The Economic Impact of Sanders’ Radical Agenda (real after-tax wages fall more than 50%)

supply and demand (in that order) ^ | February 25, 2020 | Casey Mulligan

[karpov]

If fully implemented, but otherwise implemented wisely, Senator Sanders’ agenda for the economy would reduce real GDP and consumption by 24 percent. Real wages would fall more than 50 percent after taxes. Employment and hours would fall 16 percent combined. There would be less total healthcare, less childcare, less energy available to households, and less value added in the university sector. Although it is more difficult to forecast, the stock market would likely fall more than 50 percent.

Previous analysis of Medicare for All

When I was at CEA, we used an extension of the neoclassical growth model to assess the economic impact of “Medicare for All” (M4A), which we charitably interpreted as 100 percent public financing of the health sector, with (in Chapter 8 of the 2019 ERP) nobody consuming less healthcare and many consuming more than in the baseline. We also charitably assumed that the public financing would occur with taxes that have minimum efficiency loss per dollar collected.

Arguably the Laffer curve for payroll and consumption taxes is not high enough to finance M4A, but at CEA we charitably assumed that the tax base is inelastic enough to rule out this possibility. As reported in the 2019 Economic Report of the President, we concluded that payroll tax rates would increase 14 percentage points and tax payments would increase an average of $18,000 per household per year. Real national income and GDP would fall 9 percent. Real national income net of taxes and health spending would fall 19 percent. These result from M4A by itself, and are a best-case scenario.

Considering Sanders’ Agenda More Fully: Factors of Production

My purpose here is to consider Sanders’ agenda more fully, including free public college, free childcare, and a full transformation of the energy sector.

[karpov]

Mulligan is an economics professor at the University of Chicago and served for one year chief economist with President Trump’s Council of Economic Advisers.

If we can convince people that Sanders' plans would shrink the economy by 24%, Trump should win in a landslide. As Mulligan notes, most of Sanders' plans would not be enacted if he became president, but it is fair to judge Sanders by what he promises to do.

[all the best]

All the other dems are Sanders lite for the time being. They just a little bit craftier or just plain stupid and don’t see the next step.

[Ingtar]

After reading, I see that Mulligan is a global warming believer.

[NEMDF]

We will ALL be homeless, then, it seems. But only for a few years, since the world will be ending soon, anyway.

[Dad was my hero]

Yeah, that sounds bad until you realize that everything will be FREE! So what do you need money for (you greedy SOB)? /s