Inspired by Roosevelt’s New Deal in many regards, Senator Bernie Sanders (I-VT) recently outlined his vision for America, featuring expansionary government spending policies. A major federal jobs program, a hike in the minimum wage to at least $15, expansion of Social Security, Medicare, Medicaid, increased regulation of Wall Street, and protectionist trade policies are examples of initiatives Sanders emphasized. However, Sen. Sanders provided little information on how he might finance his vision.
In describing his political manifest before the Brookings Institute audience, Sen. Sanders’s recipe for economic growth and reduced inequality focused predominantly on the spending side of the equation. Moreover, Sanders posited that increased regulation of Wall Street and increasingly protectionist measures in U.S. trade policy would benefit the U.S. economy. For example, Sen. Sanders cited that he opposed NAFTA and similarly is against the Trans-Pacific Partnership (TPP).
To be sure, Sen. Sanders did offer some guidance on mechanisms for raising revenue; however, his clearly outlined spending program was not corroborated by an equally pellucid plan for raising revenue. To fund rising welfare related expenses, Sanders proposed an increase in the payroll taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. cap to $250,000. Additionally, the senator from Vermont, providing few details, focused on raising additional tax revenue through the relatively nebulous term “real tax reform,” including more taxes on individuals and corporations with earnings in foreign countries as well as eliminating corporate loopholes in the tax code.
Equality of opportunity is perhaps the most important and fundamental idea underlying a just society—and Sen. Sanders’s ambition to reach that end is commendable—yet his proposals may be shooting himself and the U.S. economy in the foot along the journey of reaching that goal.
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