Tag Archives: Deficit

Elizabeth Warren’s health care plan: how much will it cost, how much will your taxes rise?

Elizabeth Warren seems to be the likely Democrat nominee, so it it makes sense for us to take a look at her policy proposals and count the cost. Her signature proposal is a plan to outlaw private health insurance and move everyone to government-run health care, paid for though mandatory taxation. How much will that cost, and how much will the taxes on the middle class go up in order to pay for it?

Before we go too far with that, take a look at the budget numbers. I got these from the web site of the Democrats in the House of Representatives:

The 2019 federal budget, according to House Democrats
The 2019 federal budget, according to House Democrats

According to the House Democrats budget web site, the 2019 federal budget has $3.451 trillion in revenue, $4.411 trillion in spending, for an annual deficit of $-960 billion. And keep in mind that we are $23 trillion in debt already. This would be like saying that your annual income is $34, 510. You’re spending $44, 110 per year. You are adding $9,600 to your debt every year. And you are already $230,000 in debt (and paying interest on that).

In other words, America is in no position to be spending more money. We’re already in debt, and adding to the debt each year. So how much more money would you have to spend for Elizabeth Warren’s health care plan?

For months, Sen. Elizabeth Warren (D—Mass.) has hedged on the question of whether she would raise middle class taxes to pay for Medicare for All, the single-payer health care plan she says she supports. Warren has stuck with a talking point about total costs, saying that the middle class would pay less, while critics, political rivals, and even liberal economists friendly to single payer have argued that the enormous additional government spending required by such a plan would inevitably hit the middle class.

Today, Warren released a plan to finance Medicare for All at a total price tag of nearly $52 trillion, including about $20 trillion of new government spending (an estimate that is probably low). Although her plan declares that no middle-class taxes will be necessary to finance the system, it includes what is effectively a new tax on employers that would undoubtedly hit middle-class Americans.

So , Warren admits that the total cost of her plan is $52 trillion over 10 years. Warren needs to come up with $5.2 trillion per year to pay for her plan. Is there that much money available by taxing only the wealthy?

The wealthiest Americans don’t have enough money to cover even $2 trillion in additional spending – assuming they continue to work in America as much as they did before the government took MOST of their earnings:

CRFB reinforced their prior work indicating that taxes on “the rich” could at best fund about one-third of the cost of single payer. Their proposals include $2 trillion in revenue from raising tax rates on the affluent, another $2 trillion from phasing out tax incentives for the wealthy, another $2 trillion from doubling corporate income taxes, $3 trillion from wealth taxes, and $1 trillion from taxes on financial transactions and institutions.

Several of the proposals CRFB analyzed would raise tax rates on the wealthiest households above 60 percent. At these rates, economists suggest that individuals would reduce their income and cut back on work, because they do not see the point in generating additional income if government will take 70 (or 80, or 90) cents on every additional dollar earned. While taxing “the rich” might sound publicly appealing, at a certain point it becomes a self-defeating proposition—and several proposals CRFB vetted would meet, or exceed, that point.

So, Warren is going to have to lean on the middle class for the remaining $3.2 trillion, even if the rich hold still while the government takes 70-90 percent of what they earn. (Unlikely)

Warren likes to tell everyone that her plan will make costs go down. I guess she thinks that government oversight of health care will be more efficient than private sector oversight of health care. Maybe she believes that people in government are more careful about spending taxpayer money than people in private businesses are about spending their own money? In any case, studies from centrist and center-left think tanks disagree with Warren:

Warren and her defenders will likely try to shift the discussion back to total costs, but that’s just a way of repeating the dodge that has dogged her campaign for much of the year. Warren will no doubt claim that costs would go down under her plan, but there are reasons to doubt this, including an analysis from health care economist Kenneth Thorpe finding that under a Sanders-style plan, more than 70 percent of people who currently have private insurance would see costs increase, as well as an Urban Institute analysis projecting that single-payer plans would raise national health care spending by $7 trillion over a decade.

All we have right now to weight against these studies is Warren’s own words, as a candidate wanting to win a popularity contest.

Warren herself says that there would be enormous job losses in the health care industry:

Democratic Massachusetts Sen. Elizabeth Warren admitted Wednesday that Medicare for All could result in two million lost jobs.

