How long are you going to resist the obvious Paul? We should be approaching spending entirely separately from taxation. They are separate functions with little crossover in the economy. Medicare4All may be deflationary and require a tax cut to train and employ displaced workers, but being mentally constrained by gold standard thinking in a fiat world could easily have bad outcomes for large spending projects.
Chasing pay fors has been the mistake of the left since '80 and we simply can't afford outdated and harmful econ policy with all that needs to be accomplished. Our only spending restraint is inflation, not the deficit, and you know this to be true. The injections of public money from these programs will allow Americans to pay down their private bank debt that is choking our economy. Let the budget serve the economy and stop using the economy to balance the budget.
Even Trump understands that we create the money. America cannot become a Zimbabwe or Venezuela unless it foolishly denies its ability to use the currency as it is Constitutionally mandated. The debt is not an obligation to taxpayers and America can afford anything that is available and priced in dollars that Congress creates at will. Any misery in America is entirely a political decision, not economics.
Democrats can pay for a trillion to two trillion in new spending by pointing to parts of the Trump tax cut that favor the very very wealthy. Only after that is there a need to find offsets.
1
I have to say Shame on Paul for his epic failure in this article and others when he talks about the costs of Medicare for All and other forms of universal health care.
The US pays twice per capita what any other major country pays for health care and we do not cover all of our people. The majority of this cost is footed by corporations who pay for their employees' health insurance.
So Medicare for All should reduce our overall health care costs and reduce the burden on corporations who are paying for it. As a businessman, I would welcome the opportunity to pay into Medicare rather than for-profit insurance companies. It would probably be cheaper and even if not, the big corporations just got a huge tax break and can afford to pay extra to cover the people who are currently falling through the cracks.
Krugman might legitimately make a political argument about the difficulty of selling Medicare for All, but the economic argument that "we'd need a lot more revenue" is grossly misleading, because that money is already being spent by the same people who could pay for the Medicare expansion.
2
As a small business owner that is self insured I believe that additional taxes to pay for Medicare for all would be less than my monthly insurance cost. It seems to get left out of the debate that this is not adding cost to taxpayers, it's just changing who we pay our medical insurance money too. As for people who receive benefits through an employer, the employers would need to be required to put the amount they spend on health insurance on the employee paycheck. Again, this should cover additional fica withholdings that pay for Medicare for all.
3
The single critical question that a nation must ask itself is, "Who is going to be healthy?"
Single payer *is* the ideal, and there are numerous systems in place that are easily evaluated for efficiency and performance, and they look better than the American system. (Notice that no one has switched to the American model.) But of course you have to pay for it. You have to pay for everything. What isn't made clear enough is all the stuff you *wouldn't* pay for, so the "increased cost" is offset by other costs that go away. Like insurance premiums, co-pays, minimums, most of your prescription costs, lab tests, etc. Of course, it depends on how well-resourced and structured the system is what the details are, but there is no less access to or quality of care.
I recently spent 8 days in the hospital with "an infection of unknown type." I had every high tech and biological diagnostic test in the book, up to six blood draws a day, attention by several infectious diseases specialists, nursing, lousy food, etc. At the end of the 8 days, I went home well. Cost to me? $0.00. Forms to fill out? 0. I'm glad I had that available. I'm glad everyone has it. Why would I deny them?
2
One thing I always wonder: why *shouldn't* we raise taxes on everyone?
Imagine if you board an airplane, and somehow only the business class customers will pay for it. No, coach customers must fly for free! After all, business class customers can afford the trip better, right?
Obviously, it's ludicrous! Same thing here. *Everyone* benefits from a governmental program. Somehow, in America, all voters are convinced that they (btw, everyone in America thinks they are middle class) should not need to foot the bill. It's ridiculous.
@Lam Luu That's actually not too far from an airline's business plan. On many routes, filling up the front and the cargo hold pays for the flight. Those in the back are low-value gravy.
But your overall point is a good one. Problem is, Americans have been conditioned to believe that even on penny of tax is extortion.
I find it staggering that no one adds in the feeling of relief that one has (Im a Canadian) knowing that Hospitals , Doctors, drug companies etc have to get in line to compete for space in a system like we have here in Canada . Don't let anyone tell you that our system doesn't work! it may have some faults but everyone has access to care without discrimination or extra cost.
Drug companies have to compete to share in access to 40 million
people. Do you not think they drive down costs? Hospitals (yes private or not) have to provide care at reasonable cost regardless of your ability to pay. Nothing is perfect but believe me this is better than paying $ thousands every year for coverage you may never need.
We all have to pay taxes, so we may have to pay some more but it is relatively painless when you consider the benefits .
7
thank you for this article. It sets out some policy tracks in the snow.
To me the 'green new deal' is too vague and smacks of jive.
As for moving the ship of state, why not tweak existing methods like carbon tax, AMT, marginal tax and inheritance tax to move the ship instead of jerking it about? Since congress won't adopt effective means on climate control and budget, let's complicate things to get elected. It takes congress to do this stuff. Dems should concentrate on congress and run a president who will do its bidding. Warren's wonkiness is helpful, but it's not a president's job. Your article also helps put Bernie's proposals into perspective. Thank you.
If it's simple, it's hard.
An overeaching 'green new deal' will not endear the populace to its civil servants: understaffed, under-trained, and with an increasing tendency to contract out or to regulate rather than manage; it will lead to unpopularity for worthy causes, add to distrust of government, and will quickly fill up with holes. I'd like to see campaign reform on the menu.
2
Professor Krugman must be onto something judging by the sputtering of his critics. Obviously, such people have not been following him very long since he has over time taken pains to crack every one of the old chestnuts posted here. Don't write that Krugman has not done his homework when you quite obviously have not done yours.
2
My how we’ve come around, Paul! You seemto have shed that wholesome “pragmatism” from the 2016 election cycle and it is wholeheartedly welcomed, indeed!
Even Senator Grassley of Iowa did an opinion piece on the lack of accountability of our defense spending. Let's get real and follow his lead! We could use some or a lot of the spending the DOD does is unaccounted for. All it takes is a computer system that requires every defense expenditure to tell us what we are buying!
2
@Bonnie
Having spent 10 years of my Navy career in weapons system acquisition I can confirm that it is awash is profit gauging and waste. A "simple" thing like an F-14 just after first deliveries had a list 4300 engineering change proposals.. Get the thing right before you start delivering! The engines designed for the aircraft were not ready so less powerful engines were installed and we had several fatal crashes because of the aircraft's flat spin problem. If the delivery date and production schedule must be adjusted so be it. I can't imagine Boeing delivering a commercial passenger jet in this manner (though I must admit I've never been part of that side of procurement). And of course can anyone remember McNamara's disastrous F-111?
3
Shouldn't an article discussing expenses and taxes and funding government programs have a lot more numbers and math in it? Do a breakdown of all the new progressive taxes people like Warren and Bernie and AOC are proposing and show us how much they'd bring in and what those funds could pay for? This is just budgeting 101 with bigger numbers. It's not hard.
@GO FISH
This is not about budgeting, it's about moral values and budget PRINCIPLES.
The question asked in this op-ed is: can deficits EVER be justified, and if yes, in what circumstances?
The GOP answers are clear here: before leaving the WH with a record and structural $1.4 trillion deficit ("structural" meaning: which cannot be eliminated in less than a decade), Dick Cheney declared that "deficits don't matter".
And the only major piece of legislation characterizing Trump's first two years, is a bill that doubles the deficit and adds $2 trillion to the debt (his tax cuts for people like himself).
For decades already, Democrats systematically install and respect the "pay-as-you-go" rule when they take over DC (= rule that determines that no bill can pass without being fully paid for, in other words a bill can only pass if it doesn't add a dime to the deficit). Time and again, when the GOP take over, the first thing they do is eliminating this rule.
And while Trump and Bush increased the deficit and as a consequence debt, Clinton eliminated the GOP deficit he inherited, and Obama cut Bush's structural deficit by 2/3.
Nevertheless, the main objection of the GOP against the GND is that we can't "afford" it. What this op-ed shows is that there are plenty of ways to pay for it WITHOUT increasing the debt, AND that "we the people" have the right to value certain things so much that we decide to do them even when they increase the deficit - as the GOP constantly does.
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@GO FISH Nah... it's harder to lie when people can check your math.
One February 12th the national debt passed 22 Trillion dollars. It has doubled in less than ten years and increased from 90% GDP to 108%GDP.
When will we start discussing the problem of an ever increasing debt. You can claim that making wise investments will pay for themselves however, the more investments we make the more the public demands.
Unless we start talking about the debt and putting together real solutions we are headed for catastrophic economic failure in the distant future.
@Travis Johnson
Tax corporations and the wealthy again and fix the inequality in this country by not letting CEO make 1000 more than everyone else.
1
@Travis Johnson We talk about the debt and banish important public spending to lower the debt. But we don't talk about the debt when laws give tax breaks to those who least need them while cutting health spending. I find your introducing the topic of debt as a response to this article to be an example of what's wrong with America and what needs fixing.
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@Travis Johnson
The first thing that is needed to address the debt, is to eliminate the deficit.
A deficit is what the government has to borrow to pay for the implementation of existing law for this specific year. The debt is the accumulation of all such borrowings.
In 2009, Bush left with a record and STRUCTURAL $1.4 trillion deficit. "Structural" means: which cannot be eliminated entirely within a decade, even when presidents would refuse to sign any new spending bill into law.
Obama managed to cut that deficit by 2/3 in 8 years, without adding to it himself. So it's mainly the Bush deficit that doubled the debt, from 2009 to 2016.
Unfortunately, the GOP under Trump immediately dropped the Democrats' "pay-as-you-go" rule, and started passing bills that weren't paid for at all. And their major legislative "victory" was a tax cut for the wealthiest, which doubled the deficit and adds $2 trillion to the debt.
So the battle today, when it comes to the debt, is to get rid of politicians who systematically increase the deficit rather than cutting it, you see?
This op-ed shows that Republicans are hypocrites when they claim that we can't "afford" a GND, as they and they alone constantly and massively increase our deficits and debt.
It also shows that there ARE ways to pay for it.
As to "public demands": Medicare for all means creating a non profit collective insurance fund, paid for by taxes that are lower than current premiums. It doesn't increase the debt at all.
2
Ever since the Second World War, employer-provided health care has been one of the biggest -- if not the single biggest -- government subsidy for health care.
And one that most people do not even realize is a government subsidy.
The subsidy is a "tax subsidy",
in the form of an unlimited exclusion from the taxable income of the employee of the entire value of the cost of health insurance paid by the employer for the employee.
Normally, everything received by the employee from the employer -- whether cash or other money or non-cash benefits -- must be included in the taxable income of the employee.
But not specified exclusions, including the biggest one of all, tbe cost of health insurance for the employee and his/her family.
The employee never "sees" this tax subsidy because it is an outright exclusion, not a deduction, and also not a credit.
The federal government introduced this tax exclusion as an exception to wartime wage and price controls during the Second World War, and proved so popular that it continued even after wartime wage and price controls ended and has survived right up until today. Moreover, nearly all state governments jumped aboard.
For the employers, it is basically a "wash":
they -- the employers -- get to subtract nearly all costs of business from their gross receipts when calculating net income for tax purposes -- and, for the employers, costs of employee health insurance is a cost of business just like wages, rent, supplies, etc.
3
@sam finn
True also for sole proprietorships. You'll find many farmers and other small business types favoring the current system, although the insured are simply their families. My health insurance provider is a company that provides health insurance only to federal workers and retirees, by default a benefit and not a tax write-off. It pays 100% of medical costs overseas, which is cheaper for the company and good for me, so I would prefer it to strict medicare for all. I'm just saying that eliminating the slice of the pie that is a tax subsidy does not simply generate funds to use for single-payer system. I disagree that health insurance is a wash to employers, it's expensive and I'm sure many would be happy not to deal with it. Tax deduction does not mean you get all your money back.
Once again the "professor" deals in broad generalities and never addresses the specifiics. It is alarming that this person calls himself and economist but never backs his ideas with analysis that can be reviewed. What an easy way to make a living - play to the audience with platitudes instead of analysis. Too bad
3
@Roger Miller
As the blue text in the middle of this op-ed explicitly reminds: this is an OP-ED.
By definition, that means a personal OPINION, not a academic class.
And in this op-ed, Krugman addresses a question that public opinion HAS to address sooner or later: on which VALUES do we want to base future policies?
The GOP systematically and actively increases the deficit, Democrats systematically and actively cut it, during the past decades and until today.
The GOP nevertheless rejects the GND not by rejecting its content, but by claiming that it would increase the deficit.
What this op-ed shows that in theory, there are many ways to pay for a GND that do NOT increase the deficit.
That means that IF we want to collectively decide our future, we HAVE to have a debat about broad principles and moral values, so that we can choose wisely.
So the GOP has no excuse to reject a debat about the content of the GND itself, you see?
THAT is the main point of this op-ed.
If you'd disagree with that, what would your arguments be?
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@Roger Miller
It's an op-ed piece if you want analysis go pull economic papers from Jstor or white papers from the World Bank.
2
Borrow, borrow, borrow. I’m stunned at your new idea. I always thought you were an adult. But for the last several years you have become younger and younger to the point that you have redefined the science of economic thinking to rival that other, but newly departed genius of economics, Dr. Hugo Chavez. His mantra was also borrow, borrow, borrow, what’s the worry.
2
@Mike
FYI: it's Republicans, not Democrats, who systematically increase the debt.
And in this op-ed, Krugman is showing HOW to pay for spending. Not exactly what you can call "borrow borrow borrow".
And what does an incompetent dictator such as Chavez has to do with this, in the first place ... ?
2
@Mike
Why would the monopoly issuer of the US Dollar ever need to "borrow" its own dollars back to spend? Treasury bonds are not revenue for a government that neither needs nor uses revenue. They draw down the total money supply, just as taxes do, as inflation control. While this has always been true, the relationship between spending and inflation was much more direct with a gold standard and fixed exchange rate.
The entire concept of "paying for" spending is partly left over from the gold standard and lazy governance. Focussing on the mostly meaningless numbers of deficits and debt (all money is created via debt) relieves legislators of much of the responsibility mandated on Congress to create the currency "for the common welfare" by the Constitution.
A half-century of such governance has degraded the American economy and caused considerable unnecessary misery in a very low inflation environment. The spending goal of Congress should always be "real" full employment at all times and funding any benefits that provide a better society, not a business-friendly stable of unemployed workers. Our only restraint should be inflation, which is actually very difficult to create in a fiat currency regime.
Warren is a "major intellectual figure"? I'll finish the column once I stop laughing.
2
@Titian--She is; you're not.
4
She is a well regarded teacher plus she could quite possibly stop the big banks “robbing” us
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@Titian
Because of course, you've read her proposals and studies in detail, and have made a list of all the arguments refuting those studies and showing how easy it is to refute them, I suppose ... ? ;-)
2
The naysayers commenting here seem to think more of the same will solve our problems some of which are dire. My self employed health insurance for my 3 person family is well over $20,000 yr. and many forget just how much their company pays for their insurance without factoring in that this is money taken from their salary by a different method. Those i ask about Medicare all seem to love it and as one grows older you realize how private insurance companies raise your rates because of your higher risk factors. If you are under 50 then get ready.
Climate change will not solve itself but many seem to just be willing to wait and see shrugging their shoulders and going on in a carefree manner. You should never have children and if you already do you should bow down and kiss their feet as you apologize for your reckless careless ignorant attitude.
