By Kevin D. Williamson
Wednesday, November 06, 2019
The bad news is, Elizabeth Warren has some barmy ideas
about raising your taxes. The good news is, she’s a proven coward. She says she
likes to “nerd out” on the policy details. Okay, let’s do that.
Warren estimates that her health-care scheme would cost
about $2 trillion — every year, forever. As often is the case when we are
talking about the federal budget, the numbers sound incomprehensible to many
people: millions, billions, trillions, squidillions, whatever. To put that $2
trillion a year into perspective, a comparison: That is more money than the
federal government collects annually in all of the personal and
corporate income taxes combined. Put another way, even if the federal
government were able to successfully double the revenue it gets from personal
and corporate income taxes, the additional revenue would not pay for Warren’s
health-care plan.
In fiscal year 2019, all federal tax revenue from all
sources combined amounted to $3.4 trillion. If a Warren administration and a
Democratic Congress were successful in raising Americans’ taxes by 50 percent,
the extra revenue still wouldn’t be enough to fund Warren’s health-care
program.
And that does not take into account the rest of the
fiscal scene, which is pretty grim. While Warren talks about Medicare for All,
as it is the unfunded liability of Medicare over the next 75 years already tops
$42 trillion, or just over twelve years’ worth of total federal tax revenue.
Put another way: If the federal government continued collecting taxes at the
current rate, stopped spending even a nickel on anything else, and put all of
that money into Medicare, it would have to do so for twelve years just in order
to cover the difference between what Medicare already has promised to pay out
and what dedicated Medicare taxes will actually fund.
And never mind, for the moment, that there are lots of
things Warren and the other Democrats want to spend money on besides expanding
Medicare: trillions of dollars in subsidies for college students and
student-loan forgiveness, alternative-energy subsidies, etc. Warren proposes
the better part of another trillion dollars a year in new spending on top of
the $2 trillion a year for expanding Medicare.
To pay for that, she would have to raise federal tax
revenue by around 80 percent — and that still would do nothing about the
trillion-dollar deficits we already have or the unfunded liabilities of Social
Security and other entitlement programs that already are piling up even faster
than the official national debt.
Writing at Slate, Jordan Weissmann describes
Warren’s plan to pay for her health-care proposal as “not entirely realistic.”
Indeed. And it is worth keeping in mind that all of the above relies on Warren’s
own estimates of the cost of her program. Other analysts have put the number
much higher — about 50 percent higher, in fact. If those estimates are closer
to the truth, then paying for all this means doubling or more than doubling
federal tax revenue.
And here it is worth reminding ourselves that tax rates
and tax revenue are not the same thing. Progressives like to point out that
during the Eisenhower years, the top tax rate was radically higher than it is
today. And that is true. But tax revenue today is about what it was then: From
1950 to 1960, federal
tax receipts averaged 15.9 percent of GDP, whereas in 2018 they were just a
tad higher than that, at 16.2 percent of GDP. So don’t let anybody sell you the
story that we could pay for all this with the tax rates of the 1950s or 1960s.
And don’t let Elizabeth Warren sell you her story,
either.
The last time Democrats had a big idea about reorganizing
U.S. health care — the grievously misnamed Affordable Care Act — they proposed
to pay for part of it with a piddly little tax on manufactures of medical
devices and the so-called Cadillac tax on expensive health-care plans. The
Cadillac tax never has been implemented, because it annoys government workers,
labor unions, and other important Democratic constituencies that have
gold-plated health-care plans — paid for by somebody else, usually, often
taxpayers. The medical-device tax was suspended, too. Does anybody remember who
led the charge to repeal it? None
other than Senator Elizabeth Warren. In theory, Senator Warren represents
Massachusetts; in reality, she represents Boston and its wealthy suburbs, which
are home to a number of medical-device companies.
A politician who cannot stand up to a relatively minor
special-interest demand back home — while serving as an elected Democrat in one
of the most reliably Democratic states in the country — is not going to oversee
the doubling of the federal tax burden in pursuit of a new welfare program that
also would strip most Americans of the private insurance they already have and
mostly want to keep. It’s not going to happen.
It’s a fairy tale — or, properly understood, a lie.
As the aforementioned Jordan Weissmann writes, the point
of Warren’s nonsense story about how she’ll pay for her Medicare expansion is
to “deflect unpleasant questions from debate moderators and journalists.” It
does not have anything to do with the actual facts of the case — only with the
contours of the fiction that is the Warren presidential campaign. One more
piece of evidence that political partisans enjoy being lied to, if they are
skillfully lied to.
Give me the power now — we’ll work out the details
later.
There is only one reason that Elizabeth Warren would
proceed in this manner: She thinks her voters are stupid.
There isn’t any obvious reason to think she’s wrong about
that.
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