What Bernie Sanders’s Proposals Would REALLY Cost

Published October 16, 2015 by Ryan Whitacker

Updated on October 22, 2015

The WSJ estimated (badly) that everything Bernie Sanders wants would cost an astounding $18 trillion – but the WSJ did this analysis in some kind of time vacuum with no supply or demand forces. Medicare, for example, was apparently multiplied over 10 years (though the $15 trillion figure doesn’t seems supported by the source), while college costs were uncited and apparently estimated based on a single year. Sanders and several analysts have slammed the WSJ as being sloppy, but it made us wonder, though, what it would really cost per year if Bernie Sander were able to push through every proposal he’s made during his campaign.

Our final analysis shows that we’d need an additional $1.7 trillion per year for the first 5 years, which means we’d need to raise national tax revenue by about 54% to avoid increasing deficit further. Sanders has already outlined $319 billion in new taxes, but we’d need to increase individual tax burden from 31.5% of income to 45% if tax mix stays the same. Read on to see what that would mean for the country.

Democrats appear to be “Feeling the Bern” particularly in one of the most important early-primary states: New Hampshire.

New Hampshire Democratic Primary Polls (source)

For those using tiny screens, Sanders is the brown line.

Sanders is probably best known for his sweeping promises like full government-paid college and healthcare for everyone. We had to wonder how much these things would cost. Here are the proposals and promises we’ve pulled together and verified. Not all of these were phrased as “promises,” but more as “things Bernie Sanders would like to do.”

The Costs

Universal single-payer healthcare: –$1.3 trillion per year

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Universal healtcare explanation: This is complicated because you need to factor in increased demand, already-stressed supply (doctors and nurses), volume discounts, waste, and oh so much more. Expert estimates range from saving us $300 billion on taxes to costing $15 trillion more. As we mentioned, the WSJ said $15 trillion, but they seem to have badly misunderstood the expert source. In reality Gerald Friedman is a staunch supporter of universal healthcare, and was (somewhat optimistically) arguing in favor of savings.

Rather than adding to the complexity by trying to understand every hypothetical program that would be created or destroyed, we just looked at the best real-world example we could find. We looked at Norway, which spends about 6% more per person with combined private and public spending. Then we looked at government spending: the Norwegian government spends almost twice what the U.S. government does per person on healthcare. 85.4% of health care costs were paid by the government in Norway, and the USA is currently paying 47.1%. Per person the government would need to pay  just under $4k more from the public sector. We then multiply the difference by the estimated 325 million Americans. This is all according to the World Bank.

I know: proponents have said this would save us money and cost nothing. It may be true that it would save money, on average, for the overall cost of healthcare. It’s simply not true that it would cost nothing. Anyone selling that story is working for a politician.

Of course, the devil is all in the details. Does the system encourage cost cutting, or does it allow people to go crazy with “the government’s money”? The argument from universal healthcare supporters is that the plan would save Americans money in the end by eliminating corporate middleman markups. This argument is not without merit, but we’re just crunching the increase in taxes. It’s worth noting the WHO ranks our health care 37th – 26 spots below Norway.

Government-paid college tuition: (Conservatively) –$230 billion per year

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The average cost for a public college is $15k. Let’s assume that the states continue to pay the same amount for college education, and that they don’t let their funding slide as the federal government steps in. We subtract the 33.3 billion in pell grants the government already pays. Now there are two ways to go from here. The lazy and most conservative route is to assume that no one changes their behavior based on the law. If everyone in private schools continues to go to private school and no one else goes to public school, we’d have to pay for 13 million students in the undergraduate programs at public institutions. Sanders has said he wants to pay for room and board, so we’re left with $176 billion.

The more realistic thing to do is to assume that private enrollment would fall somewhat and public enrollment would skyrocket if the cost barrier were removed. Money is the #1 reason given for not going to college, so paying for low-income groups would absolutely increase demand. We have a parallel to look to here: the GI bill. 72% of Vietnam veterans took advantage of the GI bill for college, where only 50% of the population as a whole enrolled. That’s a 42% increase in demand versus the regular population. When you add 42% onto current enrollment you end up at $264 billion for current likely students. The real number could be twice as high or more until older people had been given a chance to attain degrees. But let’s assume that this is for young people only.

