The non-partisan Tax Policy Center issued yesterday a detailed analysis of Bernie’s Tax and Transfer Proposals. After crunching the numbers the analysts determined that even after tax increases of $15.3 trillion over the next decade the federal deficit would increase to disastrous levels. The entire report is worth reading, but here is the basic conclusion:
Over the next 10 years, the Sanders plan would increase federal revenues by $15.3 trillion but also increase federal outlays by $33.3 trillion, growing the cumulative budget deficit by about $18 trillion or roughly 7.5 percent of GDP.
If unfunded, the deficit increase would raise interest payments on the national debt by over $3 trillion over the next ten years. The dramatic increase in government borrowing would crowd out private investment, raise interest rates, further increase government borrowing costs, and retard economic growth. In combination with the dramatically higher tax rates, which would reduce incentives to work, save, and invest, the negative macroeconomic effects of the plan could be severe (Sammartino et al. 2016). Our estimates do not account for those macroeconomic feedback effects.
John Holahan, one of the lead authors of the study, summarized his assessment of of Bernie’s proposed program: “It could be very damaging to the economy.” And the Washington Post Editorial Board weighed in: “Mr. Sanders’s offerings to the American people are, quite simply, too good to be true, and much less feasible, politically or administratively, than he lets on.”