(Bloomberg) — Despite Sen. Bernie Sanders’s call for trillions of dollars of tax increases to pay for universal health care, universal long-term care, expanded Social Security, college tuition and other benefits, the cost of his programs would boost the federal deficit by $18 trillion over the next decade, according to a new policy study.
See also: How might ‘Berniecare’ work?
That 10-year increase to the deficit, which is roughly equivalent to a year’s output for the entire U.S. economy, could “retard economic growth,” according to two reports released in tandem by the Tax Policy Center, a research group in Washington. Negative effects on the U.S. economy “could be severe,” the study concluded.
Sanders has issued proposals to increase federal tax revenues by $15.3 trillion over the next decade, according to the study — tax measures that would fall on all income levels, but would hit the highest earners the hardest. But federal outlays for his spending proposals would rise to $33.3 trillion over that decade. Annual deficits of $1.8 trillion would raise interest payments on the national debt, squeeze out private investment and raise interest rates, according to the reports.
“It could be very damaging to the economy,” said John Holahan, a fellow at the Urban Institute’s Health Policy Center and the lead author of one of the two reports.
Warren Gunnels, the Sanders campaign’s policy director, said in an e-mailed statement that the study “wildly overestimates the cost of Senator Sanders’s health care plan.”
Gunnels said the authors assumed that state and local governments would push their healthcare spending onto the federal government — which he called “categorically false.” Sanders would require states and localities to maintain current levels of health care spending, he said. Also, he said, the report doesn’t address as much as $500 billion in annual savings that a doctors’ advocacy group says could be gained by reducing health care-related bureaucracy and lowering prescription drug prices.
The companion reports released Monday found that while Sanders’s tax increases would be felt throughout the income scale, the bottom 95 percent of households would receive more in benefits than they paid in new taxes. “Households in the top 5 percent would be worse off, with the average tax increase exceeding benefit gains by about $111,000, for a net loss of 17 percent of adjusted gross income,” one of the reports said.
Sanders, a Vermont senator who describes himself as a Democratic Socialist and is contending against front-runner Hillary Clinton for the Democratic presidential nomination, has proposed universal health care — under which private insurance would be replaced by government-funded health care. That proposal alone would cost $32 trillion through 2026 — more than twice the $15.3 trillion in revenue that Sanders’s tax plans would raise by then, according to the study.
Sanders’s campaign has said the universal health care plan would cost about $1.38 trillion a year — less than half the amount projected in the reports.
Under Sanders’s proposals — which would be sure to face opposition in a Republican-controlled Congress — all income groups would pay more tax, but most of the new revenue would come from high-income households.