WE argue about money but we waste much on the wrong things and then want others to save us from ourselves. I pity you all. Good luck. You didn't listen when you had the chance.
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Paul is so worried that if Obama's Nobel is pulled, it's just a matter of time before his is too.
1
@Jon
In real life, he's defending the fact that Obama increased taxes on people like himself and Pelosi, as it is what paid for Obamacare, which saves an additional half a million American lives a decade.
So ... any comments on substance?
I suppose you vote for Trump, who promised to cover even more Americans, at even lower costs, to then flip-flop to Ryancare as soon as he entered the WH, even though that bill does the exact opposite ... ?
2
Krugman's argument for investment type expenditures seems more like an IOU. Framing them as a no-brainer business proposition is only honest if the return is measured in dollars of GDP, but Krugman equivocates with the phrase "social return". Is that human welfare? On the other hand if the expected return on investment -is- measured in dollars, concrete evidence supporting the alleged return is needed for each particular case. Either way, a hand waving dismissal of cost for any expenditure of a 'investment' type just looks like "typical liberal irresponsibility". I hope ('expect' would be too strong) Democratic 2020 candidates support their proposals with sound and specific pay-for rationale - especially if the money comes from more debt.
I'd like to note that Republicans never balk at spending for the military--and much of what we spend for the military does NOT go toward the salaries or benefits to our soldiers. Instead, our taxes support huge corporate defense contractors who make equipment and weapons. So giant percentages of our tax dollars flow continuously to, what Eisenhower first described as our pervasive and ever-growing "military-industrial complex," essentially paid for through corporate welfare. Interesting that there is always enough money for that.
Secondly, the GOP is forever protesting new ideas as "too expensive," followed by the word "socialist." They called FDR's New Deal "socialist," then decided his plan for Social Security was "socialist," and then did the same thing when LBJ brought about Medicare and Medicaid in 1965. More scary "socialist" ideas! Republicans should just call themselves the party of greed, admit they worship money and power over the common good and own it. Instead, they rely on misinformed or under informed voters. Shame on them.
10
The Republicans are great at convincing people that it's okay to spend vast sums of money under the guise of patriotism, which essentially stokes the fear of future/fear of other impulse (war in Iraq, Border wall, Tax Breaks for rich and corporations as trickle down, etc). But when it comes to spending money that actually benefits our country, it's generally the Democrats who have had to make it happen, at the cost of being the constant scape goat for the Republicans (even though the historically the GDP does better under Demoractic leadership). Essentially, Democrats tend to look more at the root causes of issues or at primary solutions, where the Republicans at more reactionary and rely on tertiary solutions that never solve any issue. If we take global warming as the best example of this, we find in the Republicans in denial. Also see Republicans failure to support investment in education and instead relying on local government or for profit/corporations to take over what should not be a privilege for the few.
11
Why should I forfeit my right to private health insurance. There is no doubt in my mind my present insurance is cheaper than a Government program. And over time as the cost of medical raises to untenable levels we'll still have to address the real issue which is the actual cost of providing medical care. The whole healthcare for all idea is really just a fraudulent pipe dream of the left.
2
@mmac
It's simply a matter of mathematics, first of all.
Private insurance premium = the cost of reimbursing care for all patients + 20% margin of profits that go to Wall Street.
Public insurance premium = the cost of reimbursing care for all patients.
So public insurance is 20% cheaper, you see?
Secondly, when all Americans pay premiums, the collective fund becomes bigger, which in itself also lowers premiums.
Third, we can even collectively decide to increase taxes on the wealthiest in order to subsidize the premiums of the middle class (as most Western countries do), and then premiums go down even more.
To want to throw all this away out of a totally abstract "right to private health insurance" is quite absurd, no?
11
@Ana Luisa If one believes Warren Buffett, insurance companies make money not by reimbursing less than they take in, but by investing the money while they are holding it. Sort of like benefitting from a 0 interest loan. I don't know the industry so I can't assess Buffett's claim. But it does seem that one can't reason from insurance company profits to public option savings - at least without accounting for the risk profile of the holding period investments. Do we want our entire nation's health care fund vulnerable to a stock market crash? But if the risk taken is 0, (allegedly) none of the private company profits will be saved.
1
@Ana Luisa
It seems you are consciously or unconsciously follow the Marxist surplus theory. Needless to say that Marxism does not have very good success record. Opposite view is that feee market generate correct pricing, produces innovation through competition. Investors risks their money and deserve profit from investments. The problem though is that it is not very easy to create transparent free market in Health Care. Moreover, we probably should cover preexusting conditions. At least the legislature should work very hard to make free market model working for Health Care. However, we should always remember we will never reach the absulutrke equal access to Health Care products without degrading its overall quality and progress
Socialism in its pure form is that the means of production are controlled by the state. Bernie Sanders and his adherents, e.g. Octavio-Cortez, conflate socialism with the policy practices of several Nordic countries, such as Sweden. Sweden, is not a socialist state. Like its co-members in the European Union, Sweden practices a form of Neo-liberalism, albeit with several caveats in place to mitigate the more undesirable aspects of a capitalist economy, such as universal health care. If Sanders and his fellow travelers are true socialists, then they should stand for government seizure of the means of production. And they might also inform us that the likes of Sweden are not practicing Socialism.
1
@Richard Steele
You're confounding socialism and communism.
Communism means that the government owns everything. Socialism means that workers (ALL workers, not just the wealthiest 1%) own their own companies.
There are no real socialists, in the strict sense of the word, in the West.
There are only "social democrats". Those are capitalists, fully believing in private ownership of private companies NOT by all employees but by its managing board and stock holders alone. All that they want is that within such capitalist system, workers at least have wages that allow them to have access to decent healthcare, education, housing etc.
Most Western democracies have proven that this is perfectly possible, all that is needed is new laws, that end the laws that systematically shift the wealth produced by workers to the wealthiest 1% (= "savage capitalism"), and instead impose decent minimum wages, and install a non for profit health insurance system, for instance.
And in most Western countries, politicians supporting these social-democratic measures (many of them being conservatives, by the way) form political parties that call themselves "socialist".
That was justified, in the 19th century, when liberalism (= then synonym for "savage capitalism") and socialism were born, and socialist wanted to work within capitalism to end up making workers owners of their own companies. Today, that goal has been abandoned by socialists - including Sanders and AOC.
8
@Ana Luisa
Let me rely on my expertise as a person born in Soviet Union. Classical communism is just highest stage of socialism. Under classical socialism government owns all means of production and no private property is allowed. That means in small relatively successful countries like Denmark there is pure capitalism with “human face” rather than socialism with human face. Denmark is too small and culturally uniform to apply its model for USA. Moreover, it does not have such high military expenses.
@Alexander Fiterman
In THEORY, communism indeed follows socialism.
Here's what you're omitting though: that same theory says that socialism necessarily follows capitalism. AND those are three economical regimes, which in themselves have nothing to do with political regimes (democracy versus dictatorship).
What the USSR has done is to decide to SKIP the capitalist and socialist phase of development of the economy, and to try to impose government ownership on a rural, subsistence (= pre-capitalist) economy. On top of that, they've installed a political dictatorship. And then, without ANY good reason, they decided to call these disastrous decisions "socialism".
As soon as you start reading about Marxism, however, you cannot but observe how this is mere totalitarian propaganda, that had NOTHING to do with Marxist socialism at all. And then we're not even talking yet about the fact that Marxism supports, on a political level, democracy, not dictatorship.
As to Denmark: it's actually the entire EU that is based on social-democratic policies. And that indeed is capitalism with a human face. The EU is bigger than the US, so no, scale is no excuse for continuing to create deficits just to give millionaires and billionaires even more tax cuts all while destroying the climate and America's health (and as such productivity) ... ;-)
And no, Denmark isn't culturally uniform at all. And since when should we constantly lower taxes for millionaires as soon as we're a diverse country?
2
By the time the IRS gets around to confiscating it (part of the Warren plan), the wealthy will have put their money into untaxable or sheltered domestic investments, or removed it from the U.S. entirely.
4
As the comments below already show, one of the huge benefits of the GND proposal is that we can finally publicly debate the very notion of "socialism".
As a great number of Americans systematically confound SOCIALISM (= a law system distributing the wealth produced by workers working in a capitalist economy in a fair way, by putting the entire country first, rather than merely its wealthiest 1%) and DICTATORSHP (a political regime without separation of the three branches of government, nor freedom of expression nor any other political freedom - the exact opposite of a democracy, and of the US Constitution), for decades now many people have voted for politicians who actively support "savage capitalism", a law system that systematically shifts the wealth produced by America's workers to the wealthiest 1%.
Of course, savage capitalism tremendously benefits those politicians themselves, which is why they constantly try to betray their own voters by actively cultivating this confusion, investing billions in propaganda machines such as Fox News to spread these lies and myths 24/7.
Fortunately, in a democracy, public debate is always possible. And only a public debate is what allows an entire nation to get closer to the truth.
So for this alone already, we should be grateful to Democrats and their GND proposal.
5
@Ana Luisa Except nobody believes the democrats will tax their big donors and the hemorrhaging middle class will be stuck with the bill. Democrats believe in trickle down economics as much Republicans because the evidence is clear in their support of open borders and sanctutary cites and giving zillionaires cheap labor written off on the middle classes backs. The democrats disguise this hucksterism as a racial issue but its nothing more than neo liberalism gone wild. As a member of the struggling middle class , the political class owned and operated by the big donor 1 percent, the media owned and run by big corporations which are vestiges of the 1 percent and ,who big government benefits, doesnt have my back. Trump gave the wealthy in blue states a tax hike by taking away the ability to write off anything over $10,000 in property taxes and the Democrats hate that.
1
@Jim
With al respect, that's false.
Democrats' wealthiest donors (and politicians) massively support higher taxes for themselves, as they've proven multiple times under Obama - each time, concretely, when Democrats signed tax increases for the wealthiest into law, and they did so multiple times.
Wealthy people are't necessarily bad people, you know. Some of them are really intelligent, and higher taxes for the wealthiest is not only the best solution from a moral point of view today, it's also the smartest solution.
It's the GOP's donors who are overwhelmingly focused on narrow, personal, short-term wealth, cynically imagining that that must be the most important value in life. They're wrong.
And that's how Obamacare increased taxes on people like Obama and Pelosi, which allowed them to pay for the bill - bill that saves an additional half a million American lives a decade. That's the very opposite of "hemorrhaging" the middle class, you see?
And Medicare for all simply means that we all continue to pay health insurance, it's just that the collective fund we're paying into is OUR fund, rather than giving the money away to insurers who want to make profits. As you eliminate the intermediary and the for profit aspect, we'll obviously end up paying less rather than more.
Concretely, it means higher taxes for the middle class, with a tax increase that is LOWER than what we pay today in premiums.
6
@Ana Luisa->
Made-up economic hogwash.
Paul, you state "[m]uch of what seems to be in the Green New Deal falls into that category", i.e., of public investment, without support for that statement. Take the GND's "Economic Bill Of Rights," for example. It involves nothing short of nationalizing the entire economy, involving various so-called "rights" to things like a job, housing, "affordable" utilities and so on -- using all the cute progressive buzzwords liberals repeat ad nauseum -- but without any inkling of the cost of such consequences, which is projected to be in the range of $18.26 trillion per year, or just under the entire U.S. gross domestic product for last year. Do we really want to consign ourselves to indentured servitude to that sort of State of existence?
1
@Phred
You confound nationalizing an industry and regulating an industry.
Passing a law that stipulates that rents and wages have to be such that people working full-time can finally allow to rent a one-room apartment, means REGULATING the housing market.
NATIONALIZING the housing market means that the government would BUY all houses, and then, as LANDLORD, ask ordinary citizens to pay a rent to the government.
That's totally different, you see?
"Servitude" means what tens of millions of hard-working Americans are facing today: working full-time, but being paid such a ridiculously low wage, compared to the cheapest rents out there, that they can't even hire the smallest of apartments. Why is this happening? Because "we the people" elected politicians that passed bills that totally distort the housing market in such a way that the wealthiest control everything and the poorest workers literally become their slaves. What Democrats propose is to REPLACE this regulation system with a fairer one, that from now on puts AMERICA first, rather than putting the wealthiest 1% first, you see?
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@Ana Luisa Americans are being paid low wages mostly in part due to open borders and competing with illegal alien unskilled and skilled labor and fraudulently acquired h1b visa holders. Maybe Americans would need less government regulating rents if government secured our borders and made people here illegally leave like they are suppose to. Big government helps corrupt politicians funded by super wealthy donors. If Goverenment can't do its constitutional duty to secure its own borders it has no businessmen sending people to war to defend other peoples borders or regulating anything else.
Thank you for clearing up why GND isn't fiscally catastrophic (indeed, not supporting a form of GND proposals will be fiscally catastrophic). Wish I could @DavidBrooks and @BretStephens to calm down about paying for GND and completely missing the costs of the alternative, but hey, maybe neighborhoods can "Weave" their way out of Global Warming or let Serious Responsible Conservatives come up with market solutions.
2
"when people ridicule progressive proposals as silly and unaffordable, they’re basically revealing their own biases and ignorance."
There is one thing that should be painfully clear to everyone, this is a right of center country. Socialism is a dirty word. The Republicans will use that word to clobber any Democratic candidate.
That is a reality. It is not silly. It is just a hard fact.
Do some of Warren's ideas have great merit? YES. Will they be adopted. NO.
But head in the clouds liberals like yourself live in an alternate reality, Ironic when you consider Trump's similar behavior.
Read the political landscape.
1
@Babel I disagree. We are a left center country. Per polling: Americans support high taxes on the rich and corporations, expanded social investment, reasonable environmental regulation, action on climate change, pro-labor policies, pro-family policies, gun control, DACA, etc. etc. etc. The issue isn't that Americans are conservative, it's a lack of clear information connecting liberal policies with the values most Americans share; literally the result of disinformation campaigns run by the well-funded corporate party. What's interesting is Trump's appropriation of liberal values ONLY for the purpose of hoodwinking a pivotal demographic that is desperate for a labor agenda, but too resentful and ignorant to reject Trump's rhetoric. That's the tragedy, and Progressives aren't at fault for dreaming "in the clouds" just because too many are voting against their interests.
9
@Chris N.->
The influx of 22million illegals have tipped the scale toward socialist precepts. Everyone in the world wants something that's paid for by others.
Folks seem to ignore the lesson in Venezuela.
LOL. "It would work fine, but it'll never work because people like me will never accept it." I'll take self-fulfilling prophesies for nine hundred, Alex.
Paul you are as mealy mouthed about the costs of these entitlement programs and where all this money is going to come from as the candidates themselves. People like all this big talk about what the Social Democrats are going do for them and how the uber rich are going to pay for it all, as if their money just grows on trees that only they own and can be harvested at regular intervals. You and the NYT are big on graphics, kindly show us just how all this is going to pan out. Brushing aside realists as biased and ignorant is unbecoming of a man of your pedigree, Paul. Assure us you know what you're talking about. Assure us as if your name a credentials depend on it. Taking up time blathering about what if's and when's is a waste of our time and yours. We've got candidates that have that covered.
2
@Kurt Pickard
The uber-rich's money doesn't grow on trees, it grows on Wall Street. Without them having to move a finger.
Now can you please explain how bills that constantly lower their taxes all while asking America to live with a rotten healthcare system, artificially low wages, and low quality education could somehow rime with "putting America first"?
How much money the uber-rich earn is entirely determined by LAWS, not by nature.
Republicans actively and deliberately pass law after law that increases their wealth, to the detriment of a fair distribution of the wealth produced by America's workers.
