Democratic presidential candidates’ spending programs such as Medicare for All and free college tuition would cost, on average, $40 trillion over 10 years, but their “tax the rich” plans will only raise about $4 trillion, according to a new study.
The list of new spending ideas put forth by the top Democratic presidential seekers runs the gamut from the Green New Deal and more generous Social Security benefits to universal child-care and student debt cancellation.
Total cost estimates for the list from each candidate average $40 trillion, according to Manhattan Institute senior fellow Brian Reidl, with Sen. Bernie Sanders (I-Vt) showing the highest, at $97 trillion.
“To put these figures in context, the entire Gross Domestic Product over the next decade is projected by the Congressional Budget Office to be $262 trillion, and current federal spending is projected at $60 trillion,” Reidl said in the study published Oct. 17.
Reidl pointed to statements among the candidates claiming their proposals can be funded simply by raising federal taxes on the wealthiest taxpayers, while holding taxes on middle-income families at current rates.
As an example, Reidl cited Sanders as saying, “I believe that we should be asking the very wealthiest people in this country to start paying their fair share of taxes. That way, we will not only lower the deficit, but we will bring in enough revenue to invest in our economy and create the millions of new jobs we desperately need.”
And Sen. Kamala Harris (D-Calif.) has said, “My vision for Medicare for All does not include a middle-class tax hike. I’m not prepared to do that.”
The issue of how to fund new spending proposals was on center stage during the Oct. 15 Democratic presidential debate.
When Sen. Elizabeth Warren (D-Mass.) was asked for a yes-or-no answer on whether her Medicare for All plan would require higher middle-class taxes, she said, “I will not sign a bill into law that does not lower costs for middle-class families.”
Warren’s evasive response drew a sharp rebuke from South Bend, Indiana, Mayor Pete Buttigieg, who said: “Well, we heard it tonight—a yes-or-no question that didn’t get a yes-or-no answer. This is why people here in the Midwest are so frustrated with Washington in general and Capitol Hill in particular.
“No plan has been laid out to explain how a multitrillion-dollar hole in this Medicare for All plan that Sen. Warren is putting forward is supposed to get filled in.”
Looking directly at Warren, Buttigieg declared, “Your signature, senator, is to have a plan for everything, except this.”
Reidl also found that
- Government taking 100 percent of all income earned above a $1 million threshold would generate no more than $8.9 trillion in new revenues.
- Paying for $40 trillion in new spending would require raising the payroll tax by 38 percentage points or imposing an 88 percent national sales tax, even after imposing massive spending cuts on the Department of Defense.
- To make up the difference between total added spending and revenues generated by higher taxes on the wealthy, the federal government would have to double or triple the median household tax of $5,000.
- Even if these new programs were successfully financed, the federal budget’s annual baseline deficit over the next decade under current policies would still exceed $15.5 trillion.
Growing entitlement spending is the basic problem facing government officials and taxpayers, according to Reidl.
“The federal government is on an unsustainable fiscal path toward consistent $1 trillion budget deficits,” he said in the study, but “annual Social Security and Medicare shortfalls will rise from $440 billion to $1,656 trillion over the next decade, pushing annual budget deficits above $2 trillion under current policies.”
Without major benefit cuts for the 74 million retiring Baby Boomers beginning to enter the Social Security and Medicare programs, taxes on current workers will have to be raised, he said.
Contact Mark Tapscott at firstname.lastname@example.org