t be long before Americans start voting like the French. It won’t be long before Americans have French (or Swedish for that matter) levels of desire to outcompete their international peers. The effort-reward curve is flattening below the nearest competitor nations, so the era of permanent one percent growth trendline is now near. Once international competitiveness drops just a few points below the leaders, a vicious cycle sets in and prosperity capsizes.
Voting for a statist to address a crisis brought upon by coercive collectivism, was the decisive point of no return that American voter-lemmings crossed in 2008. It was the telltale sign of entrance into the vicious cycle. Now coercive collectivism is on autopilot to Argentinization.
Better accelerate building that salvage ark.
You can’t fix stupid, nor envy or greed. This is the cord that strikes the heart of Democrat voters. You might as well try reasoning with a junk ysrd dog.
How many liberals will argue that social security is a wonderful program despite the fact that your taxes yield less than 2% annually and the SCOTUS has declared three tmes that US citizens have no legal right to social security payments.
Might as well tell these people unicorns don’t exist, they know you are lying.
Any plan to “tax someone else” ignores the fact that the total tax burden will be integrated into the prices we all pay for goods and services.
[…] Source: Accelerating on the Path to Greece with Bernie Sanders […]
Mr. Mitchell, sorry I missed your reference to ‘unicorns and pixie dust’ as Sanders favored sources of funding his programs. I caught it only upon rereading your post. I was taken by the cleverness of my Tooth Fairy meme. I enjoy reading your work.
And yet the only thing Sanders tells his economically and math challenged supporters is that this can all be funded through taxes on Wall Street speculation. I do wonder if the target of his populist attacks and tax plans are on so-called corrupt capitalists, why can’t he throw in the Clinton Foundation for good measure?
It is as if his supporters through willful ignorance refuse to even countenance the fact that they are willingly signing themselves up (either now or in the future when his ruddy college kid supporters grow up) for eye-watering taxes. Thinking of all the 25 year olds living in their mom’s basement because their college loan is too large to justify the job that they received in today’s sclerotic economy and how they want to readily believe that the solution is as simple as loan forgiveness and free things going forward is a bit sad, but unfortunately all of the wrong conclusions are being drawn as to why we have anemic economic growth and what can fix it. These voters are wanting to promote the guardsmen at the gate to the highest watchtower, when he is the one that willingly let in the invaders that are now sacking the city. Thinking of the youth vote reminds me of the advice Pericles gave to Athenians in the funeral oration at the outset of the Peloponnesian War within the book by Thucydides that, “It is impossible for a man to put forward fair and honest views about our affairs if he has not, like everyone else, children whose lives may be at stake.”
Bernie Sanders’ understanding of how to finance the programs he promotes is akin to the level of understanding a 5-year old placing his ‘first’ tooth under the pillow. Both are possessed of fantastical reasoning. The 5-year old though has a greater, realistic expectation of funding from the Tooth Fairy than Bernie; yet, only faith in the Tooth Fairy will save Bernie.
it’s worse than anyone realizes… the Bern is a Stalinist… he has been since the 60’s… time on a communist oriented kibbutz in Israel… a lengthy honeymoon in the USSR… and now……. he is poised to bring it all home… to the USSA… over time he has adopted democrat methodologies… and covered himself with the democrat scent… but he is not anything like a traditional democrat… and he has some truly creepy ideas… which I am sure will become public over time… the reason for his success? a pathetically dysfunctional educational system… coupled with a mainstream press corps that kisses and licks progressive body parts as directed… young people supporting the Bern have no idea what socialism is… they truly do not understand the political and economic philosophies they are voting for… all they see is their kindly old grandfather handing out free stuff… that he has procured from the evil rich… income inequality… the 1%… WHATEVER! and they are entitled to a good life… aren’t they? courtesy of their government… and that kindly old elf……………………………………….. Bernie…
younger people are angry… they can see the American dream slipping away… and have no idea how to salvage it… they are saddled with student debt… are forced to live with their parents… and can’t find a job that pays a living wage… marriage and family are out of the question… so when they are offered the socialist ideal as an alternative to their life as it stands… they take a chance… and feel the Bern…….
rebelatheart
Under Bernie’s “free college” plan, the only courses not available will be real Economics courses. [Keynesian courses will of course be available.]
The logic of the Sanders proposal on healthcare is as follows:
– The new system will be better than the current system
– It will cover everyone not covered under the current system
– Costs will be reduced.
Huh?
Totally ignored in this analysis is the rise of fraud and abuse. It has been shown that when something comes from a third parry who pays for it, the consumer pays little attention to how much is billed. Providers use this fact to overbill at every opportunity. And nobody cares because it’s “free stuff” from the government. Somehow stealing from the government is not considered stealing- in fact you are considered stupid if you do not take advantage of it.
Also, the fraud runs rampant. Scammers have learned how to set up empty offices, and hollow recipients who they then charge fake invoices to the government. The only way we are allowed to find these people is through whistleblowers (if you don’t believe me go to the FBI’s website on fraud in healthcare). There is no government program set up that analyzes the data and searches for abusers- because the Graham/Leach/Blyley act prevents the government touching personal data that may belong to US citizens. A well intended act to protect our personal information (followed closely by HIPPA) the effect has instead been to protect those who desire to bilk the system and thus the taxpayer.
We just need more laws, right?
What if we got to the point where we had just the right amount of laws to work with (like the original Constitution for instance) and yet we still had an entire body of people whose job was to make laws? Oops- I think we passed that threshold a long time ago. Every law adds another burden to the innocent who don’t feel harmed if they are not crossing that barrier.
This is all good, but somewhat superfluous to the need. Your average readers all know its a very bad scenario. The thing is, Bernie is just the vessel through whom enormous voting energy is currently being thrust. Might it be best to spend time trying to understand more thoughtfully the “why” behind the patterns of the current American voter? On the surface, there is a lot of anger and distrust out there right now. But what is really behind it? I think you write about it often, in economic terms.
My head hurts. All Democrats should be required to take Economics 101.
Sorry….I meant to say Sanders vs. Trump (I can’t get Hillary out of my mind….as much as I’d like to).
Reblogged this on Give Me Liberty.