They then refuse to take all independent studies showing that this is harming America (and the federal debt) into account.
THAT is the very definition of irresponsible government, and taxation without representation.
Obamacare, on the other hand, saves an additional half a million American lives a decade, all while CURBING healthcare cost increases, compared to what we would be spending if one of the GOP's repeal bills would have been signed into law.
THAT is responsible governance, and putting America, not just the wealthiest 1%, first.
And of course, Medicare for all eliminates for profit insurance, which means that it costs LESS, overall, then Obamacare, not more. So the money is ALREADY there, you see?
Conclusion: the question isn't where the money is going to come from. The question is: how to obtain a better result with the money ALREADY paid for healthcare?
7
@Ana Luisa. Top 1% pay 39.6% of total taxes, and top 10% pay 90% of total taxes.
They also enable the rest to have jobs keep the economy moving.
Taxation without representation does not mean people who do not pay taxes can impose taxes on those who are already paying the biggest share.
3
@PJ
The relevant question here isn't how much of America's tax revenue is coming from the top 1% wealthiest citizens, but how much do they earn, compared to the other 99%.
Let's say that the top 10% wealthiest citizens earn 99% of all income, all while paying 90% of total taxes. That means that the 90% are proportionally disadvantaged, you see?
If not: belong to the top 10% wealthiest citizens only refers to how much you earn annually as an individual/household, compared to all individuals/households. It doesn't take the income gap between the wealthiest and the other 90% into account at all, and if you don't take this gap into account, you have a distorted perception of who's paying what.
If Congress first passes laws that systematically shift more wealth to the 1% (= by law, so NOT because they start working harder), then by definition, for the same work week, ordinary citizens end up earning less.
If the wealthiest 10% then pay 90% of all income taxes, but if they receive a wealth that is much bigger than 90% of all US wealth, whereas the 90% poorest citizens receive a total income that is much lower than 10% of all wealth, the tax system artificially benefits the wealthiest and hurts the other 90%. And THAT is the case today, and cannot possibly be justified.
3
Again, Paul is incorrect. He says that Obamacare was paid for by taxes on the rich. My taxes went up due to Obama care and I am not close to rich. That is what I love about liberals like Paul. “Let’s raise taxes on the super rich, like above $50 Million”. Who can argue with that??? Then all of a sudden, a family consisting of a construction worker and a teacher suddenly realize they are the super rich!!!! There just aren’t enough super rich to pay for these programs. But Paul has never dealt with reality.
3
@Jdg
"Higher income taxpayers, as well as taxpayers with sources of income that are defined as net investment income in the statute, pay an additional 3.8% tax to offset the costs of the Affordable Care Act.
This tax first took effect in 2013. At the time, "higher income taxpayers" were defined as taxpayers with a modified adjusted gross income of $250,000 for married couples filing jointly, $125,000 for married couples filing separately, and $200,000 for individuals or heads of household. The tax is applied on income from interest, dividends, rents, royalties, passive activities, and gain from the sale of most properties."
In other words, Obamacare contains a SMALL tax increase for the top 5% wealthiest Americans, and only a tax on what they earned from interests etc. (= without having to work for it), not on salaries.
Those people not only earn five times the average US wage, they are also the only ones to constantly, year after year, see a significant (= almost 5%) wage increase, since 2007, contrary to what happened for the other 90%.
Thanks to this tax, an additional half a million American lives are saved a decade. If that is not "putting America first", then what is it ... ?
7
@Ana Luisa. I can bet that you were covered by your employer.
Individual mandate implied "not rich" paying the penalty, which Obama administration argued to be a tax in Supreme court.
Middle class premium sky rocketing for many, especially self employed.
@PJ
So ... you want to argue that once you refuse to pay for your own health insurance, "we the people" should nevertheless pay for your ER healthcare, even though as a household where both partners are having a full-time job, you refuse to pay a small fee ($700)?
In that case, why do you want free healthcare?
As to premiums skyrocketing today: that is exactly what the CBO predicted would happen once the GOP included in their tax cuts for the wealthiest a passage that ends the individual mandate.
Ending the individual mandate means reducing the collective insurance fund, and that, by definition, increases the premiums of those who still contribute to that fund - because that's how the very notion of insurance works, remember?
Eliminating the individual mandate even raised premiums to such an extent that 13 million Americans who had insurance, can now no longer pay for it, and as a consequence have no insurance at all anymore.
Obamacare curbed premium increases, the GOP's tax cuts for the wealthiest bill accelerates those increases once again.
That's the OPPOSITE of what Trump promised to do on healthcare. And then we're not even talking yet about the fact that we KNOW how to lower premiums even more. Combine the individual mandate with an additional subsidy for those who aren't receiving subsidies on the exchange markets yet (maybe people like you?), because under the ACA they earned too much to receive them. The GOP refuses to do this too ...
4
Our military is some outrageously large behemouth -- something like our military spending is more than the next 8 largest military spending countries combined. Enough is enough. Lets stop playing dumb about why our taxes are so high and our benefits so skimpy...
2
@B G. Our defense spending is 3.15% of GDP and a good chunk of it goes to protecting other countries.
Same liberals who are against defense spending don'r like the idea of withdrawing troops from other countries, and to ask other countries to pay for their own defense. You cannot have it both ways.
@PJ
The latest GOP defense budget increase had nothing to do with protecting other countries, and wasn't asked for by the military AT ALL.
So it corresponds to the very definition of wasteful bureaucracy and "big government".
As to protecting other countries: the US military indeed works together with the militaries of our most important allies. Obviously, that's because protecting our allies, as wealthiest country on earth, is what guarantees world peace and as a consequence no WWIII on US soil.
To imagine that we do this out of pure generosity rather than self-interest is to ignore the history of world wars ...
3
Come on! Who needs to pay for stuff?! Let's just lower taxes and borrow more. Seems to work for Republicans.
1
Look at Venesula. Look at the article in this very paper about the people who are fleeing socialism, after it brought down one of the richest countries in South America.
2
@Len
If you believe that what those people are fleeing is "socialism", instead of a cruel and incompetent dictatorship, then how do you explain that Scandinavians, whose countries are MUCH more socialist than Venezuela, and that also happen to be democracies, are the healthiest and happiest people on earth (all while living in capitalist economies, and belonging to the wealthiest countries on earth)?
Conclusion: this kind of arguments doesn't make any sense, you see?
3
Krurgman is holding back---timid or cagy. We know he bashes the GOP. Does he support some of Warren's agenda? But he won't go there.
He says he doesn't know if Warren 'SHOULD get nominated but she's a 'major intellectual figure'. Is she too intellectual for our politics then--to beat our non intellectual president? Say it plain, PK.
Is Warren too 'liberal left wing' for Krugman, the conscience of a not too liberal liberal? Maybe he'd prefer a Hillary type who makes millions from speeches to Wall St banks, and then refuses to tell the public whose votes she wants what she told the banks?
Where does PK disagree with Warren's ideas on regulating big banks, consumer protections, taxes. On child care, that radical idea? Give a clue.
He cites her 'personal trajectory'. Uh oh, what does that really mean? Her likability? Her "heritage problem"? Her past as a Republican? What, PK? Inquiring minds want to know.
Warren lost my support by supporting Cortez in denying 25000 employment opportunities to new Yorkers. The coffee klatch circuit is not a substitute. Sad to say deblasio joins them in infamy for his incompetent handling and subsequent about face.
We've eaten for free for over 300 years at the buffet table called "The Environment".
The ledger books of countless businesses have never included water tables ruined because of pollution, of extinctions caused by clear cutting forests, of the increase in cancer rates because shareholders except and demand a healthy return on investment.
We ignored what keeps us alive - we ignored that we are biological beings first; before servants for Trump, lackeys for growth, or addicts unconnected to anything other than the next high.
We are paranoid, scared, out of our league, because we have never faced certain death, and our own extinction.
Cleaning up the mess we have, correcting how we consume, and preparing this planet for the 7th generation, is cheap.
Stupid is not doing anything about it.
3
Hmmmm....this is the same Krugman that said this:
“It really does now look like President Donald J. Trump, and markets are plunging. When might we expect them to recover? A first-pass answer is never… So we are very probably looking at a global recession, with no end in sight." Paul Krugman of the New York Times the day after the election.
I’m not a Trump fan but Krugman is often wrong and the left wing proposals put forth by the Presidential Democratic Candidates are entirely dependent on a responsible Federal Government that frankly isn’t competent and is highly inefficient.
2
PK’s main point? That the ‘opposition to progressive proposals reveals their bias and ignorance.’ Yeah? Hey, we know! A cute jab at Schultz Schmultz. So what?
PK says it’s ‘probably right’ that the middle class would be better off with higher taxes and extra benefits? That’s nice--- could he explain how they'd be better off in his columns--- for a change? Probably? Don't be 'too ideological'?
If we can’t get data showing this from a liberal Nobel economist who works with an organization studying intl economic inequality ---then who should we get it from?
The media keeps this data unmentionable on TV, lest it puts too much pressure on politicians subsidized by corporate donors? Or what??
The NYT op ed page is skeptical and cautious.
PK will enjoy jabbing at the GOP instead of giving data on how better alternatives would actually work, for average citizens. Too boring?
Why are we only aspiring to reform---not realizing it---in the 21st C, generations behind other democracies? Taboo topic?
Where’s the concrete role model data on real people, that we the people could throw in the faces of the GOP and make them answer to?
Admit that what’s called ‘too left wing’ for even our liberal columnists to justify, are in other nations centrist.
Go over the border to Canada and ask a few people on the street, businesses and doctors how they pay for, use and dispense health care. It’s not THAT far a trip in miles. But politically it’s light years away.
2
Bigger government usually means higher taxes, more waste and more corruption. Why cant we fix existing government agencies like TSA. Why do we need hordes of overpaid self-absorbed sloths to confiscate water bottles from people flying domestic. Credible studies show that TSA is not effective at preventing any threats but highly effective at creating huge lines and harassing law abiding citizens. If government would have enough money they would have put TSA checkpoints on all interstates to create even more congestion. No thanks.
1
@Alice Government efficiency moves in inverse proportion to its size. I am speaking with 35 years of experience. The larger it becomes in relation to the productive group which enables it the less able to enable it is experienced by the enabler, and the more that the enabled needs to grab. It is a long term downward spiral. There was once a term used but mostly in reference to unions, but now extrapolated to government. It was called "featherbedding."
1
@Alice
In a democracy, it's electing corrupt politicians, who will then hire corrupt people to take care of the executing of existing law, that leads to more corruption, NOT paying or raising taxes.
The GOP systematically destroys the basic services that American taxpayers have voted for. THAT is when "more waste and more corruption" happens.
Democrats hire competent and honest people, and that is when taxpayers' demands are heard and needs are met.
It's how Obamacare for instance saves an additional half a million American lives a decade, all while curbing healthcare cost increases.
Together, we can do a LOT of good things, which no individual can do on his own. But it all starts with voting, and voting for responsible people, who only support science- and fact-based policies. If we allow the GOP to control DC, the exact opposite happens, time and again, as the last decades have shown ...
As to TSA agents: most terrorist attacks on US soil are committed by US residents, remember? And putting explosives in what looks like water bottles is one of the easiest ways to blow up an airplane. That's why TSA agents all over the world refuse water bottles (not just in the US). And in the US, most terrorists enter the country through airports, not via land or sea, so IF we want the government to keep us safe, taxpayers need to pay for TSA agents.
3
@Ana Luisa.
>>"Democrats hire competent and honest people"
That was a bold statement. Look at the financials of democrat and republican elected officials. The general trend is that net worth of elected democrats increase substantially when they are in office, while that of Republicans stays flat or goes down.
Tells you all about who is corrupt and who is not.
2
Why are people encouraged to worry ONLY when they are likely to receive money through some social program such as security or medicare. So long as it goes into (and doesn't leave) some billionaires pocket, there is nothing to worry about.
BERNIE keep saying it: 3 people own more than the bottom 50% -just stay on that message. Especially after a lot of that 50% is going to owe taxes this year. Trump needs money in his pocket...
I did learn from Trump. I learned that people vote whoever will give them more $$$, no matter how awful the person or how big the lie. Ethics, environment, etc. are really non-issues for hair splitting in front of the media - especially when trying to hide the Russian connection.
Dump Trump Putin's puppet.
2
>Many of those demands will be made in bad faith, from people who never ask the same questions about tax cuts.
Because tax cuts are about revenue, not spending.
To accept the notion that tax cuts have to be "paid for" one must start with the premise that all money belongs to the federal govt, and citizens only get to keep whatever scraps the govt allows them to keep.
This is patently false.
You have to find some way to get money to spend it...and with $22T of debt, congress has long since decided that you find money by borrowing it.
That said, I abhor the massive debt and believe that a responsible congress would dramatically reduce govt spending to start to deal with the debt.
3
@Suvarov
That's an idea that no Scandinavian would ever think of, let alone believe to be true.
Taxation isn't giving the GOVERNMENT money, it's paying for services to "WE THE PEOPLE" because when we do and pay for those services collectively, we all benefit.
Let's take the notion of insurance, for instance.
By definition, it means that many people constantly pay a small amount of money into a collective fund, which then provides money to people who are victims of bad luck, so that instead of depending entirely on things we can't control, we can now make sure that if those things lead to something bad, it's won't have such a dramatic impact.
That collective fund can either be managed by a representative government, of by a private company. In the case of a private company, we all have to pay more, as that company wants to make profits. In the case of a public fund, we all pay less, as nobody has to make profits.
It's as simple as that.
We elect representatives who write and pass bills that install all the things that we want to do collectively, for ourselves, and taxes is what we pay to obtain them.
If, however, you constantly pass bills that reduce taxes, then of course, you actively create a federal debt.
Fortunately, there's a way to prevent this: the Democrats' "pay-as-you-go" rule, which makes it impossible to pass a new bill unless it's fully paid for (= doesn't add a dime to the deficit). Unfortunately, the GOP systematically eliminates this rule...
4
@Ana Luisa
One basic flaw in the whole argument.
Private insurance is not forced on people and everyone pays into it based on what he is expected to consume, not based on his income or wealth.
1
@PJ
In in what sense is that a "flaw in the whole argument"?
1
I'm in favor of the Green New Deal. However, I think that all the politicians who push for these programs need to develop and promote a plan that gets very specific and explains how they will pay the cost of these programs. Otherwise it's just hot air and conservatives will continue to mock them. Either put together a real world plan or shut up.
2
@Gene
That's not how change works, in a democracy ...
FIRST, you need to DEFINE your goals. What is it that we want, and why would we want it?
Now that the GND does exactly that, the question to the GOP is: why do you reject these goals?
The fact that they refuse to answer and start yelling that we cannot "afford to pay" for these goals, is pure hypocrisy, NOT because the specifics of the payments aren't laid out yet, but because of what Krugman says here: a lot of our goals actually increase government revenue, whereas others can be financed through taxes on the wealthiest.
The GOP knows this of course, as they used the exact same argument to justify their tax cuts for the wealthiest, a bill that adds $1.9 trillion to the debt all while doubling the deficit. It would be paid for by higher GDP growth, they claimed.
The problem is that contrary to what Democrats do, Republicans never come up with studies proving this argument, and then reject the CBO studies proving that it's false and sign the bill into law anyhow.
Conclusion: for the moment, the debate is about the GND's goals. Do we want a future like this or not?
Once we decide collectively that yes we want such a future, the NEXT question becomes: how will we decide to pay for it? What we already know is that Dems systematically respect the pay-as-you-go rule, so they won't pass this without having worked out the details. So now, the GOP has to try to focus on substance, if they want to enter the debate too.