In an interview with New Hampshire Public Radio, the Democratic presidential contender said she concurs with a study from the University of Massachusetts-Amherst that said socialized medicine would probably have a devastating impact on the those working in the current private health care industry.

This would create similar health care shortages and waiting lists (with people dying on waiting lists) that we see in single-payer systems such as Canada and the Veteran’s Affairs health care system. Except far worse.

And keep in mind that the middle class pays for health care in Canada:

Socialized medicine in Canada anything but free. The [Fraser Institute] think-tank reported that the average Canadian family spends over $12,000 in taxes on government-funded health care.

That is how single-actually works. We need to look at how single-payer health care works in reality, and not form our opinions of it based on a candidate’s WORDS during an ELECTION CAMPAIGN. Let’s look at evidence, and not just vote for things that sound good and make us feel good and make our friends like us.

Elizabeth Warren and AOC agree: give convicts and illegal immigrants welfare, enact rent control

Elizabeth Warren is telling people that we have 11 years to live
Elizabeth Warren has a much better way to spend the money you earn

This week, Warren and AOC announced their support for giving taxes paid by U.S. citizens, permanent residents and people here legally on work permits to illegal immigrants. Watch the video below, and read the story, and ask yourself whether you think it is your job to pay for welfare for people who wouldn’t even go through the process of coming into this country legally.

Here’s a short video clip from Fox News:

The Washington Free Beacon reports:

Democratic presidential candidate Elizabeth Warren endorsed a Rep. Alexandria Ocasio-Cortez (D., N.Y.) policy proposal that includes taxpayer-funded welfare benefits for illegal immigrants.

Ocasio-Cortez’s proposal, dubbed “A Just Society,” calls for nationwide rent control and bans the federal government from denying welfare benefits based on an individual’s immigration status and previous criminal convictions. Warren became the first Democratic presidential candidate to endorse the plan, calling it “just the type of bold, comprehensive thinking we’ll need” to make “big, structural change.”

[…]Ocasio-Cortez’s proposal, consisting of six separate bills, calls for the expansion of welfare. Bills three and four make it illegal for the federal government to deny welfare benefits to ex-convicts and illegal immigrants.

[…]The last bill in Ocasio-Cortez’s proposal establishes health care, housing, and healthy food as government-provided rights.

[…]The legislation does not address how to pay for the rising cost of welfare, nor does it explain how it would accomplish its goals.

Remember, AOC and Warren already have the Green New Deal on the table, and the cost for that is $94.4 trillion over 10 years. So where will they get the money for this new plan? Would they do it with their own money? No, they want to do it with your money. They want to do it with your employer’s money. They want to do it with the money earned by the companies in your 401K plan. 

By the way, regarding the rent control. If there is one thing that you learn in Economics 101, it’s that rent control policies do more harm than good. It causes a shortage of living space for the poor, because the people who rent out living space cannot make enough money as they can in other investments. So, they stop investing in rental properties.

The Free Beacon article notes:

Ocasio-Cortez’s second bill, titled “The Place to Prosper Act,” calls for federal rent control by imposing a 3 percent national cap on annual rent increases. Similar legislation has failed at the local level amid concerns that such policies increased housing prices while limiting supply. A recent study by the American Economic Association found that San Francisco rent control policy “drove up market rents in the long run, ultimately undermining the goals of the law.” The Council of Economic Advisers found that in 11 metropolitan areas with housing regulations, deregulation would reduce homelessness by an average of 31 percent. More than 80 percent of economists surveyed by the University of Chicago in 2012 found rent control to be bad policy.

This is not controversial. Harvard University economist Greg Mankiw is the author of a very widely used economics textbook. In his textbook, he has a section where he reports on what economists (academic and professional) agree on, across the ideological spectrum. The number one item on the list, with the highest level of agreement, is that rent control does not work.

He writes:

My textbook covers business cycle theory toward the end of the book (the last four chapters) precisely because that theory is controversial. I believe it is better to introduce students to economics with topics about which there is more of a professional consensus. In chapter two of the book, I include a table of propositions to which most economists subscribe, based on various polls of the profession. Here is the list, together with the percentage of economists who agree:

  1. A ceiling on rents reduces the quantity and quality of housing available. (93%)

You can read the rest of the list on his blog, but AOC and her ally Elizabeth Warren probably disagree with all of them. And that’s who the American left are looking to for leadership. People with no knowledge. People with no achievements. People who have never solved economic problems in the private sector in their entire lives. Warren and AOC have no demonstrated achievements in the area of economic policy. There are just speaking words that make them feel good, and get applause. They don’t know what happens next, if they ever get their ideas put into law.

