Welcome to DU!
The truly grassroots left-of-center political community where regular people, not algorithms, drive the discussions and set the standards.
Join the community:
Create a free account
Support DU (and get rid of ads!):
Become a Star Member
All Forums
Issue Forums
Culture Forums
Alliance Forums
Region Forums
Support Forums
Help & Search
Bernie Sanders
Related: About this forumWhat Would Sanders Do? The Dynamic Effects of Seven Sanders Initiatives BY GERALD FRIEDMAN
http://www.dollarsandsense.org/archives/2015/1115friedman.htmlNo one should be surprised by the popular support that Sen. Bernie Sanders (I-Vt.) has attracted in his run for president as a democratic socialist. Nor should we be surprised that he has drawn attacks charging that his policies will bankrupt the United States. Sanders proposals for infrastructure, early-childhood education, higher education, youth employment, family leave, private pensions, and Social Security would total over $3.8 trillion over 10 years. While this is a large number, it would be barely 6% of federal spending for 2017-2026. Apart from any benefits these programs would bring directly, their cost would be reduced in four ways: Two operate by offsetting current spending and tax policieseither replacing existing federal spending or reducing tax breaks currently subsidizing private spending. The other two, which account for over 70% of the cost reduction, are the dynamic effects of increased economic growthboosting tax revenues and reducing federal safety-net spending when the economy expands.
A quarter of new spending would be offset by savings and by faster economic growth. (See Figure 1.) The ongoing effects of the Great Recession that began in 2007 have left many resources underutilized. By putting unemployed workers and discouraged workers (who have stopped looking for jobs) back to work, the Sanders program would increase economic activity and government revenues while reducing spending on safety-net programs like Supplemental Nutrition. Taking these dynamic effects into account, the net cost to the public treasury would be about $2.7 trillion, instead of $3.8 trillion, over 10 years. That is, over a quarter of the total tab would be offset by reductions in other forms of government spending and by increased tax revenue derived from faster economic growth.
Figure 1: Additional Spending and Offseting Cost Reductions under Sanders Program
Each of the seven spending proposals would benefit from offsets and dynamic effects. (See Figure 2.) Universal childcare and free college tuition, for example, would replace existing spending on programs for childcare assistance and much of the spending on Pell Grants for students at public colleges, spending on infrastructure would offset some required maintenance spending, and raising Social Security benefits would allow some seniors to avoid dependence on Supplemental Nutrition (SNAP) and other safety net programs. The programs would also increase tax revenues by eliminating some existing tax expenditurestax breaks that subsidize private spendinglike deductions for employer-provided child care.
Figure 2: New Spending Programs and Net Costs after Offsets and Dynamic Effects
The programs would accelerate the recovery from the Great Recession. (See Figure 3.) Eight years after the beginning of the Great Recession, the American economy remains depressed. While the economy has been growing steadily since the end of 2009, output remains nearly 5% below capacity. Only 59% of the adult population is employed, down from over 63% before the recession and the lowest level in 30 years. I estimate that, due to increased government spending, the Sanders program would increase GDP growth rates for 2017-2026 enough to result in a projected GDP in 2026 $4 trillion higher than without the programs.
Figure 3: Projected Gross Domestic Product (GDP), CBO Estimates vs. with Sanders Program
The Sanders program would add six million new jobs. (See Figure 4.) The Congressional Budget Office (CBO) projects that, due to sluggish economic growth, the percentage of the working-age population employed will fall between now and 2026, from 59% to 57%. The Sanders program would directly create jobs in infrastructure, in child-care services, in higher education, and for young people. It would also create additional jobs indirectly, as the newly employed and others spend their additional income. All told, I calculate that the program would raise employment by six million jobs by 2026.
Figure 4: Projected Employment, CBO Estimates vs. with Sanders Program
Government spending would decline relative to GDP within the decade. (See Figure 5.) Federal spending would initially increase faster than GDP under the Sanders program. After 2021, however, federal spending would be lower as a percentage of GDP than it would be under Congressional Budget Office (CBO) projections, because of the strength of the economic recovery engendered by the Sanders stimulus. This is actually a conservative estimate of the boost to GDP because it does not include the productivity-raising effects of infrastructure spending and increased education.
Figure 5: Projected Federal Spending, Percent of GDP, CBO Estimates vs. with Sanders Program
GERALD FRIEDMAN is a professor of economics at the University of Massachusetts-Amherst.
InfoView thread info, including edit history
TrashPut this thread in your Trash Can (My DU » Trash Can)
BookmarkAdd this thread to your Bookmarks (My DU » Bookmarks)
21 replies, 1972 views
ShareGet links to this post and/or share on social media
AlertAlert this post for a rule violation
PowersThere are no powers you can use on this post
EditCannot edit other people's posts
ReplyReply to this post
EditCannot edit other people's posts
Rec (52)
ReplyReply to this post
21 replies
= new reply since forum marked as read
Highlight:
NoneDon't highlight anything
5 newestHighlight 5 most recent replies
What Would Sanders Do? The Dynamic Effects of Seven Sanders Initiatives BY GERALD FRIEDMAN (Original Post)
Proserpina
Dec 2015
OP
don't worry, Hillary will come out with something...tomorrow that will look exactly like Sanders. nt
Javaman
Dec 2015
#12
Tomorrow? She must have the focus group on speed dial and working overtime. n/t
A Simple Game
Dec 2015
#19
Just think of the increase in the economy if the minimum wage is increased to $12, uh, I
Dustlawyer
Dec 2015
#13
Android3.14
(5,402 posts)1. This OP shows the "how"
Let's get this started!
Scuba
(53,475 posts)2. K&R Thanks Proserpina.
Proserpina
(2,352 posts)16. You are quite welcome, Scuba
Art_from_Ark
(27,247 posts)3. K&R
think
(11,641 posts)4. Capitalism fans should love Bernie...
cantbeserious
(13,039 posts)5. Bernie Better Than The Rest By A Wide Margin
eom
tecelote
(5,122 posts)6. Exactly what America needs.
A Simple Game
(9,214 posts)7. Hillary has ideas too, just ask her... ummm, after you elect her. n/t
Javaman
(62,442 posts)12. don't worry, Hillary will come out with something...tomorrow that will look exactly like Sanders. nt
A Simple Game
(9,214 posts)19. Tomorrow? She must have the focus group on speed dial and working overtime. n/t
tazkcmo
(7,286 posts)8. I'll wait ...
...until Maureen Dowd has a chance to review this "economist's" numbers. She is, after all, the Economist of Record now.
sarcasm
Uncle Joe
(58,112 posts)9. Kicked and recommended.
Thanks for the thread, Proserpina.
Proserpina
(2,352 posts)15. You are welcome, Uncle Joe
Mom says Hi!
Tell your mom I said Hi, peace to her and you as well.
Proserpina
(2,352 posts)18. Thank you, I will
Live and Learn
(12,769 posts)11. K&R nt
Dustlawyer
(10,493 posts)13. Just think of the increase in the economy if the minimum wage is increased to $12, uh, I
mean $15 an hour! That money would be spent! Later maybe even some would be able to go into something they call savings! What a novel concept!
peacebird
(14,195 posts)14. Let's get this article out there & get Bernie elected!
WillyT
(72,631 posts)20. HUGE K & R !!! - THANK YOU !!!
Proserpina
(2,352 posts)21. You are welcome!