4
@Ana Luisa. Tax cut increased debt by 1.9 trillion.
Well Obama's socialist policies increased the debt by 10T in 8 years. Out of Trump's 2 T increase, a bulk of it also went into serviing the debt incurred by Obama.
Dem's don't respect pay as you go rule. Debt increase in Obama's 8 years was more than total debt increase by all of the predecessors combined.
1
@PJ
You're wrong.
To know WHO increased the debt during a certain period of time, you have to ANALYZE the debt increase.
If you do so with the debt increase under Obama, you'll see that it's NOT Obama bills that increased it, it's the structural Bush deficit.
And if you analyse those Obama bills, you'll see that they DO respect the pay-as-you-go rule, until the GOP Congress ended it.
The only bill that temporarily increased the deficit (= a one-time increase, not a structural increase) was the Recovery Act. But that falls under Krugman's first category: investment. It was the only way to turn a -8% GDP into a decade-long, steadily growing GDP - and needless to add that a negative GDP increases the deficit, so the Recovery Act, overall, REDUCED the deficit compared to where it would have been without it.
The GOP has constantly lied to its own supporters when it claimed that the massive debt increase under Obama had something to do with Obama and the Democrats. It didn't.
And why did they massively betray their own supporters? To then have an excuse to pass their gigantic tax cuts for the wealthiest tax bill, which again actively creates a STRUCTURAL deficit and $2 trillion debt increase.
Just look it up and you'll see ...
1
The best op ed on American HC hassle and high cost is NYT-- "The Fake Freedom of American Health Care" By Anu Partanen---a Finnish journalist who moved here after marriage, & wrote “The Nordic Theory of Everything: In Search of a Better Life.”
She says... "As a US citizen now, I wish Americans could experience the freedom of knowing that the health care system will always be there for us regardless of our employment status."
But our freedom and security seem to be the last concern of the corporations that fund and dominate US politics.
She details concrete examples that dismay her and make life difficult here --- HC hassles unknown in Finland--- anxiety, high charges, paper work and confusion with doctors, hospitals and insurance.
Let's face the basic attitude difference. Citizens abroad think it's not radical for them to demand good representation for their taxation from the govt they elect. They haven't been subjected to years of political messages warning them that govt is an enemy of freedom to be feared and resented. That's what our Democrats must face and change to reform HC here.
Abroad they also support strict govt gun laws as well as HC for all, so they have longer, safer, healthier lives.
The portrayal in our politics of govt protections for citizens in return for their taxes as the left wing, socialistic road to big govt interference has made both US health care and politics the world's most profitable.
And kept our media's coverage inadequate.
4
@Meredith. Let Finland have take in 3% illegals, and let it pay for its own defense. Also, let it invent some breakthrough drugs on its own.
It is funny how these nations can preach while freeloading on outcomes of United state's capitalism.
The approximate cost per income for joint filers for the tax cut is $26,000. The Iraq war cost joint filers another $100,000. In the last ten years the Repub party saddled my wife and me with about $130,000 in debt to provide a tax cut to Don Jr. and to fight a proxy war for the benefit of Iran.
Republicans suggested how they would pay for or offset these costs.
In that same spirit I suggest Dems note that cost for health care, education and child care will pay for themselves through trickle up economics.
3
Krugman's argument for federal investment comes down to his assertion that, "if you can raise funds cheaply and apply them to high-return projects, you should go ahead and borrow."
Well, uh, yeah. But there are two problems.
(1) Can the economic bureaucracy identify high-return projects? My own two decades of government work suggest that the state and federal forte is finding projects to enhance a bureau's empire. Or else, cover-your-butt efforts.
There will usually be no high returns from such endeavors, and thus no happy beneficiaries to tax, and in turn, payment of the loan will have to come from elsewhere.
(2) If the government should stumble onto a project that gives a high return, that's still not the end. The loan has to be paid off, which means part of the high return has to be appropriated by the state, ie taxed, and handed to the creditor.
So far so good. However, government investment typically aims at a high social return, and this is distributed in vastly many directions. Not being able to determine these points of improvement, the government will find that appropriating part of the benefit to retire the loan is unlikely.
Accordingly, the government will have to refinance its borrowing (raise the national debt), tax (left liberals?), or print money (the easy way, until you get caught).
So, not so fast. It still sounds to me like the Blue Forces' policy is to throw money around.
2
@alyosha
You're talking about appropriations bills (= bills funding the implementation/execution of already existing law for the next year) whereas Krugman is talking about new law projects.
If the head of the executive branch of government hires people that aren't very competent, and don't know how to work in a rational and non corrupt way, then of course, the implementation of existing law will be imperfect, to say the least.
This op-ed, however, is about the legislative branch of government. The question is: when lawmakers write and vote for a NEW law project, does that bill necessarily have to include the means to pay for it, so that its future implementation won't add a dime to the deficit, or not?
Krugman reminds us here of the fact that there are different ways to make sure that such a new bill doesn't add a dime to the deficit:
1. you include a passage that increases taxes on the wealthiest in such a way that what the non partisan CBO shows that the new bill will cost, is entirely paid for by those taxes.
2. the bill itself leads to increased government revenue, over time, based on CBO reports. THAT is what "high-return" project refers to here.
Example: Obamacare saves an additional half a million lives a decade. That means half a million more people working, paying taxes, and buying stuff (and paying doctors, nurses etc.). So to know whether it adds to the deficit or not, you have to know how much these people contribute to increased productivity, you see?
1
People have to realize that nothing is "free." Either you pay for it yourself or through taxes. I am currently on Medicare and it costs approximately $500/month, compared with my employer's health plan for which I paid about $90/month for both myself and my spouse. On the other hand, buying private health insurance on your own is way more expensive.
As for Social Security, eliminate the cap. I supposed the argument is some people will pay more in far above what they'll receive, but almost EVERYONE below the cap does that! Fair--or unfair, if you prefer--for all.
1
@ariella
Your employer's health plan for which you paid about $90 per month was probably subsidized by your employer. It was a "benefit" given to you, the employee, in addition to your salary, BUT it was not taxed -- as it should have been, in my opinion, i.e. it should have been included in your salary as reported on the W2 form.
2
It would seem that Paul would be surprised to learn that government revenues are slightly ahead of last year....but we are spending almost 10% more. I think I see a problem.
This is simply defining away your need to explain the fiscal consequences of the various policy proposals put forth by the Democrat candidates. Along the way criticisms are cavalierly dismissed with the claim that opponents do not understand economics. Nowhere is there any factual foundation established for any of the claims in the article.
Before being able to say that "investment can and should be debt financed" a number of threshold issues must be addressed. Examples are 1) what is the appropriate level of federal taxation 2) what is an acceptable level of fiscal deficits and 3) what is the relative priorities of our spending choices.
It seems to me that any discussion of expansion of federal level social programs must be preceded by placing existing programs on a firm fiscal foundation. No candidate is talking in those terms and has not for quite a long time.
I think if you look at Australia’s recent wind and solar program you would discover a grid becoming increasingly unstable with the highest electricity rates in the world
Doubling electrical and energy bills translates to a loss of disposable income for most middle class people
I hardly call that an investment
3
Paul,
Your economics may make sense in the ivory tower from your you transmit it, but I do not share your optimism of the effectiveness of Government intrusion.
Most importantly, where in the Constitution is ANY of this justified? If you want all this expansion of Government service, you will need to clear Constitutional muster, something you seem to have forgotten to address. I don't imagine the Constitution is any impediment for your (or most progressive's) grand scheme for fundamentally reshaping the most powerful nation in the world.
If there is a public outcry for the services that you believe should be added by the Government, you will need Constitutional amendments to accompany them; Or perhaps a Constitutional convention. If 'We The People' need the things you propose, I'm sure a consensus can be developed and we can move forward in that light. As it stands now, the Elites like yourself are simply re-writing the rules as you go. In your concern for providing for 'the people' perhaps you should ask us what we want.
@peace and justice
The notion that there exists a requirement for “constitutional justification” (whatever that means) is absurd.
The contitution is a foundational document, nothing more. It was never meant to be, nor has it wver been, the script for society’s existance. The const contemplates elected officials enacting laws - exactly what Prof. K is talking about here.
Comments like this one elevate rhetoric (bad rhetoric at that) to a new and perverted high. And have naught to do with economics.
5
@Homer We do have a Supreme Court as you may recall. Your great learning may have crowded out such thoughts. The Constitution specifies HOW the Government works, and the Bill Of Rights says specifically what the Government CANNOT do. Hang on, cause this is important stuff; The Government MUST NOT do what the Constitution says it CANNOT do. The Founders thought that these ideas were pretty important so they risked EVERYTHING to maintain it. I learned that when we used to read books about them.
I'm trying to get those thoughts inserted in a civics class in High School. It's not easy because They Who Did Not Read Those Books are very opposed to that. I hope someone reads what I just wrote and thinks about it for as long as they consider where to make reservations for tonight's dinner. It really is important stuff.
Indeed, and better clear Rhetoric than haughty Rhetoric, but you do you.
@Homer
You are dead wrong. The Constitution you so readily dismiss IS, and was always meant to be a script for society's existence. It's a social contract stating the terms and rules that enable its diverse citizenry to govern themselves, coexist peacefully, and preserve their individual liberty and agreed-upon rights. The Constitution is not so important in that it empowers government as it is in that it constrains government. What is absurd is the notion that government may take any action NOT justified constitutionally. Anyone who isn't willing to abide by our Constitution's terms is free to voluntarily relinquish their citizenship and move to another part of the world.
Krugman is a poor economist, who routinely draws his conclusions first, then sets about trying to select (or manufacture) data to corroborate his theories. Not coincidentally, this follows the pattern of thought and action for the entire politically progressive segment of society. Here's a basic economic fact that he doesn't understand: Neither individuals nor countries can prosper by regularly and systematically consuming more than they produce.
Here's some more documented facts that are contrary to Krugman's and progressive's narratives. Income disparity in the US is not as large as taxation disparity. The top 1% of earners get 20% of the income but pay 40% of the income taxes. Meanwhile, at the other end of the income spectrum, 49% of citizens pay no income tax at all.
I disagree with Dr. Krugman a little. Medicare for All would cost money, but because it would replace private spending on health care it would surely reduce America's overall health tab. The basic problem is that health insurance currently is a valuable non-taxed employee benefit and if that benefit is no longer needed, how can we make it so employers replace it with other employee compensation rather than just pocketing it for the shareholders? My answer: pay for Medicare for All with a tax on employers equivalent to what, under existing law, they are required to pay for mandated employee health coverage (after deducting their prior tax benefit). Employers are left in the same economic position as before and employees are no worse off -- better, actually, if no cost-sharing or copays.
4
@Bill U.
How does replacing private spending on healthcare with government controlled spending on healthcare "surely reduce America's overall health tab"? All evidence based on current government-run programs runs contrary to your statement.
1
How do you define a 'tax'? How define confiscation or exploitation? Americans are forced to pay the highest health care costs in the world---charged by big monopoly insurance and drug companies and a medical industry that helps subsidize the elections of the lawmakers to represent us.
Our health care charges are not optional---they are demanded by the medical industry. Yet we're constantly warned to fear and resent high taxes, as big govt confiscation.
We need our govt to work for our needs, health and security. To start limiting the excessive freedom of corporate mega donors to dominate our politics for their profit and power. Compare to dozens of nations with generations of lower cost, good HC for all, to prove this isn't exaggerated.
Do Americans know that other democracies don't even allow poltical campaign ads paid by private donors-- our biggest cost?
Do they know that many nations don't allow the drug advertising direct to consumers that flood our TVs, 24/7? And have increased hugely in recent years.
What are the ripple effects in costs and power of those differences in policy and attitudes? Taxes? Americans have forced upon them high costs and political manipulation entrenching and rationalizing corporate poltiical power.
Could a NYTimes columnist ever put this all together?
How can lawmakers we elect give us representation for our taxation---the essence of a democratic system--- when their careers depend on big money from the financial elites?
4
Thank you, Professor Krugman, for this very helpful framework on which to build my arguments for those inevitable confrontations I'll have with people who want to cry "we can't afford it" or "taxes, taxes, taxes". Let's add another source of money to pay for progressive priorities - the defense budget and it's enormous bloat. Our national priorities are seriously out of whack. It's time we adjusted them dramatically. Or maybe you already are including that in your systemic change bucket. Either way, it's the elephant (Republican allusion deliberate) in the room.
7
I don't want to see a major system overhaul on medical until something is done about the rampant corruption, anti-market regulations and monopoly power in the system. Until there is the political will to make common sense reforms any new program will fail. The biggest part of our medical system is the cost due to monopolistic greed.
8
Look, you want a free market system. Just say so. It won’t work and these “waste, fraud and abuse,” ohony arguments from the Right are tiresome, but just say so.
If the wealthy individuals and corporations want continued business growth and personal prosperity, it is necessary for them to pay taxes to build the infrastructure they need and the services they utilize. They need roads, bridges, tunnels and railroads. They need services to maintain their personal needs and business needs, and most overlooked is they need the defense the military provides thus protecting the nation in which we almost all prosper and whose freedom allowed them to become wealthy. The wealthy need to reward the laborers that built their business and keep them healthy to assure their continued productivity. The wealthy need to pay taxes to continue their ongoing wealth growth.
Elizabeth Warren is an academic expert in these matters and I wholeheartedly defer all my opinion formulations to her expertise. She must be viewed as the teacher she is just as we read Krugman for the same reason. If we don't learn, we don't prosper and grow.
If Warren says we need to tax the rich, we need to.
If the rich fail to pay taxes, the well they drink from will dry up just as the sun rises in the morning. If the rich were smart enough to amass wealth, they should be smart enough to know they need to pay taxes to continue growing wealth.
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@PATRICK
Did Warren tell you that the top 1% already pay 40% of the total income taxes paid, though they only earn 20% of the income? Did she inform you that taxing the top 1% of earners at a tax rate of 100% doesn't come close to paying for Medicare for all?
@kkflash - Those numbers are just looking at reported Adjusted Gross Income and federal income tax. It does not account for various shelters and loopholes that hide a lot of the income of the 1% from AGI. It also doesn't include payroll taxes, which are much more regressive.
If you want to understand Democrat economics just look at both terms for Clinton and Obama - Democrats pay as they go. With all of the Republican hypocritical railings of the opposite, it's the Republicans that consider a seat in the Oval Office as permission to break the nations piggybank over the backs of the middle class and overnight express the contents to the top 1% at the expense of the bottom 99%. There are some fantastical agenda items coming from the early 2020 entrants, but let's not forget, Democrats are the party that pays for stuff.
6
Democrats pay as they go??? You do realize that our national deficit went from $8 billion ( with a B) to $20 billion in 8 years. Is that what you meant by paying as you go?
2
@David The national debt increased by over 8 trillion dollars during Obama's time in the White House. I don't see how this matches with your statement.
1
@hannstv I clearly made a mistake. I meant to say that deficit went from $8 Trillion (with a T) to $20 Trillion in 8 years. You can look that up, it is correct. I apologize for my mistake, however.
Calling a spending priority an investment that would result in an increase in productivity assumes a lot. Why not cite relevant research showing enhanced childcare as is discussed here actually does increase productivity and in magnitude that justifies the "investment".
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@Michael Mikita, I think Krugman is including Elizabeth Warren's proposal for childcare in his second group--proposals that expand on existing programs where the sums involved are small enough that they can be paid for by what he calls narrow-gauge taxing. Under investment he includes infrastructure, research, and child development (education). There's ample research on why these three things increase productivity.
