Why Sanders' Economic Plan Is Best For The 99 Percent

The Democratic presidential campaign – unlike the Republican circus – has actually produced a debate in which each candidate’s economic agenda has gotten better and more populist. But as you can see at CandidateScorecard.net, there are also big differences.

Both Hillary Clinton and Bernie Sanders agree that America’s long period of stagnant wages and growing inequality has been due to chronic slow growth and high unemployment. In Clinton’s words, “getting closer to full employment is crucial to raising wages.” Both are committed to some amount of increased public spending on infrastructure and investments in “green industries.” But the differences between the two candidates on public investment are a matter of scale.

Clinton wants $275 billion more in infrastructure investment over the next five years.

Sanders would increase the public investments in jobs-creating infrastructure by $1 trillion over the same five-year period – creating one million new jobs, while helping to retool the U.S. economy to reduce carbon emissions.

Limited Taxes, Limited Ambitions

One explanation for the size difference in their spending plans may be found in Sanders’ willingness to tax the wealthy and corporations. While Clinton has outlined some plans for higher capital gains taxes, she still has not rolled out detailed plans that would show us whether she would ask corporations pay a larger share of taxes to pay for growth-producing public investments – or whether her corporate tax plans would be “revenue-neutral.” Clinton’s reluctance to raise taxes on corporations limits her ambitions on public investment.

Clinton has also drawn a line that is limiting her ability to help create programs to support the incomes of middle-class and poor Americans. She has declared she will not raise taxes on anyone making under $250,000 per year. Other Democrats have locked themselves into similar pledges – notably Barack Obama in 2008 – but Hillary has now pivoted to attacks on Bernie that are more typical of Republicans than Democrats.

This is unfortunate. If Democrats of earlier eras had adopted the Clinton approach, there would be no Medicare or Social Security – and no publicly funded elementary schools or high schools.

Here’s how the debate has turned ugly: Clinton is attacking Sanders’ Medicare For All proposal because she says it will raise taxes on the middle class. What she doesn’t say is that the Sanders plan would allow Americans to stop paying health insurance premiums, that their deductibles and copayments would be dramatically reduced, and that insurance executives would no longer interfere with their care.

The Sanders Medicare For All proposal would save the average family more than $5,000 per year. It also would increase, not lower, incomes for 95 percent of Americans, according to Professor Gerald Friedman, professor of economics at the University of Massachusetts at Amherst.

Friedman writes that if Medicare for All was enacted, “we would, as a country, save nearly $5 trillion over ten years in reduced administrative waste, lower pharmaceutical and device prices, and by lowering the rate of medical inflation.”

Former Labor Secretary Robert Reich notes that:

Bernie’s proposals would cost less than what we’d spend without them. Most of the “cost” . . . would pay for opening Medicare to everyone. This would be cheaper than relying on our current system of for-profit private health insurers that charge you and me huge administrative costs, advertising, marketing, bloated executive salaries, and high pharmaceutical prices.

Paul Waldman recently wrote in The Washington Post, “Every single-payer system in the world, and there are many of them of varying flavors, is cheaper than the American health care system. Every single one. So … you can’t say (Sanders’ proposal) represents some kind of profligate, free-spending idea that would cost us all terrible amounts of money.”

Read Her Lips

But rather than argue the case on its merits, Clinton has chosen to use the anti-government framing of the right by pledging that she will never “raise taxes” on the middle class (a group which, by her definition, includes people making $250,000 per year.)

Social Security would never have been created if Democrats had taken this position in the 1930s, since it is funded by payroll taxes. But that funding is one of its sources of political and fiscal strength, since it is forbidden by law from contributing to the federal deficit.

And if Democrats had taken Clinton’s tax position in the 1960s, we wouldn’t have Medicare today, since that program is also partially funded through a payroll tax. Both Social Security and Medicare have provided enormous benefits and savings for the middle class. They provide better service than private corporations could provide, at a much lower cost. Medicare For All would do the same.

Sanders has proposed to increase Social Security benefits for all recipients, a move which would increase the income of a typical senior by roughly $1,300 per year. He would fund his proposal by having the wealthiest 1.5 percent of Americans pay into the program at the same rate as everyone else.

That happens to conform to Clinton’s pledge not to raise taxes for households with less than $250,000 in income. Nevertheless, she has refused to support the Sanders proposal and has not ruled out a Social Security benefit cut.

Then there’s college education. Sanders proposed to make public colleges and universities tuition-free, as many were in the past (and as they are in a number of other countries today). Vice President Joe Biden supports this concept. But Clinton opposes it, even though it would save middle-class families more than $9,400 on average for each child they send to public college.

Sanders would pay for his college tuition plan with a tax on Wall Street speculation, so there’s no middle-class tax involved. But Clinton has rejected it for a much more limited plan that would cost middle-class families much more. She says she is “not in favor of making college free for Donald Trump's kids.” But how likely are billionaires’ children to attend a public college? And you could use that logic to oppose free high schools or elementary schools, too.

In reality, it won’t be Donald Trump’s kids who lose out if Sanders’ plan is blocked. The sons and daughters of the middle class will pay the price instead.

The $6,000 Difference

What about the minimum wage? Bernie Sanders has called for a gradual increase to $15 per hour by 2020. For her part, Clinton has called for a $12-per-hour minimum wage. Under the Sanders plan, full-time minimum wage workers would receive an additional $6,240 more per year than under Clinton’s proposal.

Together these wage and jobs proposals would help the middle class by increasing demand for workers while at the same time raising the floor on their income. By contrast, Clinton has offered a weaker minimum wage proposal and has not proposed a major jobs plan.

The middle class bore the brunt of the 2008 financial crisis, which cost the U.S. economy at least $6 trillion. Sanders predicted that Wall Street deregulation could lead to a taxpayer bailout and a financial crisis, and he has a plan for preventing the next one – by reinstating the Glass-Steagall rule and breaking up commercial banks, investments banks, hedge funds and insurance companies which now threaten the global economy. Clinton opposes both measures.

Clinton’s use of anti-government, anti-tax rhetoric is counterproductive at best. It prevents her from supporting excellent proposals like New York Sen. Kirsten Gillibrand’s FAMILY Act, which Sanders supports. It would provide American families with at least three months of paid leave to care for a newborn baby or seriously ill or injured family members. This would particularly benefit working women, and it would only cost the average worker just $1.61 per week.

What’s more important – another Grover Norquist “no taxes” pledge, or a comprehensive plan for caregivers that costs less per week than a cup of coffee?

Framing like Clinton’s paints government as inherently bad, even when it can deliver urgently needed programs more fairly and cost-effectively than the private sector. It closes the door on important proposals like the FAMILY Act and Medicare For All, and it undermines successful programs like Social Security and Medicare.

Tinkering vs. Fundamental Change

Here’s the bottom line: The middle class is in crisis, and Clinton’s proposals merely tinker at the margins of that crisis. They would not shift the fundamental direction of an economy that is growing more unequal every day. Nor would they offer greater security for the millions of Americans who live in fear of the future and wonder how they’ll make it through today.

What’s more, Clinton’s agenda has been presented with a framing that threatens to undermine her own party’s greatest achievements and make future advances for the middle class more difficult to achieve. The leader of the Democratic Party should fight for better government, not reinforce the anti-government tropes of the right. That sort of talk may have had an audience in the 1990s, but it is politically unwise today.

Bernie Sanders offers the best economic plan for the middle class. And he has shown that he is willing to challenge the Republican Party’s rhetoric, rather than offer a pale reflection of it.