Sanders' programs to add $18T to debt, largely due to healthcare plan: 4 things to know

Despite that the benefits of Democratic presidential candidate Sen. Bernie Sanders' (I-Vt.) domestic program would more than offset additional taxes for most Americans, his plan would increase federal budget deficits to more than $18 trillion over the next decade, according to a new report from Urban Institute & Brookings Institution's Tax Policy Center.

"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," the authors wrote.

Here are four things to know about the new TPC report, which also draws from findings in a March TPC analysis and a May report from the Urban Institute.

1. The tax increases proposed by Sen. Sanders would raise $15.3 trillion over the next decade. In addition to new excise taxes, federal income, payroll, business and estate taxes would be increased across income groups, but most acutely felt among high-income households in terms of both absolute dollars and after-tax income.

2. Even with the unprecedented tax increases, TPC estimates the agenda would add $18 trillion to the national debt by 2026, plus a potential $3 trillion in interest. Though Sen. Sanders' domestic agenda includes Social Security expansion and tuition-free college, this increase is largely attributed to Sen. Sanders' Medicare for All plan, which was estimated to increase federal medical spending by $32 trillion, including $2.9 trillion in long-term care costs.

3. Benefits would offset tax increases for 95 percent of households. Specifically, the TPC noted the average net gain per household would be approximately $4,300 in 2017. Among those households in the bottom quintile, the average net gain would be roughly $10,000 and among middle-income households, net benefits would equate to about $8,500. However, for those in the top 5 percent, the average tax increase would exceed gains by roughly $111,000, or a net loss of 17 percent of adjusted gross income.

4. The Sanders campaign took issue with three main tenets of the analysis. In a statement it first said it makes a "categorically false" assumption that state and local governments will put their healthcare obligations on the federal government. Second, it says the study underestimates the administrative and bureaucratic costs that would be saved by the universal health program — savings estimated to be nearly $500 billion by the Physicians for a National Health Program. Third, it says the authors overestimate the costs of Sanders' plan by $8 trillion compared to the highest estimates to date.

 

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