2
@Michael Mikita
Why not Google for it?
https://www.brookings.edu/research/the-effects-of-investing-in-early-education-on-economic-growth/
@Rheumy Plaice.
Sure, Read the Brookings piece. Used a small study (Perry) to extrapolate to a 2 trillion dollar impact. Looks like a bit of a real, wouldn't you say.
the costs of not having a progressive agenda are infinite: the potential squandered, the minds that don't reach their potential, the discoveries never made, the achievements never reached, because people lack the basic social determinants of health -- food, clothing, shelter -- and the opportunities for education that a rational and logical society would provide for all its people
we are in thrall to a backward disaster of a fantasy of capitalism that socializes risk for the poor and privatizes profit; socializes support for businesses while taking away support for workers, and makes life worse and security of any kind unattainable for the many while hoarding profits for the few
it is unsustainable and it will end badly if it doesn't change
3
@true patriot
None of the potential costs you list are necessarily avoided by accepting a progressive agenda, but the up front cost is most certainly assured. There's nothing rational or logical about society paying for a college education for every citizen. Even now, without this progressive pipe dream, billions of $ are wasted on advanced education for people who don't reach their potential, make no discoveries, and achieve little. Education isn't a right of citizenship. Never the less, a great deal of money is provided from many sources for those who exhibit achievement and potential prior to college. Obtaining that money and the knowledge it can buy is competitive, as is life. That's as it should be.
Great piece. Worthwhile reading. You hit the nail on the head. I hope the presumed progressives, Democrats, Socialist/Communist, fuzzy centrist independent, Bernie's fan and especially GOP read your piece. But the GOP politicians thrive on demagoguery, dogma, and absolutes without good results but disaster. It would be an exercise of futility for the latter. Of note, your first sentence comes a she before he.
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The professor once again raises the meaningless & farcical question about how we are going to ‘pay for tax cuts’. The correct question to pose is ‘how will we pay for spending’? 2018 nominal federal revenue was virtually unchanged from 2017. But federal spending rose close to 4% in 2018 vs 2017 - well above the CPI-U inflation rate.
Deficits are a spending problem, not a tax revenue problem. It’s no different on a national level than it is for individual consumer debt. I hope the Professor does a better job educating students than he does lecturing the rest of us.
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@Alan, deficits are a revenue problem too. Every economist talks about paying for tax cuts. Those "economists" who believe in trickle-down economics (anyone besides Art Laffer?) say that tax cuts pay for themselves, but most serious economists acknowledge that tax cuts must be paid for or added to the debt.
Unfortunately many Americans think of taxation as the government taking something that belongs to them. They forget that wars, defense buildup, veterans' programs, roads, bridges, airports, and government itself cost a lot of money. Anyone who lives in a civilized society must pay for it.
You're claiming that there is no difference between macroeconomics and microeconomics. That's Econ 101.
3
@SandraH.
You talk as if every dollar government spends is a societal necessity, and imperative to the continued functioning of the nation. Nothing could be further from the truth. Government is inherently wasteful precisely because the money they take from the people does not belong to them. For that reason, federal government should be very limited in those things for which it may tax and spend the people's money, such as national defense. Considering the current size and scope of government in the US, and the fiscal irresponsibility and mismanagement both major political parties have exhibited, it's really pretty ridiculous to argue for additional government takeovers of higher education or healthcare. It's time we reduced the federal government, not expanded it.
Few who argue for further expansion of government agree with your statement that "Anyone who lives in a civilized society must pay for it." Rather, most of them suggest that a small, successful minority should pay for it.
At the end of the piece, about a major system overhaul, you say, "To implement these proposals, then, we’d need a lot more revenue, which would have to come from things like payroll taxes and/or a value-added tax that hit the middle class."
Really? Why can't that revenue come from higher taxes on the ultra-rich, and from taxes on commodity trades?
Perhaps your analysis betrays your own biases?
3
@citybold, because the numbers don't work. You can pay for programs like subsidized childcare with taxes on the ultra-rich, but a single-payer medical system like Canada's would involve raising taxes on everyone. I'm a supporter of a single-payer system, but I would also be willing to pay higher taxes because I feel that I would save that money on premiums and co-pays. I think Krugman is simply saying that it's a harder sell.
2
The three-way categorization makes sense. One can argue about whether one program or another has a high enough cost-benefit relation to go into the first category or not.
And I share Krugman antipathy to systemic changes like single-payer health insurance.
The basic point of disagreement with Krugman is that his analysis is that it seems to assume that we are starting from the optimum fiscal balance This is not the right starting point.
We have a very large structural deficit thanks mainly to the combined effects of the GWB tax cuts of 2001 (slightly reined in by the tax reform of 2010) and the "Tax Cuts for the Rich and Deficits Act of 2017" and the fact that SS and Medicare tax and benefit proportions have moved and are moving toward deficit as the population ages (a design flaw in the 1977 reform). So the bottom line is that right now, with no new spending, we need substantially more revenues and smaller, approximately zero deficits (depending on how much spending generates future income/reduces future costs passes a NPV test).
One way to do this would be to fund Medicare/SS at least partially (all would be better) with a VAT instead of payroll taxes and close the rest of the structural deficit with higher collections from high income people, who were the major beneficiary of the GWB tax cuts and the "Tax Cuts for the Rich and Deficits Act of 2017."
Additional transfers for child care or improvement of ACA or a more generous EITC will require even more revenue.
" private health insurance currently amounts to 6 percent of GDP. To implement these proposals, then, we’d need a lot more revenue, which would have to come from things like payroll taxes and/or a value-added tax that hit the middle class."
So where can the money come from. Businesses are already paying for health benefits. Why shouldn't we expect that they pay for these benefits by buying into, say, Medicare for their employees. And we might even permit them to buy into a premium form of plan that might help them in their employee recruiting efforts. And unions might bargain for particular plans, all variations on Medicare for all. We are already spending on health care. What we need is simplification and cost control. The money already being spent on health care is more than enough to pay for this kind of coverage for all.
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@how-right, I think Krugman agrees with you in this column. He groups Medicare buy-in in his second tier--enhancements to existing programs that can be paid for by narrow-gauge taxing. It makes sense for individuals, businesses and unions to be able to buy into Medicare, and it wouldn't have to mean raising taxes on everyone.
Americans are already paying a healthcare tax, and I'm not talking about 1.45% employee and employer Medicare tax. I'm talking about the percent of the price of every item we purchase from businesses that covers the cost of healthcare to the company's employees. If you purchase an American car, I am going to guess that $5,000 or more of the price of that vehicle goes to pay for autoworkers' health insurance. The good news is that a single payer system will lower the cost of healthcare for everyone. So the real question is do you want to pay more as we are doing today, or do you want a system that increases coverage and costs less? I know my choice.
5
Guess away. Or, try looking it up.
@John Woods
We have a single-payer system now (essentially) for those over age 65. Is there any evidence that entrusting healthcare for the aged to the government has lowered the relative cost of care for this segment? What about coverage for veterans? Is the actual cost of care per covered person less in this government run segment? (For now, let's ignore the quality of care question.)
How about we take some of the money from the DoD? They won't miss a few billion here or there. And it would be a lot better if it were used for purposes that actually helped people. I realize this is a radical proposal, but maybe someone in the government will have the guts to think about it.
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Professor Krugman forgets the fourth and potentially largest expenditure. For National Emergencies.
Clearly, most of his examples qualify as national emergencies
1
"But she’s a major intellectual figure, and is pushing her party toward serious policy discussion..."
And God Bless Her. Whether or not she has a serious shot at becoming the nominee, she will certainly shape the debate in a way no other candidate can. And I hope she will remain in the race. It's because of Warren that I'm most looking forward to the democratic primaries leading to 2020 and the message the democrats need to deliver. We should count ourselves lucky we have someone of her caliber entering the race.
1
For at least 40 years, Republicans have referred to the Democrats as the "tax and spend" party.
BREAKING NEWS: That is what government does to keep the government functioning.
What Republicans have been adroid in doing is, MORE BREAKING NEWS: PUTTING ALL OF THEIR WARS ON CREDIT CARDS WHILE CUTTING THE TAXES NEEDED TO PAY FOR THOSE WARS, NOT TO MENTION PUSHING THEIR REAGANESQUE MANTRA OF "STARVE THE BEAST" IN THEIR EFFORT TO KILL SOCIAL SECURITY, MEDICARE AND MEDICAID.
To be a nation of the 21st century, we need revenue for the Treasury to fund such efforts as: clean water. Clean air. Improving public education and the access to it; improving conditions for Native Americans; improve cyber security for all government services; support of NASA; better support of our veterans; launch the ever-promised infrastructure projects to fix and replace bridges, roads, waterways, coastline protections, development of, and access to, communications technology to all Americans, development, and the spread of, alternative forms of energy production, updating, maintaining and protecting our National Parks and wildlands for future generations, ...
You get my point, of course. The Republicans love to cut taxes to get votes while securing financial support from corporate America, all at the expense of what America needs to keep up with the rest of the world then, lead the way.
The Republican Party is no longer the party of green eyeshades. It is the party of the 1 percent. Nothing else.
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Thank you so much for this opinion piece. It's so helpful to get a sense of the arithmetic and financing for big political proposals.
4
When it comes to something like a war, we seem to have no problem spending whatever it takes to get the job done. Just look at the deficits, basically all to support the war, during WWII.
So think big. Why can't we borrow the funding upfront for a government funded healthcare system, and then pay back the loan by taxing such groups that save money because of the new system? And in the long term, perhaps we'll end up spending a reduced % of GDP on healthcare, and with everyone covered. Wouldn't we be better off?
That said, of course, an enhanced public option would improve what we have now. And we would take that. But in settling for that, we may miss the opportunity to do something much bigger.
Joseph in Missoula
3
The Fed's measures to fight the Great Recession and prevent a depression were anomolous, created an anomolous benefit to the rentier class, and exacerbated weallh inequality. Why is it outrageous to propose a, say, ten-year anomolus program of wealth taxation and redistribution to offset it?
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@eisweinoI'm not sure what the Fed has to do with your statement of "why is it outrageous to propose the 10-year wealth taxation"? The Fed is a unique branch, separated from the executive and legislative branch.
1
The Fed is not a ‘branch’ of government. It is private and owned by its member banks.
1
The one trillion dollars corporations spent las year on stock buybacks that upset even Marco Rubio should be taken from them through taxation and spent on Medicare for all, universal daycare, free college, and the Green New Deal.
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Buybacks are not the business of government. They are a private sector transaction.
1
@Alan, but tax giveaways like the one in 2017 are definitely the business of government.
@Bruce Shigeura
Stock buybacks are essentially the same as dividends. It's a return to investors of profits the company made. Neither stock buybacks nor dividends are currently deductible to the corporation as a business expense, so there's no tax benefit to the company either way. Dividends are taxed to the recipient in the year received, so the corporate profits are taxed TWICE before they can be spent - once by corporate income tax, and once by recipient income tax. Are you and Rubio suggesting that the same profit dollar be taxed a 3rd time before it can re-enter the economy? Such policies discourage investors from risking capital that is needed to build businesses and create jobs. No return on capital = No capital.
Words have meaning and are used artfully by those who represent the wealthy individuals and corporations.
How often have you heard criticism of taxing the rich as "Soaking the Rich" or justifications of tax cuts as "Trickle Down Economics"? Consider these points; Any soaking of the rich is the act of their amassing their wealth through business and schemes. We the consumers are soaking the rich with our hard earned money. And what about "Trickle Down Economics? The reality is that American wealth is trickling up and out of the country to offshore accounts and business interests. It's called "Global Investing". Trouble is, that wealth is your pension money and consuming dollars.
I don't think taxing the rich is immoral in any way. The wealthy got wealthy from the middle and lower class and the right thing to do is to support the middle and lower class to continue earning wealth. The Wealthy and corporations have to pay taxes to keep the worker pool healthy, rewarded for the labor that enriched them and to pay for the infrastructure and services they use far more than the average person.
So in actuality, just as the middle and lower classes support the wealthy, so too the opposite should be reality. The wealthy should be more than willing to pay taxes to assure their own prosperity.
7
The vast majority of rich people don’t like to pay income taxes. I know many wealthy people who spend an inordinate amount of their time scheming how to avoid them. It is almost pathological. They would support Osama Bin Laden for President is they thought he would cut their income taxes.
They are very focused on marginal tax rates, and the important deductions and credits that benefit them directly. So the key is to find ways to get money out of consumption and activities they will not forego.
For example, private equity firms are doing so many M&A deals. How about a 1% tax on the total consideration of every merger and acquisition transaction? A deal worth $1 billion (cash plus debt) would owe a $10 million tax on closing. It’s a rounding error in this context and would be rolling into closing costs.
Another example: the uber wealthy love buying high end real estate, and often own many homes. How about a 1% federal real estate tax payable by buyers on any real estate costing more than $5 million? Again, it would turn into a closing cost.
Restaurants: Any restaurant will an average entree costing more than $35 (i.e., one that more well-off people eat at) should include a per entree tax of 5%.
Cars: Vehicles costing more than $50,000 (i.e., high end) should include a federal vehicle tax of 3%.
The key is to “tax” the wealthy on stuff they are going to do anyway. And not tax their income.
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@Jack Sonville
Perhaps a 1% transaction tax on stock transfers over $10,000 would be an additional idea. Just a rounding error for the big traders.
2
Paying for a progressive agenda only makes sense if its primary beneficiaries are valid US citizens and not the entirety of the developing world. Progressives are very good at understanding the limited capacity of our atmosphere and oceans to absorb human-produced emissions/waste. Why don't they understand the limits our nation has to absorb outsiders?
11
@Rennata Wilson, are you talking about immigration? What makes you think immigration is a major economic problem? On the contrary, since our birthrate has been steadily dropping, economists say that immigration will be the way we finance Medicare and Social Security in future years.
1
Beverly Hills seems to have a remarkable ability to absorb underpaid brown-skinned nannies, maids and gardeners, though.
The progressive agenda also includes massive immigration
by various means,
including endless amnesties for illegal aliens (aka "undocumented immigrants")
and including weak immigration control
(including funding strangulaton for detention facilities for so-called "asylum seekers"),
most of which skews immigration heavily toward "immigrants" who bring with them less education and less skills and more children .
That all adds up to hundreds of billions of dollars every year
-- over and above the meager taxes they pay --
for schools (to which they are "entitled" even if they are "undocumented") and medical care (some of which they manage to scarf up -- especially via hospital ER rooms -- even if thy are "undocumented" -- and still more of which they will become "entitled" upon amnesty),
plus expensive burdens (by way of additional required maintenance) on roads, parks, sewers and other infrastructure.
The "studies" by supposedly erudite economists which purport to show that all those costs are offset by some kind of "contribution " by immigrants to the "economy" invariably look only at supposed growth in total GDP (a bigger "economic pie") and not at what really counts, namely GDP per capita (the individual slices). Because immigration necessarily involves more people -- unlike other "tools" that the economists usually analyze, such as tax policy, fiscal policy, monetary policy, regulatory policy, etc. -- GDP per capita does not grow simply because total GDP might grow.
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@sam finn, I didn't realize that Ronald Reagan was a progressive. Live and learn.
Dr. Krugman, won't you be my President? Please? Seriously, if you ran and got into the debates, you'd scare the bejeesus out of all the Republicans - meaning Trump and his surrogates - and that alone would at least give some valuable info to the Dems who will be fighting it out. At most, though, you'd get the nomination and become another President who never ran for office (a selling point to voters) and already has a Nobel.