If you’re not already paying off your debts and saving money, you’d better start. Because when these Democrat demagogues get power, you are going to feel the effects of their economic illiteracy where you live and where you work. Remember Obamacare? We lost our doctors, we lost our health plans, and the costs of our health insurance went up. If you elect an imbecile to make policy decisions, you will be made to feel the effects of your choices.

What will the Republican and Democrat plans for the economy mean for you?

Pretty soon, our mandatory expenses will consume all of our tax revenues
Pretty soon, our mandatory expenses will consume all of our tax revenues

I found two very good articles about the Republican and Democrat plans for taxing and spending. On the one hand, there’s an article about the effects of the Trump tax cuts, posted at the Washington Times. On the other hand, there’s an article posted at the radically leftist Vox, about the cost of Democrat party spending plans. I wonder which one is better for you and your family?

First, let’s look at the effects of the Trump tax cuts:

Almost immediately, numerous employers — including Boeing, AT&T, FedEx, CVS, and others — began offering bonuses to their employees. Nearly 200 companies, including Walmart, announced wage hikes due to the 2017 tax cut. Still others enjoyed higher contributions to their retirement plans.

The benefits soon went beyond that, however. The tax cut contributed to the strong economy we’ve been enjoying, leading many businesses to hire more and more workers. The United States added more than 2.6 million new jobs in the year following the passage of the tax cut — nearly a 25 percent increase from the previous year.

Unemployment is way down, with jobless claims at their lowest since 1969, thanks in large part to the tax cut.

[…]The Heritage Foundation used IRS data to produce a special report last year that shows how widespread the tax benefits truly are.

They found that in 2018 taxpayers would save an average of $1,400. Even better, married couples with two children would save more than twice that: $2,917.

So, that sounds pretty good if you’re a taxpayer. You got to keep more of the money you earned, and spend it on the things you wanted for yourself and your loved ones. If that money had gone to government, then government employees would have taken half for their own salaries and benefits, and then the rest might have been spent in a wasteful way by someone who never earned it.

By the way, you might think that taking less money from the people who earn it would cause tax revenues to go down. But that’s not the case. Whenever you allow job creators and workers to keep more of what they earn, they work harder and take more risks developing better products and services. This naturally results in more revenue to the government from increased economic activity. In Feburary of 2018, after the tax cuts were in effect a whole year, federal revenues were $1.4 billion HIGHER than the previous year.

But let’s see what the Democrats can do for the taxpayer, by looking at this article in the far-left Vox.

It says:

Sanders has proposed a Social Security expansion, including higher cost-of-living adjustments and higher minimum benefit levels, that the liberal Tax Policy Center estimates will cost $188 billion over the next decade.

The Tax Policy Center also scores the Sanders “free college” proposal at $807 billion over the next decade. (Note that free college benefits students from wealthy families and those whose tuition is currently affordable.)

Next, the center estimates that Sanders’s proposal of up to 12 weeks of paid family leave for new parents and for people with serious health conditions would cost another $270 billion.

Those costs, however, pale beside the cost of replacing private insurance, including copayments, with a Medicare-for-all plan. The liberal Urban Institute estimates that Sanders’s single-payer health plan would add $32 trillion in federal costs over the decade.

[…]Ocasio-Cortez and Senate Democrats also want to guarantee a job for anyone who wants one, at $15 per hour plus benefits. The liberal Center on Budget and Policy Priorities, commissioned a report by outside scholars Darrick Hamilton, William Darity, and Mark Paul that estimates the cost of a more modest proposal along these lines (with a lower wage, for example). It suggested the cost would be $56,000 apiece for 9.7 million enrollees, for a total of $6.8 trillion over the next decade.

[…]Finally, Senate Democrats have promised $1 trillion for new infrastructure, and House Democrats are rallying around legislation to pay off all $1.4 trillion in student loan debt — both of which the far left generally supports. I will exclude vague promises such as universal pre-K and expanded special education funding.

Total cost: $42.5 trillion in new proposals over the next decade, on top of the $12.4 trillion baseline deficit.