College enrollment rates are already much higher now than they were in the 60s and 70s, so let’s be generous and slice the increase in demand by 20%. Our final (very conservative) figure is $230 billion more per year. We assume the rich won’t be paying into the system while being denied the benefit for their children.

Infrastructure development: –$1 trillion over 5 years

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This one is pretty straight forwards since the figures were listed in the bill, and Sanders himself called it a $1 trillion project. Sanders claims the infrastructure bill would replace America’s aging transportation infrastructure while creating 13 million jobs.

Early child development: –$12 billion per year

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Sanders introduced legislation in 2011 that would “award grants to states” [for] … “providing children, from the age of six weeks until they reach kindergarten, with universal access to high quality early care and education programs.” We don’t see families sending kids to pre-school for more than a year. If we assume that every parent in America sends their children to preschool through the government program for a year at $6,000 per year times 4 million children of pre-school age, we come to 24 billion. The exact amount is hard to pin down, because the bill never got into the details of how much it would pay. It could theoretically be more (if parents used services every year) or less (if only low-income groups were reimbursed). But if we assume that only half of children’s families would qualify for a full year of payment we have somewhere to start. Sanders hasn’t yet provided enough details to get a more accurate figure.

Pension fund worker protection: -$29 billion

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Sanders indicated he’d like to set up a fund for retirees who had their pensions raided. At current rates of depletion that money wouldn’t even last a year, but the bill didn’t call for any ongoing funding. The pension fund was actually not slated to be paid for with new taxes, but by closing loopholes and increasing estate taxes in some cases. We’ve calculated these savings separately.

Youth training and jobs program: -$5.5 billion

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The youth training and jobs program is aimed at helping young people in disadvantaged communities find jobs. The idea is that young people in poor communities are most likely to go to jail, so the bill might even pay for itself by keeping people out of jail. We don’t see good evidence for this claim, but Sanders threw it out as a potential benefit, not an absolute claim. The $5.5 billion price tag was specified by the bill, with no ongoing plan. Payment structures are often settled much later in the bill, so it’s not uncommon to see “TBD” on the timeframe or even cost.

Jail fewer non-violent offenders: +$17 billion per year

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Sanders advocates cutting back on the number of people we put in jail for nonviolent crimes – especially drug use. Non-violent offenders make up about 60 percent of the prison population, and cutting that in half would net about 17 billion in reduced storage and staffing requirements. We put it in this section because no new taxes are involved. This figure does not include any change to law enforcement budget, which might yield additional savings.

Total cost of proposals: 1.7 trillion per year for the first 5 years, and 1.5 trillion after that assuming no new proposals. Additional bills with no specified time period would add 35 billion – a drop in the bucket compared to other proposals.

The Taxes to Pay for Everything

If we assume we leave other government programs in place – and Sanders hasn’t proposed cutting anything that we could find – we’re obviously going to need to find some new revenue sources. Closing loopholes does not pay for a trillion dollar program, so what would the shortfall be?

2015 tax revenue is expected to reach $3.2 trillion. Adding these programs into the budget while maintaining the same projected deficit would require an overall tax rate increase of about 54% from all sources. Sanders has already outlined a few new sources of tax income and government savings.

Flatten social security tax: $130 billion per year

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Current tax on social security is about 6.2% for the first $250,000, but the rest is exempt. Sanders wants to maintain current levels of payment (an average of $16,000) by taxing all income at the same rate. The United States currently generates 48.9% or $580 billion in taxes from those who make over $250,000 (the top 2.4% or so of Americans) from 2.8 trillion in adjusted gross income. So 6.6% of that is $183 billion, minus the amount they do pay on the first $250k, which is about 53 billion (figuring 2.4% of 136 million returns). To be clear, we’re looking at the additional tax needed to implement this policy, not of keeping social security payouts at a set level.

Closing art sale and certain estate tax loopholes: $29 billion per year

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Sanders feels that rates and caps on taxes for the super wealthy estates are too low. He would fund some spending by increasing these taxes, which many proponents see as one way of preventing rich families from becoming American royalty. The pension fund was actually not slated to be paid for with new taxes, but by closing loopholes and increasing estate taxes in some cases.