NOT KIDDING. You could win!
7
@Nat Ehrlich: "Dr. Krugman, won't you be my President? Please? Seriously, if you ran and got into the debates, you'd scare the bejeesus out of all the Republicans -"
Oh yeah, that'd be great.
It would be fun to hear Krugman preach to many of my friends who I grew up with in Detroit about race relations.
And you're walking the talk candidate Krugman?
"Well I live in Manhattan and when I run in Riverside Park I can see that all is well with the world and that crime is down in the country."
Candidate Krugman how can you justify living in a city that has one of the most racially segregated public school systems in the country?
"Well, you're racists from flyover country just like West Virginia! Just read my OP-ED pieces."
Krugman, please do run.
Very interesting Paul. Thank you.
No thoughts yet on Green Climate Bonds, at 5%, to start at small denominations for small investors, and short redemption periods, 1 yr. and gradually increasing to 6.5% for 10 and 30 year bonds.? Money to fund Green New Deal, and issues to be a different category from the traditional denominations from Treasury. Why do I peg the returns at such a level, much higher than current rates on Treasuries? To give conservatives "the saving incentives" they always wanted, but aimed at working and middle class families, in addition to paying for the Green New Deal programs we will need.
1
@William Neil:"No thoughts yet on Green Climate Bonds, at 5%, to start at small denominations for small investors, and short redemption periods, 1 yr. and gradually increasing to 6.5% for 10 and 30 year bonds.?"
6.5% for 10 year bonds and they're guaranteed by the US Government? I'm a conservative Republican and where do I sign up?
BTW, you've just upped the cost of borrowing by other junk bond issuers.
2
@Jp
Well Jp, looks like I used successful bait if I've reeled in a conservative R; they usually are not biting at my lures...
And I've had the added benefit of discouraging junk bonders by raising their costs? Great. CR's are always preaching, Old Testament like, the costs of "Unintended Consequences," - well here's a good one.
Seriously now, the cost aren't so much in the rate of return offered, by the size of the issuance. That's set by the investments you want to fund, or programs you want to pay for, but part of my intent here, especially at the small denominations and short term issuances, is to offer an incentive to "save." You remember that, don't you, from old thrifty R values? And participation, as with the WWII bonds.
Got to go now, I hear the Green New Deal train whistle calling, its pulling out of the station right alongside the Sanders-Warren express. Nice to have you aboard.
The most urgent problem that must be addressed is global warming. Unless that is met head on the rest will not matter. The ultra rich have just been getting richer ever since Reagan. in other words for decades. That lost "trickle down" tax revenue has to be clawed back. So yes, the rich will have to pony up until an equitable equilibrium is attained. If someone makes a billion dollars in a year then they should be paying at least a real 70% tax rate. They will just have to get by on the $300 million left over. Anyone working 40 hrs. a week should be paid enough that they pay some taxes.
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You do realize that the 70 percent tax really does not hit the super rich 1 percent (who do not gain or keep wealth by ordinary income like the middle class)? I thought not. Instead of shooting blanks with the politically nice sounding and practically worthless 70 pc tax perhaps we'd be a bit better off closing a good deal of the loopholes? But then again, the wealthy paid law makers for those loopholes and want their monies worth. In other words...you lose.
7
@Mark Shyres "should be paying at least a REAL 70% tax rate."
Paul, as you well know, we pay 18% of GDP for health care while all other developed countries pay an average of 11%. If we were to run a program of Medicare-For-All as well as other developed countries run their universal health care programs, we would not have to look for a 'pay-for' for the program. Instead, we would just have to devise a way for those who now pay premiums to private insurers (including individuals, organizations and corporations) to simply pay a similar amount in taxes.
The overall result of Medicare-For-All, done right, would be hundreds of billions of dollars per year in net overall annual savings, and all our citizens receiving good health care.
19
Thank you, Dr. Krugman, for a concise and easy to understand cost-benefit analysis of some of the main policy proposals by progressive Democrats. Their biggest challenge lies in successfully communicating facts like these to the majority of voters.
8
MMT argues we can have all this and should then raise taxes when we get inflation. We have plenty of great options for that with record income and wealth inequality:
1. Remove the cap on the payroll tax, which is $132,900 in 2019. This would affect the top 6% of wage earners and cover 70% of the Social Security shortfall for 75 years, bringing in $200 billion/year or about 1% GDP.
2. Wealth tax of 1% on wealth over $10 million brings in about 1% GDP.
3. Eliminate tax expenditures (loopholes) for top 1% is about $200 billion/year or 1.0% GDP.
4. Increase top marginal rate to 57% for top 1% (income over $600k) brings in $170 billion/year, about 0.8% GDP.
5. Reverse Trump tax cuts for corporations for $100 billion year or about 0.5% GDP.
6. A 0.1% financial transactions tax is $80 billion/year or about 0.4% GDP.
These add up to 4.7% GDP without touching the bottom 94%.
MMT says let's focus on inflation, not the deficit. Let's give that a shot and see how it works, starting with printing money to eliminate all student loans and cover college tuition or trade school for all.
14
Soak the rich!
5
Dr. K: Your proposals are spot on. May I recommend another -- cutting the military budget by 25-30 percent?
26
What about converting the grid to all renewables? How can that be done in a cost-effective way? Clearly, it is in the public interest to curb carbon emissions, and there must be a way to do so in a cost-effective manner.
9
I think it is good that these sorts of discussions are being had. Funding healthcare through taxation is a smart way to go if it'll e possible in America, which I personally don't see it happening.
That said, even if Warren is elected, the House and Senate really need to be firmly planted in Democrat territory in order to move things along. Until then, as we saw during the Obama Presidency, it'll come to a grinding halt.
And to be Debbie-Downer, based upon the Far-Left taking over the voice of the Democratic Party, the odds of Trump going into a second term continues to grow so there's still that to contend with.
4
@Scott
The Democrat party has all be guaranteed a two term Presidency for Trump.
What a disaster the Democrats have created!
The echo chamber is deep today. A few realities people seem to be ignoring. 1) Whether or not Universal healthcare will lower the amount of GDP spent on it I couldn't say. What I will say with a great deal of confidence is it will redistribute out whose pockets the payment comes. And frankly everyone who thinks that it could or would be payed for by increasing taxes wealthy or diverting the money corporations pay on Healthcare premiums? Well your ignoring the realities of the US political system. Simple question Who funds way more then 2/3rds of our elected office holders campaigns? Who offers thousands dollars for twenty minute speeches? Who offers lucrative jobs as lobbyists or company directors after ones political career ends? You are expecting our politicians to betray their owners! Honestly not a very likely prospect you must admit.
2) After the disaster the ACA was for a lot of people they look on any Democratic proposition healthcare with at least mild suspicion.
3) Running the printing press until the plates melt to pay for it has so many here have proposed? I hate to break the news but that would reduce the dollar to eye catching toilet paper in international transactions for sure, and when domestic workers figured out the Peso was worth more? Blood and lots of it!
4) I don't dispute we need to change healthcare. But we need a better plan to pay for it then government efficiency (Yeah Right) and we'll stick it to the people and corporations who are unpopular.
5
Mr. Krugman's perspective makes sense in a sensible world, but let's replace the notion that the very rich got that way through their own merit based performance with a dose of reality. Many inherited said wealth, and many in that category are tremendous human beings that do a lot of good. Probably more than most of us can comprehend. However, there is also a % of the very rich that got that way through a variety of deception, inside-pool, monopolistic control that doesn't equate to garden variety greed, rather, systemic criminality that literally bought the system. The reason the populace writ-large doesn't trust institutions is because they have utterly failed to do their jobs if you consider their jobs to protect the American people and hold criminals accountable. Do you think for a second the DOJ did it's job under Holder, if you consider his job to uphold the law and make those that shatter it accountable? Holder had his play as did Gonzalez before him and now we're all horrified by the current buffoonery of "Curly" Whitiker whose outright obstruction was made possible by the failure of those who greased the wheels before him. What I hope the likes of the distinguished Mr. Krugman come to grips with is the wholesale con that has persisted for decades that turned any rational theory of supply and demand built in an economy predicated by fairness. Where has the demand come from these past 10 years Mr. Krugman? From a rebooted economy? Yea right.
2
@Patrick Lovell Well said...Honoré de Balzac said "Behind every great fortune is crime."
What are the costs of NOT adopting programs like universal healthcare? One of the reasons so many countries around the world peg their currency to the US dollar is because our country is not only a superpower but, in historical and global terms, extremely stable. That’s one of the reasons we can spend so heavily into debt. Holders of US treasury bonds don’t view them as lousy IOU slips. They view them as sound investments that will hold value.
But will that last forever as our middle class shrinks and gaps between the wealthy and poor grows? Historically, such societies are not stable and prone to violent upheavals. We might already be getting a glimpse of it with the election of an unstable con man like Trump. If we go down that road, then that’s when our debt will really catch up with us... when bond holders think they are holding bad investments. So among other reasons for pursuing social safety nets, programs that ensure a stable society is a sound investment.
8
There are a number of bad actors on the world stage, and just yesterday, Putin threatened us with missiles reigning down on us. That said, the truth is that the whole Vietnam War was a horrific disaster, so have been the wars in both Afghanistan, and Iraq, and the subsequent destabilizing of the middle east, by removing both Mubarak, and Gaddafi. There was more death, in the millions, more refugees, in the millions, most of those refugees deposited on the doorsteps of western Europe, and the costs, in the trillions, of mostly borrowed money. All of it can be laid on George W. Bush, and Barack Obama. The sad truth, is that neither man would admit the horrific mistakes they made because they are both arrogant. The fact that General Frank didn't have enough troops on the ground in 2002, to complete the mission and be out in a year, and he should of been smart enough not to go into Iraq. The real failure of leadership is not having Presidents who have been good military leaders, and then not having those in the military before undertaking any mission, really understand the history, and the culture, of the place, whether a mission is worth it, in lives, and treasure. Obviously, lessons from the failure in Vietnam, weren't learned by the time the middle east incursions happened after 9-11. The military has become a jobs program, and that is the other side of the coin. There is little money left for the domestic side, especially healthcare, education, and infrastructure.
6
So, we spend significantly more on health care than other advanced countries and we can't figure out a way to capture that spending in taxes the feds collect? Why can't my employer pay a tax instead of paying an insurance company for my health care? Why can't all business pay a tax in the amount that they should be paying for employee health care? I don't think it needs to be paid for in total by taxes on average citizens and I think the average person would come out ahead.
10
Perhaps securing the revenue base should be top priority for the Democrats?
I voted for Clinton in 2016, but it’s time to actually learn from past mistakes. 2016 conventional wisdom about what was “too radical” for American voters was way off. First, pundits who wrote off Bernie Sanders as a fringe “socialist” candidate turned out to be way wrong. Then, putting their “smart money” on a supposed moderate figure like Clinton beating a two-bit reality TV con man turned out to also be wrong, too. While I respect Dr. Krugman’s understanding of economic issues, I think his sense of what most Americans will accept is still way off.
I think the same talk of watering down necessary changes now sounds like static to many Americans. They can smell of stink of politicians kicking the can down the road. I think Americans are ready for a more serious solution rather than to drag the problem out with half-measures, and pundits need to re-evaluate what they think is “center” on these quality-of-life issues.
I think discussions about funding these proposals are legitimate. But, if other developed countries like Germany (1/4 US population) and Japan (1/3 US population) can do it, we can do it. It won’t be easy, but writing off systematic change like single payer for the sake of political expediency is a bad call.
9
Barney Frank suggested lowering the age for Medicare which makes sense in terms of cost.
Also, the public option that former President Obama had included in healthcare reform made sense.
It should be noted by everyone running in the Democratic party that after a years' worth of haggling and adding over 150 amendments to healthcare reform legislation until it could be called Romneycare, that they refused to vote yes - even after all that.
And that they have destabilized the marketplace.
Every one of these contenders should be pointing this out.
And since the GOP is constantly deifying Churchill, also repeat word for word what Churchill had to say about Universal healthcare:“The discoveries of healing science must be the inheritance of all. That is clear: Disease must be attacked, whether it occurs in the poorest or the richest man or woman simply on the ground that it is the enemy; and it must be attacked just in the same way as the fire brigade will give its full assistance to the humblest cottage as readily as to the most important mansion….Our policy is to create a national health service in order to ensure that everybody in the country, irrespective of means, age, sex, or occupation, shall have equal opportunities to benefit from the best and most up-to-date medical and allied services available.”
(Oh, my! What a 'socialist" that guy was!)
12
@Jbugko
Even more significant, Churchill viewed it as part of the UK's national defense.
What became the NHS was passed after WWI because at least a quarter of the British prospect draftees were disqualified because of their health.
As Churchill's fiery predecessor David Lloyd George said, "You cannot have an A-1 army with a C populace [referring to draft standards]".
5
While I imagine the vast majority of Americans favoring affordable and accessible health care and child care, the devil is in the details.
Does single payer healthcare come with salary caps for medical professionals as in most democratic-socialist countries who run similar programs?
Would the child care and health care benefits be only open to Americans? How about legal immigrants? How about the 11-13M undocumented immigrants?
These issues are political poison and I can only imagine the chaos at trying to pass such legislation. Yes, the money is there, but whether or not politicians have the political capital and will to see it through is the question.
3
Every time Krugman writes about Warren, he cites her intellectual brilliance and the originality of her ideas, then questions whether she "will or even should be" nominated for president. Given all she's done to defend consumers, her anti-corruption bent, her considerable intellect and passion... why be so defensive in your praise? She appears to be the cleanest politician in the pack, and (other than the ridiculous Pocahontas travesty) I don't know why her public support has waned. I think she deserves more serious consideration as a candidate.
13
Warren would make a fine candidate in Germany, but style matters over substance in America.
Remember Al Gore and Hillary Clinton, both too awkward.
Paul Krugman is the cabinet official this country needs.
4
@RTC Find a spot for Robert Reich too another great American with great intellect.
I appreciate the framework put forth attempting to classify how to fund various forms of government spending. It has always galled me to look how a group of 535 people, many extremely wealthy from successfully running companies, cannot apply the same financial judgement to their work for the USG. Whether you agree with the classifications here or not, at least there is a way of making decisions rather than absconding the responsibility for income to address expenses.
A must read for all Progressives (Democratic Socialists, too). Please copy this to all of them, Paul, just in case they may not be Krugman addicts like me.
1
"private health insurance currently amounts to 6 percent of GDP. To implement these proposals, then, we’d need a lot more revenue, which would have to come from things like payroll taxes and/or a value-added tax that hit the middle class."
Why? of course there would be transition expenses. Some of that could be recouped by a phase out of employer sponsored health insurance. Say through a diminishing tax over 10 years based on present expenses but not to exceed current business health insurance expenses. That would provide funds. Universal health care would improve US business world wide competitiveness. We already pay more that all industrialized countries by far and receive less for it in return. That is in good part because of for the profit health care industry which removes vast sums from what we assume we are spending on health care. Based on a well run system that is capable of regulating pharmaceuticals and devices, the savings should pay for itself. There are many other ancillary benefits such as improved worker productivity and diminished possibility of bankruptcy. New industry start ups would face less hurdles.
There is a strong case to be made that universal health care would be less expensive, relieve the middle class of an outsized burden, lead to improved health outcomes and remove a significant hurdle to the competitiveness of American industry.
5
@Common cause
Do you have an issue with paying more taxes for healthcare?
We would need more money from not only the wealthy, but the middle class as well.