OK, that does sound like a lot of money, but the rich are just sitting on trillions and trillions of dollars that they aren’t even using, right? So the total cost of all this spending is only $42.5 trillion of new spending and $12.4 trillion of existing spending, for  a total of about $55 trillion dollars over the next 10 years. I’m sure that if we just raised taxes by 5% on the rich, we could easily raise 10 times that amount, right?

Not quite.

In 2011, the Tax Foundation explained that even if you taxed ALL THE INCOME from all the people who make $200,000 or more, you would only raise $1.53 trillion dollars:

So taking half of the yearly income from every person making between one and ten million dollars would only decrease the nation’s debt by 1%. Even taking every last penny from every individual making more than $10 million per year would only reduce the nation’s deficit by 12 percent and the debt by 2 percent. There’s simply not enough wealth in the community of the rich to erase this country’s problems by waving some magic tax wand.

Finally, to put everything in perspective, think about what would need to be done to erase the federal deficit this year: After everyone making more than $200,000/year has paid taxes, the IRS would need to take every single penny of disposable income they have left. Such an act would raise approximately $1.53 trillion. It may be economically ruinous, but at least this proposal would actually solve the problem.

Now, if I were a rich person making over $200,000 a year, and someone came along and told me they would take all of it, I would not continue to work. And I doubt they would either. But taking all this money from “the rich” would just barely cover the BASELINE deficit of $12.4 trillion over the next 10 years. It would not cover the new $42.5 trillion of Democrat spending plans.

Think about that. What that means is that can’t pay for their spending even if they take every penny from “the rich”. Do you know what that means? It means they’re going to have to take money from YOU, the ordinary middle class American taxpayer. Something to keep in mind.

New study: “Medicare For All” would cost $32.6 trillion, but it’s actually more

A Christian friend of mine who is divorced with children surprised me by telling me that she favored single payer health-care. I asked her if she realized that people would have to be taxed to pay for all this free health care, and she seemed to be aware of it. But even I didn’t realize how much it would really cost.

Investor’s Business Daily reports on a couple of recent studies – one from the left, and one from the far-left – that both agreed on the price tag for universal health care.

Excerpt:

Last year, 16 Senators, including three presidential hopefuls, co-sponsored Sanders’ “Medicare for all” bill. And earlier this month, more than 70 Democrats signed on to form a “Medicare for all” caucus. Support for the bill is now something of a litmus test for Democratic hopefuls.

Do they have any idea what they’re endorsing?

A new study out Monday from George Mason University’s Mercatus Center finds that Sanders plan would add to federal spending in its first 10 years, with costs steadily rising from there. That closely matches other studies — including one by the liberal Urban Institute — that looked at Sanders’ plan.

To put this in perspective, “Medicare for all” would the size of the already bloated federal government. Doubling corporate and individual income taxes wouldn’t cover the costs.

Even this is wildly optimistic. To get to this number, author Charles Blahous had to make several completely unrealistic assumptions about savings under Sanders’ hugely disruptive plan.

The first is a massive cut in payments to providers. Sanders wants to apply Medicare’s below-market rates across the board, which would amount to a roughly 40% cut in payments to doctors and hospitals. Blahous figures this will save hundreds of billions of dollars a year.

But cuts of that magnitude would drive doctors out of medicine and hospitals out of business, since the only way providers can afford Medicare’s cut-rate reimbursements today is by charging private payers more.

The study also assumes that shoving everyone into a government health care plan would cut administrative costs by $1.6 trillion over the next decade and prescription drug costs by $846 billion. Neither of those are likely, and wouldn’t make much of a difference in overall spending anyway. Private insurance overhead accounts for about 6% of national health spending, and drugs less than 10%.

There’s also the fact that every other federal health program has seen costs explode “unexpectedly” after they were enacted. The per-enrollee cost of ObamaCare’s Medicaid expansion, for example, is almost 49% higher than expected. Medicare itself cost nearly 10 times as much as projected in its first 25 years.

The author of the Mercatus study was nominated Barack Obama to be a member of the Board of Trustees of the Social Security Trust Funds. That might explain his questionable assumptions about costs. And the Urban Institute is even further to the left. There can be no doubt that the true cost of the Sanders health care plan would be much higher than what these two studies calculated it to be.

