WHILE CONTINUING his decreasingly plausible campaign for the Democratic presidential nomination, Sen. Bernie Sanders (I-Vt.) is keeping up the ideological pressure, hoping to tilt the party platform leftward, in the direction of his sweeping campaign promises on taxes, health care, Social Security and college tuition. That’s an internal matter for Democrats, to be sure, but also of interest to anyone who believes that political parties should offer realistic solutions.
In that sense, the prospect of a Sanders-ized platform is cause for concern. Mr. Sanders’s offerings to the American people are, quite simply, too good to be true, and much less feasible, politically or administratively, than he lets on. More expensive, as well.
The latest confirmation that Mr. Sanders’s plans don’t add up, fiscally, comes from a pair of reports by the nonpartisan Urban Institute and the Tax Policy Center, which is a project of the Urban Institute and the Brookings Institution. Analysts modeled the combined impact of Mr. Sanders’s proposals for a single-payer health plan, long-term care, free state university tuition, paid family and medical leave, plus increased Social Security benefits — and the tax increases he has proposed to pay for them. The good news is that the Sanders plan would redistribute resources quite progressively. The lowest-earning 20 percent of the U.S. population would gain net transfers equivalent to almost three times their current adjusted gross incomes. The net losers would be the top 5 percent — with AGIs averaging $656,241 — who would see an average loss of $110,994.
Alas, the bad news is bad indeed. Despite the substantial tax increases associated with Mr. Sanders’s policies, they would not be fully paid for — not even close. To the contrary, the tax hikes would be sufficient to cover just 46 percent of the spending increases, resulting in additional budget deficits of $18 trillion over 10 years. A deficit increase of that magnitude would cause an additional $3 trillion in interest payments over the same period — unless, of course, Mr. Sanders has another $18 trillion in tax increases or spending cuts up his sleeve.
Why is that so troubling? Because, as the Tax Policy Center puts it, such a huge increase in government borrowing could “crowd out private investment . . . and retard economic growth.” And without robust growth, the economy cannot generate the additional resources necessary to pay down the debt long term. Indeed, because of its impact on incentives to work, save and invest, the “negative macroeconomic effects of the plan could be severe,” the Tax Policy Center notes, though its report did not attempt to quantify those repercussions. In other words, as grim as these estimates are of the Sanders plan’s impact on the solvency of the U.S. government, its real-world effect could be even worse.