2
@Driven
Probably more people than you'd think would pay more taxes if it meant smaller (or at least stable) premiums and copays.
Also, the cost of auto insurance , once it doesn't have to cover injuries, should drop, at least partially offsetting increases elsewhere. UK rates are substantially lower than in the U.S.
2
@Driven
How do you know that? Just because many economists have announced their opinions? This is not an issue that has ever been the focus of an adequate and unbiased inquiry as far as I know. We pay the most now. Just condemning a constructive alternative as bound to cost more is not sufficient.
2
Another Dem train wreck in progress.
2
There's plenty of funds needed in the bloated Defense budget which Trump drew up for his defense industry supporters.
5
The growth of the our federal government has coincided with the expansion of global capitalism, corporate media and US military interventionism. It's worth considering whether these developments are related.
We need more Small Government, small-scale production and distribution, local commerce, independent news sources and less pentagon-driven foreign policy... just my opinion.
3
1. Medicare for all cuts US health care from 17% of GDP to 10% of GDP (European average). That SAVES $1.1T PER YEAR.
2. Green New Deal eliminates US oil import trade deficit. That SAVES $300B PER YEAR.
3. Green New Deal eliminated national security threat of Middle East Oil allowing 50% reduction in US war budget. That SAVES $350B per year.
Saving for US for the "Progressive Agenda" is $1.75T a year.
Next battery.
10
@EaglesPDX
While I can't vouch for your numbers they do get at my core question which seems to not be part of the discussion. That is, what would be the total cost per person of health care before and after instituting a single-payer system? My assumption is as EaglesPDX suggests, namely that the total cost of healthcare would be less without a drop in outcomes and that this would be a net benefit to society. Yes, we would pay more in taxes but would pay less (and less than the related taxes, so net savings) in healthcare premiums. It is a shift of cost from the individual and the employer to the government but also a reduction in total cost. Right? Shouldn't we be talking about that?
4
One person's savings is another person's job. You understand that the 17% of GDP that goes to U.S. healthcare does not vanish into the either, right? Instead, it supports around 25 million jobs. So if you can somehow manage to cut it to 10% of GDP--easy to do on paper, but nearly impossible in the real world--your "savings" equals around 10 million job cuts. What will you do with those people, most of whom are not well-paid doctors? And how does your comment get so many upvotes?
3
@tanstaafl, there's another interesting opinion piece in today's NYT that suggests the model we should follow to reform healthcare is Germany, not Canada. In Germany citizens choose from about 100 private health insurance companies, all non-profit and heavily regulated. Administrative costs are about two percent higher than Canada's, but most of those insurance jobs would be preserved.
All very thoughtful, Prof. K., and very informative.
I have two comments on the general issue:
1. Any of these proposals would be OK with me. A Democrat on her worst day is inifinitely better than a Republican on his best.
2. More than the details, I think Dems need to change their attitude towards campaigning. You are spot on when on you say that many of the people asking questions will do so in bad faith. We know who they are. When ever one of these people poses such a question to Warren or Harris or Sanders, the response should be combative:
"I'd gladly anwser the question if you were asking it in good faith. Go take a hike."
7
This sounds good but as we've learned, unless it's backed by a Congress that's in favor of it, paid for by a wealth-tax...it won't fly.
This Child Care Plan and the words 'wealth tax' is going to be red meat to Republicans and Trump.
The Republicans and their Donors were just reveling in their huge Trump Tax Cuts. Don't expect them to give up 1 cent to families in need of Gov child care.
I'm surprised Trump hasn't gone after Head Start. He's definitely not interested in children, except wealthy people's children and his own children by lowering the Estate Tax.
3
@sandi We've got to stop worrying about the Bogeyman in the White House. The midterm elections provide ample evidence that the Emperor has no clothes.
4
@G W McCullough Do you remember the mid term election results during the Obama Administration? Or is it convenient not to?
All these big new spending plans and no control of the border is not something the voters will ever get behind. Kind of have to choose which you want, a whole bunch of new 'voters' or one or more of these proposals. Insist on both and you guarantee you will get neither. Choose one or the other please.
3
@GregP What, exactly, do you base your assertion that the voters won't get behind domestic spending increases that help middle and working class families and support spending on a barrier at the southern border? The recent midterm elections were fought over expanding health care to more Americans and ignored the border security issue despite being the main issue put forward by the GOP. And the Dems won that argument by historic margins.
5
@G W McCullough
Yeah, if by 'historic margins' you are referring to the number of retiring Republicans leaving seats open. If you are referring to anything else far from it. Trump lost seats in the House, but less than both Obama and Bill Clinton did in their first Mid-term after coming to Office. He gained seats in the Senate, mainly due to the Kavanaugh Smear even if you won't believe that. So that is far from Historic but the number of Republicans vacating seats could be described correctly that way so maybe that is what you meant?
1
@GregP I am referring to the 8.6 million vote advantage the Dems had in the midterms.
I've not heard any talk from progressive candidates about cutting military spending as a means to fund their proposed programs without raising taxes. Why not?
9
@GBR The late Seymour Melman once proposed a "Save Amercia Budget" that involved cutting $100B a year out of the defense budget for ten years, and that saved money would go into infrastructure renewal, electrifying the railroads, etc. He came up with this 35 years ago. What's changed, now that the DofD soaks up $700B/year, more than half the overall budget.
4
@GBR
Because they're addicted to MIC PACs.
2
@GBR War is business and business is good.
Paul Krugman justifies increasing the national debt for "investment" "if you can raise funds cheaply and apply them to high-return projects, you should go ahead and borrow."
Yet, when it comes to "major system overhaul" such as free health care for all, he changes his tune and says such programs "would have to come from things like payroll taxes and/or a value-added tax that hit the middle class."
Why not sell bonds to fund the entire cost of such programs "if you can raise funds cheaply and apply them to high-return projects?" Isn't free health care for all a high return project? We should also remember that Krugman has already stated his view of the national debt, for example, here https://www.nytimes.com/2015/08/21/opinion/paul-krugman-debt-is-good-for-the-economy.html
Furthermore, if such programs hit the middle class, we can then ask, when will economic and political equality be reached?
3
@Judy M
No it isn’t high return.
The more important issue that cries out for public debate is climate change. Green energy is now bipartisan in most states. But the congress and Trump seem to think it a minor consideration. The public costs to control climate change Trump argues will cost jobs and be wildly over expensive. The dire warnings of serious consequences are no longer set far in the future they are practically upon us. Trump and his polluter buddies will not give up their willful disastrous dishonesty. This should be the major issue of any candidate against Trump.
3
At this early stage in the Democratic sweepstakes, I think we need a vigorous discussion of ideas, rather than a contest of personalities. There are innumerable ideas for spending money for social benefit, and ideas about how to pay for some of them. These ideas need to be discussed thoroughly until they gel into a workable, clear, and comprehensive platform, well before we decide who can best sell and implement them. The process has barely begun. I’m looking for potential candidates who talk less about “me” and more about “us”, and who are willing to discuss policy options without insisting that their own proposals are the only way to go.
7
Dear Dr. Krugman,
While I understand the principle that "investment spending" should not be subjected to a justification of "how we will pay for it", I am less certain about the assumption that all these monies spent will have a "high social return".
Theoretically, I can see this may be true, but I have seen plenty of government "investments" that have not panned out so well, to say nothing in regard to corruption and waste that often accompanies such programs.
I assume there is an "ROI calculation" to compute the "high social return" on such investments and perhaps Mr. Krugman and the candidates can be more specific and quantify those returns to demonstrate that they are indeed a good "investment".
I certainly don't cavil about spending on the social good but I want to see and hear more than that it has a theoretical social benefit. I want to see some evidence that such programs will actually perform as advertised.
2
@gpickard
We have all seen investments that did not pan out, in the private sector as well (Enron, Worldcom), but I am not convinced we can apply 'rigorous' cost-benefit analyses. The premises of 'rational choice' analysis include the reduction of all values to monetary equivalents, and that masks a variety of conceptual errors, well described by Elizabeth Anderson (Values in Ethics and Economics) and by more direct debunkers of orthodox economics (Steve Keen, Debunking Economics). The negative ROI deriving from lassitude in enforcement of antitrust and prescription drug regulations is already evident, as are the secondary effects of foreign interventions. The risk that domestic investments might not realize all one's fondest hopes seems trivial in comparison to the illusions of MarketWorld.
2
@gpickard
Dear Curmdgeon74,
I agree that "social returns" cannot be reduced to a monetary ratio. You will note I put "ROI calculation " in quotation marks. I was hoping that people reading would understand that the benefits of a program are should not be predicated upon whether they will make money or even pay back the investment, but rather that, social investments should be vetted to ensure they will actually achieve what they were intended to do for the price tag advertised.
I am a contractor by trade and I know how hard it is to bring a project in on time and on budget and completely functional and operational.
I have had some good projects and a few losers, but I always had the discipline to sit down and measure twice and cut once.
So often politicians and their shills tout projects and pricing that are complete rubbish. When these projects overrun, then it means something else that might have been more worthy of the expenditure must be delayed or cancelled. That is not in the interest of the public good.
I want to know that someone sat down and put their intelligence to work in making a budget, a schedule and an execution plan to ensure that it functions and produces properly and efficiently.
It is not an easy task. I know. But if politicians are unwilling to demonstrate their good faith explaining this then I have no respect for them
3
Everything *can* be paid for, but this is not a math problem.
2
If it was really an investment and subject to accountability measures then ok. Problem is that doesn’t happen. Once something starts it just goes on forever and any action to streamline is immediately attacked as cruel. Obamacare is an example. Advocates say more people insured, yippee. That’s not the goal, the goal is better healthcare and that clearly isn’t happening. Look at food stamps. A good and necessary program. When economy improves it would make sense for its cost to decline but as soon as someone says that out loud, they’re taking food out of the mouths of children. A lot of the left sees more money as victory in itself and that’s just wrong.
3
@Tim Kulhanek, I'm trying to understand your comment and coming up short. You say some government programs outlive their usefulness and then call out Obamacare as an example. Obamacare not only increased the number and percentage of Americans covered by health insurance, it also helped reduce the rate that all insurance policies were rising. It also limited the amount insurance companies charge for non-healthcare expenses. It also was helping reduce the federal deficit. So where is the problem with that? Regarding food stamps, when the economy "improves" it always seems to help wealth people first and the working poor may never see an improvement. That is what we need to fix. So, maybe you need to open your mind and read in non GOP run media to see that Democrats are the party that is trying to help average people. I betting you won't though.
1
Problem is the wealth tax will never pass. All Republicans and many Democrats will not support it. In fact it may be unconstitutional. Oprah just lost $500 million on an investment in Weight Watchers. Would she be due a refund for the tax paid when it was worth more and now it's 70% less? It's impossible to value investments because you can't use market price because it changes hourly. Up one day down the next.
Income taxes are easy for the rich to avoid. Just don't have income. Live off the money in the bank. Or create trusts or whatever. That is why although their are high taxes in Europe the rich pay less as a percentage of the population than in the US because the masses pay a lot more.
Just be honest or the Democrats risk being a party who can't govern when they get power because you can be everything to everyone and the Republicans will divide an conquer which is why they have the WH, Senate, and the Courts.
4
@SeattleJoe the wealthy already pay "wealth taxes" on their homes and business real estate. Its called a property tax so its not such a new idea. Expanding it as Elizabeth Warren has proposed will solve the problems you state regarding an income tax which can be gamed. Regarding the GOP, they have cheated and committed treason to get control. We have the numbers, we just need to stop self defeating as you seem to be.
1
So a person who knows almost nothing about investments has an opinion, not a very good one. We should not borrow for anything other than long lasting capital investments. Our debt level should be determined by how much of those capital investments we have. No borrowing for yearly expenses, you have to either eliminate those expenditures, make them cheaper or tax someone to pay for them. Putting these things at a state or local level allows better control so there is where such investments belong. Here we have free college or technical education, we pay for it with a lotto. Others could do the same.
4
@vulcanalex
Improving the health and education of the nation IS "long lasting capital investments." The tax cuts have not produced the promised infrastructure improvements by the government. And they have not produced the projected private investments by companies. Companies instead largely chose to buy-back stock and increase executive compensation. This impinges on the compounding of value and long-term benefit that is certain to flow from needed investments in human capital. This result would not be dependent on further government and private market decisions.
2
The reason we're dealing with chaos now is because of Bernie Sanders, who got into the Democratic Party and cause such dissension that many young people decided not to vote at all, and we all know what happened next, Trump was enabled by that and other things to win the White House.
Bernie, please go some where, sit down and be quiet.
There are many able and savvy young women who are running for the opportunity to get the job done!.
3
@Gwendolyn Sure there are??? Amy who?? A disrespectful couple of senators with almost no real experience in running anything? And gender should not apply to this or any position, let the proposals and experience count.
1
"Medicare for all" is best implemented as a multi-stage/year program rolled out by age cohorts starting at the 60-64 group and simultaneously at the 18-24 age cohort, to balance out actuarial risk, and work from there additional cohort by cohort towards universal coverage.
Each cohort would have the opportunity - not requirement - to buy into Medicare at actuarially valid rates. This would be the system wide version of the Public Option which unfortunately, Obama failed to implement in 2009.
People who did not meet certain income thresholds would be subsidized in their premiums just as in Obamacare. These subsidies would be the heart of the governmental investment, and would not be overwhelming if the economy cooperated.
Though there would be suggested target dates, new cohorts would be brought in based on the experience with the previous cohorts so as to be able to fine tune the financing of the system over time.
Basic economics would predict that over time Medicare, as the Public Option, would take over the Employer Sponsored Insurance (ESI) market. The individual market covered by Obamacare would blend seamlessly into such a MFA program, with the similar user's choice elimination of private insurers.
Private insurance companies?
They would transition to the supplemental insurance market, as happens in most countries, and as we already have in the form of Medigap coverage.
Details?
For sure. And a lot of bad faith Republican devils. But this is the basic blueprint.
4
@Arbitrot Very true but the rates would be so high that nobody would be willing to pay for them. And those without rational thought respond with insults like devils.
1
@vulcanalex
We don't precisely know how much those rates would be.
@Vulcanex
Methinks you are very far away from being an insurance wonk. Let me assume charitably that you are not otherwise an insurance industry troll.
Please take a moment to look at this link:
https://www.kff.org/other/state-indicator/total-population/
As Vulcanex has just seen, Employer Sponsored Insurance (ESI), where the employer typically contributes to the premium - sometimes 100%, in many cases 50%, in some cases lower or higher percentages - covers, roughly, 40-55% of the population, depending upon the state.
Medicare 65 and Medicaid currently cover a significant percentage of the rest of the population. Indeed, the only significant chunks after that are the "Non-Group" market and the uninsured.
Obamacare was targeted at the "Non-Group," or Individual, market, and has been successful - though not completely - in covering that remainder.
Notice that in the ESI market, the employer contribution would be diverted to Medicare ESI is the employee, at the time of open enrollment in the fall chose Medicare ESI, rather than, say, Aetna, Cigna, Wellcare, BlueCross or one of the other private insurance options.
I don't think you would find many health care economists who would suggest that Medicare ESI premiums would be higher, both to the end user and the corporate client. Indeed, most would expect that Medicare ESI premiums, with the coverage clout that Medicare (and Medicaid) overall would bring to the bargaining table, would be lower.
Capisce?