Closing tax haven loopholes: $160 billion per year

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Sanders has said he wants to close foreign tax haven loopholes. A U.S. Senate report estimated that $150 billion in taxes are lost to overseas tax havens, while $9.5 billion go to Delaware -which is apparently a good place to move the headquarters if you don’t want to pay taxes owed to other states where you do business.

These programs yield 319 billion in new taxes, but we still need 1.4 trillion. Most of this will need to come from existing tax sources. If we kept the current tax mix the same, that’s an average tax increase of about 14 percentage points (from 31.5% to 45.4%) on the individual tax wedge (personal income tax plus payroll tax). On average the US would go from the middle to low end of individual tax burden to the among the highest taxing countries in the world.

Country Personal tax wedge
Belgium 55.6%
Austria 49.4%
Germany 49.3%
Hungary 49.0%
France 48.4%
Italy 48.2%
Hypothetical USA 45.4%
Current USA 31.5%

Sanders has made it clear that the wealthy would pay more of this increase than the average American.

Would Sanders Spend America Into Oblivion?

That’s a point we’ll let the partisans debate. What we can say is that taxes would need to increase dramatically, but there would also be benefits. Many have argued that a single payer healthcare system would save money overall, and the data to back single payer being cheaper than a government-private hybrid (like the ACA – AKA Obamacare) is compelling. We’d also see an increase in education, which proponents argue would increase the US’s long-term viability and GDP. You need to decide whether that price tag is worth it for you, but hopefully we’ve provided some data to help you decide.

What’s clear is that Sanders would drastically change the mechanics of the country. Specifically it would take away the burden of paying for health care and college from the individual and put it on the government. It would also shift the balance of benefits away from the old and towards the young in a way we’ve never done. Those in the higher income brackets would definitely end up paying more, while those in lower income brackets would receive more services.

Proponents of Bernie Sanders point out that if elected, he wouldn’t be able to pass every piece of legislation he wanted. Congress (especially if it remains in Republican control) would in fact allow very little to pass, thus tempering his spending. Interestingly, libertarians have made a similar argument for Ron Paul in the past, but in reverse: that congress wouldn’t have allowed him to cut as much spending as he would like. These pragmatic arguments are probably true, but we’ve just taken the candidates at their word to run the data.

Join us next time, where we’ll take a data-dive into the potential economic impact of Donald Trump’s proposals – including what deporting all illegal immigrants would do to the U.S. economy.

Ryan Whitacker is a data freak, Excel ninja, and open data fanatic. He combines these skills to put together analysis in hopes it will help you make a better decision.

19 thoughts on “What Bernie Sanders’s Proposals Would REALLY Cost

  • Universal healthcare wouldn’t actually cost more, it would cost less. The article says it would cost $1.3 trillion, but currently we’re paying $3 trillion per year to healthcare. Sanders’ $1.3 trillion wouldn’t be in addition to that, it would replace part of that. Estimates of switching to to single-payer claim it would save $400 billion a year in bureaucratic overhead costs of the system we have now. So, according to Sanders’ plan, we would be paying $1.3 trillion through the government, and still be paying around $1.3 trillion for private healthcare. If single-payer made it possible to lower actual healthcare costs to the level of Switzerland, we’d save another $500 billion or so, bringing private healthcare spending to $800 billion, and total savings to $900 billion.

    That’s all just throwing numbers around, but it makes more sense than how this article is spinning it. One big problem though: almost all healthcare spending by US citizens is spent inside the US, and goes to other US citizens. One person’s savings is another person’s livelihood, so while each citizen would save around $2,800/year in healthcare/insurance, some people would be out of a job, and other people would have a source of riches pulled away, and they probably wouldn’t like that.

    • Thanks for the comment! If you read the “Learn more” section I did discuss this pretty thoroughly. It’s wishful thinking to believe we can go from a system where 47.1% of healthcare costs are paid for by the government into a single-payer system without any additional spending. Happy to be proved wrong, but most of our current government spending is on the elderly in the US.

  • If someone just icnores the fact that single payer health care would only cost half as the current system (compare it with the other countries; it is possible to google it in 30 sec, damn!) and therefor save and not cost money, no reader should take him seriously!

    • Sorry, I’m not taking political sides here, but that’s just not credible. The government is only paying 47.1% of healthcare costs. Aside from what I wrote, it should stand to reason that you can’t double government spending without paying more.

