Warren lets the cat out of the bag
She may have shot herself in the foot this time.
Sen. Elizabeth Warren has released detailed plans for just about every major political and economic issue: the Green New Deal, free college tuition, Medicaid for illegal immigrants, universal child care, eliminating the Electoral College, and the list goes on.
But with her latest plan detailing how she’d finance Medicare for All, she has ignited a firestorm of criticism from other Democratic presidential-nomination hopefuls.
Former Sen. Everett Dirksen of Illinois famously said, “a billion here, a billion there, pretty soon you’re talking about real money.”
Dirksen was small time. Warren is talking about serious money — about $52 trillion over 10 years — to fund Medicare for All.
I’ve panned Medicare for All with its pie-in-the-sky assumptions. But unlike Sen. Bernie Sanders, Warren has pulled the curtain back on this proposal’s stunning cost and social impacts.
Attempting to make the plan acceptable to a majority of voters, she claims that not a dime will come from the middle class. But many of her proposed new levies are little more than disguised taxes on folks like you and me.
Joe Biden’s campaign agrees, saying that Warren is “lowballing the cost of her plan by well over $10 trillion” and that her taxes “would come out of workers’ pockets.”
Warren starts by noting correctly that federal and state governments are already on the hook to spend a little over $20 trillion over the next ten years on Medicare, Medicaid, and a variety of healthcare programs for government workers, veterans, children, Native Americans, and others.
Since Medicare for All would outlaw employer healthcare plans currently covering about 177 million Americans, Warren plans to tax each private employer the amount it previously was spending on employee health care, supposedly yielding another $8.8 trillion. Unintended consequence: Businesses would cut back now on employee coverage to lower their future obligations.
But not to worry, if the $8.8 trillion over ten years doesn’t materialize — and it won’t — she’d hit up “big companies with extremely high executive compensation and stock buyback rates.”
Next she’d raise the corporate tax rate from 21 percent to 35 percent, generating another hoped-for $1.75 trillion. That would fall short too as companies go back to relocating operations overseas as they did before the recent Republican tax reform.
Taxing individuals’ unrealized capital gains would yield another $2 trillion. That idea could be applied to securities where prices are reset every day markets are open. But calculating unrealized gains on things like real estate or fine art isn’t feasible.
Expect a price bubble on real estate and on Picassos coupled with a corresponding drop in stock prices as the wealthy shift their investments.
How about her proposed 6 percent annual tax on Americans with more than $1 billion in assets that she says would raise $3 trillion? Most economists believe a wealth tax would yield far less. They cite the experience of nine European countries that enacted and then dropped wealth taxes. The taxes were difficult to enforce and encouraged the wealthy — or at least their money — to emigrate.
Trotting out a time-worn Democratic standby when more revenue is needed, Warren would hire a phalanx of tax collectors to close the estimated 15 percent gap between what people owe and what they pay, adding another $2.3 trillion to the government till. Often promised, that gambit has never come to pass.
So do the math: Warren has outlined where she hopes get about $20 trillion, assuming all her projections come true (they won’t). That’s still short over $10 trillion. Next comes her unacknowledged major hit on the middle class.
She plans to reduce healthcare costs by cutting physician reimbursements to Medicare rates. Hospitals would be cut to 110 percent of today’s Medicare reimbursements. Brand name drug prices would be cut by 70 percent, generics by 30 percent. She goes on to claim that today’s Medicare administrative overhead would drop from six percent to 2.3 percent.
Millions of the country’s middle class doctors, nurses, technicians, and staff would take significant salary cuts while being expected to deal with a major increase in the number of patients. Millions of other middle-class jobs would be lost: all those researching new drugs or working for health insurance companies.
There is no way that such draconian measures ever will be enacted; they’d drive many of our best and brightest away from health care.
Warren has let the cat out of the bag: The progressive wish list touted by almost all Democratic presidential candidates is impossibly out of reach both fiscally and politically.
By issuing detailed plans, Warren tried to differentiate herself from her competitors, especially from Bernie Sanders with whom she’s often compared. But now she’s on the defensive and has undercut the entire Democratic field, focusing voters on the cost of programs they’ve endorsed.
The viewpoints expressed above are those of the author and do not necessarily reflect those of The Independent.
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