Now, you might think that we can just tax the people who earn the most money to pay for all this spending.

In 2012, John Stossel wrote this in Forbes:

If the IRS grabbed 100 percent of income over $1 million, the take would be just $616 billion.

In 2011, the Tax Foundation explained that even if you taxed ALL THE DISPOSABLE INCOME from all the people who make $200,000 or more, you would only raise $1.53 trillion dollars:

There’s simply not enough wealth in the community of the rich to erase this country’s problems by waving some magic tax wand.

[…]After everyone making more than $200,000/year has paid taxes, the IRS would need to take every single penny of disposable income they have left. Such an act would raise approximately $1.53 trillion. It may be economically ruinous, but at least this proposal would actually solve the problem.

Taxing the rich isn’t enough to pay for single payer health care. $32.6 trillion over 10 years works out to $3.26 trillion per year. We’re not going to pay that off even with $1.53 trillion a year of additional revenue. And this is assuming that the wealthy would just allow themselves to be made into slaves, and keep working even if the government takes all their money.

Pretty soon, our mandatory expenses will consume all of our tax revenues
Pretty soon, our mandatory expenses will consume all of our tax revenues

Who is going to pay for all the spending we already have scheduled? As the graph above shows, things are going to get worse in the future as the big entitlement programs pay out more than current tax rates take in. I’m sure glad that I’m going to be retiring before 2032, and I’m not going to be stuck with the bill for this. It’s one thing for me to get out of bed every morning to be paid only 75% of what I earn. I certainly wouldn’t want to be working if the tax rates here were more like Europe, so that I’d be taking home less than half of what I earn. No thank you!

By the way, it might be a good idea to think about whether you want to have children or not before you vote. Children are expensive, and if we keep electing the big spenders like Obama, then there isn’t going to be any money left over to run a family and raise kids. Think about it before you vote with your feelings only.

Conservatives vote against wasteful $1.3 trillion spending bill

The new Republican spending bill has nothing for conservatives
The new Republican spending bill has nothing for conservatives

Even though many conservative Republican congressmen voted against the massive spending bill, it still passed the House. All the Democrats voted for it. It’s a Democrat spending bill – there’s nothing in it that Trump promised. No money for the wall. No de-funding of sanctuary cities. No de-funding of Planned Parenthood. No de-funding of Obamacare.

CNBC reports:

The U.S. Congress was racing on Thursday to approve a massive spending bill and send it to President Donald Trump for enactment before a midnight Friday government shutdown deadline, in a move that would significantly boost defense and non-military funding through Sept. 30.

The House of Representatives planned to debate and vote on the measure on Thursday. If it clears the chamber, despite opposition from some conservatives protesting the measure’s crushing deficit spending, it is likely to have an easier time passing the Senate.

When coupled with recently enacted tax cuts, the bill is projected to result in budget deficits hitting more than $800 billion for this year. That could create political difficulties for Republicans running for re-election in November if the conservative wing of the party lashes out at this legislation.

[…]It also would deliver a further setback to Trump, whose proposals for severe cuts to the Environmental Protection Agency, State Department and other federal agencies would be scaled back.

The bill, which also excludes some of Trump’s immigration-related funding requests, was unveiled late on Wednesday. Senate No. 2 Republican John Cornyn said his chamber could take it up on Thursday night if no senator acts to slow it.

On Wednesday, the White House signaled that Trump would sign the legislation if Congress sends it to him.

House Republicans’ conservative Freedom Caucus on Thursday said its roughly three dozen members would not back the bill because it massively increases spending while not defunding Obamacare, Planned Parenthood and so-called sanctuary cities.

“You’re going to see lots of conservatives vote against it,” U.S. Representative Jim Jordan, a caucus member, told Fox News in an interview.

Trump at one point wanted $25 billion included in the bill to fully fund construction of his proposed U.S.-Mexico border wall, but negotiations with Democrats to make that happen fell apart early this week, according to congressional aides.

Instead, Trump would get nearly $1.6 billion more for border security this year.

Trump is busy lying about border wall funding in the bill, promising that “more will be forthcoming”. But this bill is a loss for conservatives. Ted Cruz has vowed to vote against the bill in the Senate, which tells you something about whether the bill is conservative or not. It’s garbage. We’re going back to trillion-dollar deficits to fund worthless government bureaucracies again.