  • RE: College. Sanders has said he wants to make all tuition/books free, not room and board. Additionally, he very clearly stated in the debate that all students, rich or poor, should be able to take the benefit. He was not excluding anyong.

    • Right on who’s included. I found this, though:

      “The Sanders plan would require public colleges and universities to meet 100% of the financial needs of the lowest-income students. Low-income students would be able to use federal, state and college financial aid to cover room and board, books and living expenses. And Sanders would more than triple the federal work study program to build valuable career experience that will help them after they graduate.”

      https://berniesanders.com/issues/its-time-to-make-college-tuition-free-and-debt-free/

      So obviously the costs are reduced if you exclude room and board. That’s a big piece of the average expense, though lower than you might think because the average includes some people who live with parents.

  • Well, he wants to have all the government services of one of the highest taxing countries in the world, so this makes perfect sense.

    Also, can’t wait for your take on the impact of deporting all illegals. It would obviously hurt the economy, otherwise, it would have already happened.

    • I did miss one or two of those, but the article is misleading in that it calls additional taxes additional “revenue”. While that’s a legitimate point of view from the government perspective, you can’t call 17 trillion in additional progressive taxation “savings” from a citizen’s perspective. Many of these are just the way we’d need to pay for the increase I’m talking about.

      • I think you can. Pay stubs now have payroll taxes (income, social security, and Medicare taxes) and health plan contributions deducted. In a single payer model, all that would be deducted are payroll taxes. Currently, we spend about 8.5k per capita. With the savings noted in the source I cited above, per capita spending would decrease to about 6.7k. Assuming that 6.7k is funded completely with the Medicare payroll tax, that’s still an extra $70 per paycheck (assuming the median wage and biweekly checks) that people get to keep.

        • There’s a lot of confusion from both supporters and haters of Sanders about what I did here. I’m looking at how much the government’s budget would need to increase. I’m not saying public spending is inherently bad. In some cases it’s just shuffling money from private budgets to taxes. In other cases it might be a net savings. Some policies might add inefficiencies and cost more in the end. I’m not sure, because that’s not the analysis I did.

          I get that you’re in favor of UHC through a single-payer system, and I could be convinced that this is the best system. Still, cutting spending to $6.7k per person is VERY optimistic in my view. We pay doctors a full 3x more than Norway, which has universal healthcare, and we still spend a similar amount per person. Surgeons and nurses have a similar story. I guess that’s not really the point, though. Even if we assume your $6.7k, that’s going to require an additional $2,392 from the government.

          You’re right, from the perspective of this article it’s fair to call increased taxation “revenue” since I’m looking at it from the government budget perspective. And yes, I think the data behind overall savings vs. the ACA is good. I just want to clarify what this article was attempting to do.

  • Wow, can’t believe the response to this article! I was expecting a couple dozen people to see this. It’s now in the tens of thousands! Thanks to whoever posted it to reddit, and to those of you who shared your feelings. I was so unprepared that I hadn’t even set comments up correctly for proper discussion. I’ve fixed the issue and made it easier to comment. Really appreciate the discussion.

  • Hey, excellent article here. I was wondering, how do you take into account extra tax revenue that Sanders hopes to create by creating more jobs? That is, as more people have jobs, more income tax gets collected, right? Would this make a significant difference on the numbers you’ve provided here? (If you already talked about this, sorry – I must have missed it)

    • Good thought! The answer is that it depends on how you look at it. I’m doing a cost problem here – not a revenue problem. If the government takes $100 in taxes, gives it to you for work, then takes $20 in taxes on the wages, the job still cost them $100. You could accurately say the government captured $120 in tax revenue, but you can’t accurately say that it’s impacting cost.

      Trying to look at tax revenue on taxpayer-funded money as savings leads to a situation where it’s only logical for the government to do everything and charge 100% in taxes, because it’s all “free.” It’s a snake eating its own tail. For COST problems, no, we shouldn’t add it back in. It’s best practice to leave off tax revenue from taxpayer-funded initiatives when you’re talking costs.

