I am finally starting to ask the questions, as friends and colleagues start taking positions and debate the substance of Clinton versus Sanders. His website with economic positions is here. I have quoted for most, and added a little bit of commentary.
- Greatly expand Medicare system, basically creating a single-payer system for health care. Sure, uh, I guess. This seems to ignore all the entrenched interests (just think about all the doctors and nurses in the United States who would oppose this) and institutional legacies that make this really really hard to implement.
- “As president, Sen. Sanders will stop corporations from shifting their profits and jobs overseas to avoid paying U.S. income taxes.” No specific policy proposal.
- “He will create a progressive estate tax on the top 0.3 percent of Americans who inherit more than $3.5 million.” Currently the cut-off is $5.4 million. So this affects estates between 3.5 and 5.4. Let’s say that there are 10,000 estates a year with average value of $4 million, and the eventual rate is 25% on this wealth (the rate for above $5 million is 40%). So the tax revenue (assuming no tax avoidance!) would be about $10 billion. OK, sounds like a good change. In fact, surprisingly modest for a revolution!
- “He will also enact a tax on Wall Street speculators who caused millions of Americans to lose their jobs, homes, and life savings.” No specifics. Will he differentiate speculators from investors?
- “Increasing the federal minimum wage from $7.25 to $15 an hour by 2020.” This may not be such a great policy for those midwestern towns that are losing their manufacturing plants. But super good for the Bay Area.
- “investing $1 trillion over five years towards rebuilding our crumbling roads, bridges, railways, airports, public transit systems, ports, dams, wastewater plants, and other infrastructure needs.”… but… “This report provides information on spending by federal, state, and local governments for transportation and water infrastructure, which totaled $416 billion in 2014.” So Sanders is proposing an additional $200 billion at the Federal level? I got no problem with that. Seems like a good time to do pretty substantial infrastructure investment.
- “Reversing trade policies like NAFTA, CAFTA, and PNTR with China that have driven down wages and caused the loss of millions of jobs. If corporate America wants us to buy their products they need to manufacture those products in this country, not in China or other low-wage countries.” This, to me, is just plain silly as a policy statement. Does Sanders really think that Toyota should not be allowed to sell Prius’s in the United States? Should all assembly plants in Mexico be closed? Is Sanders really making a distinction between “corporate America” and “corporations from other countries”? Only American corporations *need* to manufacture in the United States, under the policy? What about the Littlefoot movie franchise films? Are they not going to be able to hire Korean animators anymore? I guess tattoo artists will be happy… but wait, are Dia de los muertos tattoos drawn in Mexico permitted to cross the border?
- “Creating 1 million jobs for disadvantaged young Americans by investing $5.5 billion in a youth jobs program.” $5,000 per job seems really low. I assume the labor economists would snort at this proposal. Americorps I think costs about $25,000 per job, maybe more.
- “Fighting for pay equity by signing the Paycheck Fairness Act into law.” Devil here in the details. Compensation in a market economy is tremendously resistant to simplistic solutions. Just think, for example, about that older worker who has been with a company 30 years. Thirty years means his or her salary might be a lot higher than someone who is doing the same work who just got hired 1 year ago. Should there be equal pay, mandated, in order not to have age discrimination? Turns out the Paycheck Fairness Act is actually a very modest act submitted by Michulski that calls for enhanced enforcement provisions against gender discrimination, training, and research. It does not provide a kind of “equal pay for equal work” mandate. All clear, folks, nothing to worry about.
- “Making tuition free at public colleges and universities throughout America.” Lots of debate amongst economists on the value of this.
- “Expanding Social Security by lifting the cap on taxable income above $250,000.” So I guess he means raising the social security tax. No problems there.
- “Requiring employers to provide at least 12 weeks of paid family and medical leave; two weeks of paid vacation; and 7 days of paid sick days.” Fine with that.
- “Enacting a universal childcare and prekindergarten program.” Why not greatly expanding offerings for low income households, and not worry about making it universal?
- “Making it easier for workers to join unions by fighting for the Employee Free Choice Act.” Probably pretty minimal impact. Unions have been on steady decline because the nature of work has changed a lot. Will not be reversed.
- “Breaking up huge financial institutions so that they are no longer too big to fail.” No details on exactly what he means. Here is Sanders’ office own press release on his bill, again no details. See some commentary here.
So after looking through the Sanders revolution in terms of economic policy, it seems like pretty standard Democratic Party fare. Meaning it is just ARRA of 2009 all over again, and the only way to get some of these provisions through Congress would be compromise with Republicans. I am a little surprised at how unambitious the plan actually seems to be. No expansion of negative income tax (earned income tax credit). No carbon tax. No consumption tax. No minimum guaranteed income. No ending of agricultural subsidies.