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February 11, 2016
New Revenues Will Pay for Sanders' Economic Plan, Economist Says
    by Robert Kropp

Gerald Friedman, staff economist for the Center for Popular Economics, analyzes the Sanders economic platform and concludes that new revenue streams make the ambitious plan feasible.


The votes from the New Hampshire primary are in, and Senator Bernie Sanders won handily. In the hours since then, machine politics and indeed the corporate media persist in diminishing Sanders's appeal through such descriptions of his candidacy as unrealistic and unelectable; yet the New Hampshire returns, while hardly representative on a national basis, emphatically reveal that large constituencies are supporting him, and often in overwhelming numbers.

Foremost among the targets of critics is the economic plan laid out by Sanders, which proposes to provide universal health care through a single-payer system, free public college tuition, and the strengthening of social programs that serve as a safety net for citizens in need. “Sanders’ proposals for infrastructure, early-childhood education, higher education, youth employment, family leave, private pensions, climate change, health care, and Social Security would total $14.5 trillion over 10 years,” a recent analysis reveals. “In addition to investments in infrastructure and education (birth through college), he would raise Social Security retirement and disability payments to lift all beneficiaries out of poverty, and he would create a national health insurance program to provide universal access to health care.”

The analysis was performed by Gerald Friedman, staff economist for the Center for Popular Economics (CPE), a Massachusetts-based collective of economists, which in 2012 published a booklet entitled
Economics for the 99%. "The 99% have a huge opportunity to demand changes directed instead at solving their problems and meeting their needs," CPE stated in 2012. "If we don't act now, with neoliberal capitalism discredited and change in the air, the 1% may impose on the rest of us something even worse than neoliberalism."

Assuming the time for action is now, how would a Sanders administration pay for such an ambitious plan? One revenue stream is a financial transactions tax, which, according to Friedman's analysis, could raise $3 trillion in revenues over ten years. In 2009, the Economic Policy Institute (EPI) concluded that a financial transactions tax of only 0.5% could fund the creation of 4.6 million jobs and support an expanded social safety net as well. Because it would primarily impact the wealthiest, the tax would be extremely progressive as well.

Additional significant revenue streams include a 4.75% payroll tax on employers; a progressive tax plan on the top 2%; a 1% wealth tax on net worth over $21 million; and expanding the Social Security tax to include dividend and capital gains income for high-income households. Overall, Friedman estimated that the revenue streams outlined by the Sanders plan will raise an additional $16 trillion over ten years, more than enough to offset the spending increases the plan proposes.

“Faster economic growth, low unemployment, an increase in the minimum wage and other regulatory changes would all raise wages,” Friedman wrote. “Rising employment, increases in the minimum wage, and enhancements to social security would lower the poverty rate to 6%, the lowest recorded rate in US history.”

While Friedman’s analysis was not commissioned by the Sanders campaign, it did receive strong support from the Senator’s policy director.

"We haven't had such an ambitious agenda to rebuild the middle class since Presidents Roosevelt, Truman and Johnson," Warren Gunnels
told CNN.

 

 
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