  • Right out the box, why raise the national tax rate by about 45% to avoid increasing deficit further when you can just close tax loopholes for corporations and have them actually pay what they otherwise would have? There’s your 1.4 trillion dollars EASY.
    Free college education would force higher education to lower their prices to what they used to be (reasonable*) and all that money would then go towards purchases and into the economy and taxes. Right now colleges/universities are holding billions upon billions of dollars hostage over decades based on their unfair price gouging practices. Students shouldn’t have to pay real estate costs at a time when more classes, if not all, can be taught online or accommodated to be so if they aren’t yet. A curriculum/recorded-class committee could be set up to keep the curriculum relevant, record classes for online use which keeps quality of taught material high and cuts the fat of wasted time and then just employs teaching aides that can be reached by students via phone/skype/etc. Think, people! Difficulty level could even be set and that could be a differentiating factor in the degree you receive so you can tout that achievement or not…or just have colleges set up these curriculums so you can “do the Harvard/Standford/etc.” and well, forget the actual “institution” as it stands, let them figure out how to evolve in a post-brick-and-mortar world. We don’t seem to care to leave millions of Americans in teh lurch by taking jobs overseas, why should we coddle universities? Repurpose the facilities, whatever. That and bonuses for administrative staff have increased exorbitantly without reason. You’re just not being very creative as to where money can obviously be found since it’s been hidden. You’re not accounting for so many layers of what is essentially robbery.
    Youth jobs training…hmm…sounds a lot like high school. Our whole gradeschool curriculum needs to be reformed and geared towards job readiness and not just mere “general education” for classes most people never use in any meaningful way or that can be taught on the job per position with in-house procedures. Text books need to be pared down to magazine-weight and then online classes allow for cost cutting. The social aspect or even “babysitting” aspect could be altered to be essentially old facilities used as study locations with less teachers and more guards to keep the peace. People that want to start problems would be jailed and forced to study in their cell. Not too difficult and I’m sure most of your objections are really just hand-holding, “potential for human rights offenses” BS so please, PC-shitlord, save it. We could also be obligating corporations to provide jobs in well-documented regions with low employment statistics. That would be a massive change for the better if high crime areas were given opportunities that keep them from the only other options or poverty, selling drugs, welfare fraud, etc. It would be rough to implement at first but you’d see changes soon enough. “Jobless wasteland” shouldn’t be so common a feature of the American topography when we could be holding leaders of industry responsible for providing opportunities and lowering unemployment and the crime that stems from it. That’s always the take on it and someone needs to be held accountable.
    Taxing the rich more, what an idea! “But you’re keeping me from becoming American royalty!” Seriously. Not only are they making more via their corporations but then they’re spending it more on things that don’t benefit anyone but a very minuscule population of other rich people selling art, luxury items, etc. They could be paying it back towards the country that they made it off of like they used to in past decades prior to large tax cuts for just them.
    And people are already paying for health insurance. Just shift that money over into the “free” healthcare system like every other country does which is collect taxes for it, adjust hyper-inflated medical costs as presented to insurance holders (ie: the $20 single plastic Band-aid, etc.), and voila, it’s covered. Obscene how trivially blind you are to the common sense involved in these categories. The very reason these ideas are being considered is because these categories have gone out of control as they stand now. Runaway overvaluing/price-gouging and then corporate tax loopholes are the biggest issues and constraints which seem to go hand in hand with a lack of reasonable creativity at the legislative level. “Based on current pricing and structure” is just a lazy and cynical way to approach this. Superpower can’t control it’s own markets…ffs. BS. They need us more than we need them. Worst case scenario, if corporations start to flee because it costs too much to do business in the US (which they never would, clearly) then new growth will be spurred to fill the gap and suddenly we have massive price adjustment. It works out.
    And that the US could possibly be in the top 8 of highest taxed developed countries? Well, wouldn’t that make sense if we wanted to have as high of a quality of life as them? Of all objections, this is the most petty. It MAKES SENSE that we would be paying into a country that WORKS PROPERLY rather than being worked slipshod by the rich while the middle class disappears and we move towards having a Chinese level of life quality. Shame.

  • Hettie’s point is that the U.S does not need to raise taxes by 45% to fund these programs cause there are other solutions, such as eliminating tax loopholes for corporations. Greatly appreciate the time and effort you put into bringing all of this data together – Thanks Ryan!

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