By Paul Waldman
The Washington Post, Sept. 15, 2015
The big policy headline today comes from the Wall Street Journal, which delivers this alarming message: “Price Tag of Bernie Sandersâ Proposals: $18 Trillion.”
Holy cow! He must be advocating for some crazy stuff that will bankrupt America! But is that really an accurate picture of what Sanders is proposing? And is this the kind of number we should be frightened of?
The answer isnât quite so dramatic: while Sanders does want to spend significant amounts of money, almost all of it is on things weâre already paying for; he just wants to change how we pay for them. In some ways itâs by spreading out a cost currently borne by a limited number of people to all taxpayers. His plan for free public college would do this: right now, itâs paid for by students and their families, while under Sandersâ plan weâd all pay for it in the same way we all pay for parks or the military or food safety.
But the bulk of what Sanders wants to do is in the first category: to have us pay through taxes for things weâre already paying for in other ways. Depending on your perspective on government, you may think thatâs a bad idea. But we shouldnât treat his proposals as though theyâre going to cost us $18 trillion on top of what weâre already paying.
And thereâs another problem with that scary $18 trillion figure, which is what the Journal says is the 10-year cost of Sandersâ ideas: fully $15 trillion of it comes not from an analysis of anything Sanders has proposed, but from the fact that Sanders has said heâd like to see a single-payer health insurance system, and thereâs a single-payer plan in Congress that has been estimated to cost $15 trillion. Sanders hasnât actually released any health care plan, so we have no idea what his might cost.
But health care is nevertheless a good place to examine why these big numbers can be so misleading. At the moment, total health care spending in the United States runs over $3 trillion a year; according to the Centers for Medicare and Medicaid Services, over the next decade (from 2015-2024), America will spend a total of $42 trillion on health care. This is money that you and I and everyone else spends. We spend it in a variety of ways: through our health-insurance premiums, through the reduced salaries we get if our employers pick up part or all of the cost of those premiums, through our co-pays and deductibles, and through our taxes that fund Medicare, Medicaid, ACA subsidies, and the VA health care system. Weâre already paying about $10,000 a year per capita for health care.
So letâs say that Bernie Sanders became president and passed a single-payer health care system of some sort. And letâs say that it did indeed cost $15 trillion over 10 years. Would that be $15 trillion in new money weâd be spending? No, it would be money that weâre already spending on health care, but now it would go through government. If I told you I could cut your health insurance premiums by $1,000 and increase your taxes by $1,000, you wouldnât have lost $1,000. Youâd be in the same place you are now.
By the logic of the scary $18 trillion number, you could take a candidate who has proposed nothing on health care, and say, âSo-and-so proposes spending $42 trillion on health care!â It would be accurate, but not particularly informative.
Thereâs something else to keep in mind: 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 whatever you might say about Sandersâ advocacy for a single-payer system, you canât say it represents some kind of profligate, free-spending idea that would cost us all terrible amounts of money.
Since Sanders hasnât released a health care plan yet, we canât make any assessment of the true cost of his plan, because there is no plan. Maybe what he wants to do would cost more than $15 trillion, or maybe it would cost less. But given the experience of the rest of the world, thereâs a strong likelihood that over the long run, a single-payer plan would save America money. Again, you may think single-payer is a bad idea for any number of reasons, but âItâll be too expensive!â is probably the least valid objection you could make.
There are some proposals that involve spending new money that we never would have spent otherwise, like starting a war that ends up costing $2 trillion. But in every case, whether weâre doing something new or doing something weâre already doing but in a new way, the question isnât what the price tag is, the question is whether we think what weâd get for that money makes spending it worthwhile.
For instance, Sanders wants to spend $1 trillion over 10 years on infrastructure. Thatâs a lot of money, but itâs significantly less than experts say we need to repair all of our crumbling roads, bridges, water systems, and so on. And infrastructure spending creates immediate jobs and has economic benefits that persist over time, which weâd also have to take into account in deciding whether itâs a good idea. But just saying, â$1 trillion is a lot of money!â doesnât tell you whether or not we should do it.
The conservatives who are acting appalled at the number the Journal came up with are also the same people who never seem to care what a tax cut costs, because they think cutting taxes is a moral and practical good, in the same way that liberals think providing people with health coverage is a moral and practical good. For instance, Jeb Bush recently proposed a tax cut plan whose 10-year cost could be as high as $3.4 trillion. Thatâs a lot of money that the government wouldnât be able to spend on the things itâs doing right now, although the campaign argues that weâd get much of that money back in increased revenues because of the spectacular growth the tax cuts would create. If you remember the claims that George W. Bushâs tax cuts would create stunning growth and prosperity for all, you might be just a bit skeptical of the Jeb campaignâs similar assertions. But in any case, we canât evaluate the value of Jebâs plan just by saying that $3.4 trillion is a big number. If you knew that the average family in the middle of the income distribution would get less than $1,000 from Jebâs plan, while the average family in the top one percent would get a tax cut of over $80,000, then youâd have a better sense of whether itâs a good or bad idea.
As a general matter, when you see a headline with an unimaginably large number, chances are itâs going to confuse you more than it will enlighten you. The question when it comes to government should always be not what weâre spending, but what weâre getting for what we spend.
https://www.washingtonpost.com/blogs/plum-line/wp/2015/09/15/no-bernie-sanders-is-not-going-to-bankrupt-america-to-the-tune-of-18-trillion/