Dr. Krugman - as we all know that the amount currently paid by employers for employee health coverage will not flow to the employees if private insurance were replaced by a Medicare for all type program, this should be finance by charging employers, based on the number of employees they employ, health care costs in their regions, etc. This should not be a windfall to employers at the expense of a payroll or value added tax to employees (unless the payroll tax is charged exclusively to employers). As private insurance currently subsidizes government insurance, a "tax" to employers that roughly equals their current contributions to employee health insurance, along with some employee contributions, should cover the cost of providing health care to those not currently covered because they're not employed or their employers don't provide coverage. The savings in administrative costs alone (payer admin costs plus the providers' admin costs associated with all of those different arrangement with different payers likely account for 25% of every health care premium dollar) could be redistributed to cover both the uninsured and the current shortfall in Medicare and Medicaid payment to providers. And payments to providers will need to be adjusted, as Medicaid and Medicare rates don't cover providers' costs and are currently subsidized by private health plan premiums. All of that can be done without adding any costs to the system, and likely saving a tidy sum to boot.
1
Which category of expenditure does the unwinnable Forever War fit in?
Conservatives never have to justify any of it.
5
How to pay for single payer? Start with the money already paid by employers for health care, then add the money already paid by employees, then add the 20% profit cut taken by insurance companies, then add the savings from addressing health problems when they start, then add the savings from no more family bankruptcies for health care, then add the savings from a clean and progressive accounting and reporting system instead of the black box of bizarre procedure numbers that no one can understand, then add the savings from negotiated medicine prices...and I think we can make it work.
11
@James Schoettler
Well said and clearly explained!
1
To fund Medicare for all in a politically viable manner, it seems to me that you would increase existing funding sources as necessary. Introducing new taxes is more likely to cause resistance.
2
It's all affordable! What Howard Schultz didn't understand is what makes...whatever....not affordable is where it lands on your hierarchy of priorities. All the things highlighted in Krugman's column are things already being done in other countries and they seem to manage okay.
If you just take healthcare specifically, the medical expert theory is that by giving greater access now, people will live healthier lives saving money to the system in the long run on costly medical procedures. Assuming that to be true, all that's left is for policy makers to figure out how to get the most bank for their buck.
Before we get there though, society, through its politicians needs to prioritize this. The GOP position for years is simply to wash it's hands of it and say that the market will take care of it. I think we all know, 1) that's wishful thinking and, 2) Americans don't want it left solely to the market either.
2
@Jonathan Sanders Sure medical expert theory is correct. I seem to remember an actual experiment where people were given health insurance and their health (other than mental health) did not improve. Having access to free doctors just means you use more of them in general, not that your health improves.
3
@Jonathan Sanders
We do not have a free market in healthcare, and never have had one since easily the 1960's, when NYC foisted its healthcare budget off on the federal taxpayer.
In a free market, consumers have access to price and quality. Big medicine contends that how much your insurer pays for drugs and services is a trade secret. Until a years long FOIA battle between the WSJ and Medicare, how much providers received in compensation is secret.
Granted, for emergency care, people don't necessarily have the option of comparing price/quality. But aren't we entitled to know that a physician who lost his license in another state is not practicing in our home town?
@vulcanalex
Incorrect.
The other western countries with some form of universal coverage all have better health outcomes than the USA.
It's not difficult to find statistics on that.
Any spending that invests in education and stabilizing people's life situations will likely pay for itself and then some down the road. Both childcare and early childhood education do this in significant ways. So does expanded access to healthcare, especially universal primary care.
Most of the people who argue against these kinds of programs actually live in contradiction to their own arguments on a personal level: they send their kids to the best schools they can, get the best healthcare they can, and buy a home if they can (and take on debt to do so).
But they operate on what Parker Palmer calls the scarcity assumption, believing that making these advantages more widely available to others will somehow diminish their own access to them. The opposite is true, but it's a truth they don't want to embrace.
4
@John
We spend twice as much per student on education as other countries and get worse outcomes. We spend twice as much for medical services as other countries and by some measures get worse outcomes.
Perhaps we spend too much money on things that do not contribute to society, but only to the wealthy and well connected.
A charity hospital in Chicago paid Michelle Obama $175,000 per year for a part time job as "director of outreach" when Obama was a state legislator. When he was elected to the US Senate, her pay was doubled to $350,000 for the same part time job. When she moved to DC, the charity hospital did not find it necessary to replace her.
There is no evidence that full day early childcare has any positive effects. Even the Obama administration admitted that Head Start has no discernable benefits.
It is true that middle and upper income children who attend preschool for 2-3 hours 2-3 days per week are more successful than poor children who do not. But three and four year olds who spend six to twelve hours in daycare have a hard time adapting to school at five and six years old.
Progressives like programs that sound good. They are indifferent to facts that contradict their grandiose plans to inflict the wisdom of the cronies on the population.
You are operating on middle class opinions of what is good for poor people.
1
It is very simple: investment in what is useful pay in the long run. You may buy a house, take out large debt, but in the long run, you win. You invest in your education for a reasonable choice of a study, and you are employed. So debt for investment is good. What is NOT good is debt for a vacation, or in 2017, debt for tax cuts for the wealthy. The wealthy need to repay the population for the advantages the USA gives the wealthy.
6
@toom Or debt for an education that does not lead to employment to justify it. And a house is not an investment, it is an expensive choice.
1
The right shows its ignorance about health coverage and health care systems every time a GOP pol uses the term "socialized medicine".
The whole idea was originally Otto von Bismark's--to fight socialism and deter unionization.
Theodore Roosevelt, who at least used to be a point of pride for the GOP, brought the idea into U.S. political discussion in 1912, making it a plank in his Bull Moose party.
Richard Nixon initially rose to national attention fighting communists as a member of the House and then as a senator. But during that time, he also introduced his first proposal for a national health coverage system.
Just another part of its heritage the current Republican party ignores.
10
@Grennan
Times are tough for Democrats when they are forced to use Richard Nixon as their authority.
Conservatives advanced a Heritage Foundation proposal in the late 1990's to get the federal government out of the business of subsidizing big medicine cronies and migrating to a free market. After Democrats realized how defective Romneycare and Obamacare were, they pretended the defective laws were derivative to the HF proposal and/or an attempt to placate Republicans. In reality, Obamacare did the exact opposite of every single policy recommendation of the HF plan.
The leftists display their ignorance of history every time they deny that putting the government in charge of the economy it represents socialism.
Socialism is an economic system where private ownership of the means of production is still permitted, but the government controls the businesses. Central government control always results in reduced effectiveness and efficiency of the economy. That means that there is a smaller pie to be divided up. Had the HF proposal been implemented in the late 1990's or instead of Obamacare, we would be paying 20 to 40% less for healthcare than we are, and the big medicine cronies would be less profitable. Within that lower spending, there would be plenty of money to cover those in need.
@ebmem
There's close to no truth in anything you say. My guess is you are a 'Fellow" of a right-wing think-tank who is given brownie points for making up nonsense.
Obamacare is almost identical to Romneycare, and both are based on HF ideas. And both have worked very well.
Mass has better health outcomes than almost any state. Spending growth slowed while uninsured rates were cut under Obamacare, at least until the Republicans started to defund it.
The reason it is now time for Medicare for all is that we have learned Republicans will fight any idea, endlessly, so we might as well have a stronger system with simpler funding mechanisms...fewer points to defund.
Any wealthy pundit or prognosticator who says we shouldn’t have to rush to a single-payer-healthcare system should check their privilege.
Krugman may not feel the need to rush — but something tells me he isn’t losing sleep over whether he can afford a life-saving procedure or medication.
6
@Thomas D.
The barriers to single payer are the 50% of the population who have private insurance and the 60 million Medicare beneficiaries who have no interest in getting a worse deal than they currently have.
A concerned citizen should always ask where the funding will come from. It's very easy to vote for something if you think it's "free".
5
If we have to play the capitalists' game, then in terms of health spending being an investment, think of how much creative/entrepreneurial energy would be freed up in this country if our citizens didn't have to lie awake at night with cold sweats caused by health care bills, if they didn't have to work three jobs to pay for health care, if they could take a job with a startup instead of staying shackled to some dead end gig with a big company because that's where they get their health insurance ...
5
I think that’s a really great way to sell it. It would be great for small businesses and people employed by small businesses.
3
@Diego Sure there would be, after all those poor people are full of great ideas.
2
@Diego
People will still work for the jobs that pay salaries and wages rather than speculative stock options. Pretending than anyone is tethered to a job for health insurance ignores the fact that they are also tethered by their need for food, housing and clothing.
The people lying awake are not worrying about their medical bills, which are dischargeable in bankruptcy. They are worrying about the mortgage, food and utility bills they cannot pay because they are too sick or injured to work. Big medicine is the primary beneficiary of Obamacare, because they are guaranteed the bulk of their overstated bills by people who have government paid insurance.
Most startups fail. If everyone had free medical care, they would still need to work to pay for housing, food, clothing.
Democrats created an crisis in your mind and then solved it with a scheme that gave extra money to their campaign donors. Not to mention the same characters who were paying high salaries to them, their families and friends.
1
The problem I have with this analysis is that many programs can be placed in the investment category even though they would be extraordinarily expensive.
One such program, I believe, would be free tuition for all at public colleges and post-high school education programs. This is something that I truly think would do wonders for America and should be adopted. Yet, it is hard for me to believe (I have never crunched the numbers) that it wouldn't cost at least hundreds of billions of dollars per year.
I really think there are some expensive programs which should be adopted by this country, but simply adding the cost to the national debt makes me nervous. It seems a truly great country should not be in the habit of continually adding to its massive debt. It should at some point start paying down that debt, rather than continually adding to it.
5
@Tom Krebsbach We have that in Tennessee, many who start don't finish, so somewhat it is a waste of money. They have it in Florida as well, any state can do what we do.
1
Taking Mr. Krugman's framework as a given, the projected US budget deficit for 2019 is almost a TRILLION dollars. That's a 1, with 12 zeros following. That's just the deficit. The national debt has ballooned to $22 trillion. Even now, with low borrowing costs, over 8% of the federal budget goes to pay interest on the debt. That's hundreds of BILLIONS of dollars that could be spent elsewhere. Has anyone ever evaluated the actual value added to the nation of all this accumulated financial burden? What happens when borrowing costs are no longer "low"? The point is, any further deficit spending has to be evaluated based on current fiscal circumstances and consider worst case scenarios (rescissions, inflation). We are not dealing with a blank slate. Mr. Krugman's framework (and most pie-in-the-sky spending proposals) ignore the reality of now and the burdens on future Americans.
7
Like the man said, funny how you guys never raise this when Republicans are in charge, and they want little things like $2 trillion (off-budget, too!) for a dimwit war in Iraq, or $2 trill in tax cuts for the wealthiest, or another tril for the military.
But point is, Motley Fool was right: there’s good debt, and bad debt.
Warren’s proposals are mostly good debt.
6
@Robert Mostly bad debt, debt for things that reoccur every year and show no reasonable return.
1
This has nothing to do with who is in charge. Its common sense. Resources are limited. What happens when the dollar is no longer the world's reserve currency and it costs more to borrow money? What happens if we have another recession or a financial crisis? If the government is saddled with additional obligations, what's to say we will be able to spend ourselves out of it, like we did the last time? If we have accumulated a mountain of bad debt in the past, why is that Ms. Warren's proposals would not result in more? What about current entitlements? Can we really just ignore unfunded obligations we already have? Assume you are right on Iraq and tax cuts for wealthy people (and I agree with you), that's just a dodge. Doesn't address any of the issues that actually matter. Ms. Warren, for all of her credentials, doesn't either. And, just as an FYI, I am not a Republican and have never voted for a Republican other than Mayer Bloomberg. He, at least, left the city better off than when he took office.
Paul always finds a way to pay for a democratic proposal ... and he even get a nice swipe at Mr. Coffee at the end.
It all works until it doesn't
11
Let's get granular on health care. We need to limit the use of medical devices to those that are proven to work. This would remove a lot of heartache and expense. We also need to establish best practices, such that hospitals use one knee replacement (of very few), one hip and so on. So this improves outcomes.
Re prescription drugs, we need an overhaul of what can be patented and enforcement that allows generics of many expensive drugs.
Start with this and build out.
2
That isn’t granular. That’s more hey, presto.
1
Yes, undo the loony tax-cut-for-the-rich--and on top of that reinstate a fair and proper tax regime--and then use the revenue for benefit enhancement.
Yes, borrow for investment, especially a major infrastructure program with good infrastructure jobs.
Do, please encourage politicians like Representative Ocasio-Cortez who has apparently consulted with credible economists.
Don't, please let Mr. Sanders continue to avoid doing the same. Here Paul Krugman has given Sanders and the rest of us a solid foundation for approaching such things.
No, please don't listen to Howard Schultz, who has looked remarkably clueless over the past week or two.
Yes, please look hard at defense spending and the like.
7
Would Medicare for all or single payer bring down medical costs and so reduce the tax burden?
2
@Spence
Since it does in all other western countries it should in the US, if you removed the insurance industry from the equation.
3
@Spence No it would increase use (since it would be free) and increase wait times as well.
2
@Spence
Yes.
Our goal in reforming health care should be to get our spending down to what it is per capita in other countries while not getting worse results. This is not going to cost us money because once established it will save us money. The problem is making the transition.
If health care is funded by taxes and fees rather than employers, taxes will go up and employers who funded health care will get huge windfalls, while employers who did not fund health care will get only higher taxes. If the health insurance industry is drastically shrunk, we will have hundreds of thousands of people looking for jobs and certain communities (such as those where numerous health care insurance executives live, like metropolitan Hartford) will have their economic base damaged or destroyed. The resulting economic chaos could kick off a recession.
It is far easier to continue to pay outrageous prices for our health care system and tinker with it around the edges. Our health care system is an addiction (like our military-industrial complex and our overlarge prison system). We hide from ourselves that we are indeed addicted, but admitting it is only a first step and will not make the addiction go away. And eliminating the addiction cold turkey, as with most addictions, poses serious dangers to health and even life.
3
@sdavidc9
"Our goal in reforming health care should be to get our spending down to what it is per capita in other countries while not getting worse results."...while making health care accessible to 100% of the population.
The fourth category is climate change, which is an investment BUT with a carbon tax that is refunded to people as dividends achieves an incentivized carbon market without a net increase in taxes or government borrowing, right? It is free, or even negative cost for any individual taxpayer who reduces their carbon footprint.
1
@Thomas Sure it is, no people to issue those credits, to determine how much they might be, no cheating, how interesting. You live in a fantasy alternative reality where such things are possible and where a carbon tax on US activities would make much of a difference.
1
Somebody has to cut drug prices to about 1/3. Somebody had to cut all other healthcare prices in half.
Somebody has to cut the military budget in half. Etc.
3
Let’s start with something easy: let’s show up and vote, which we don’t.
@Bill Barbour Yes someone has to lay off all those workers, replace all those dividends to retirees, and someone has to prevent another country taking over ours.
3
While Krugman is largely right on the broad outlines of his argument, the devil as always is in the details. For example, the GOP claimed its tax cut was an “investment” that would pay for itself. And while there were reasons to doubt this, there was a conceptual argument to be made that returning money to businesses is essentially what the Obama economic stimulus was and it worked pretty well. So when it comes to calling things an investment, we still need to quantify what the investment will cost and what it’s likely to do in return. For example a free childcare program that doesn’t require the caregivers to be working and that’s coupled with de facto open borders allowing millions of the very poor of other countries who have very high birth rates to flood into our country would not pay for itself.
Similarly when saying that tax X will pay for something there needs to be rigor in detailing just how much a program enhancement will cost and how much will be raised via a particular type of tax.
7
comparing the results of an economic stimulus in the middle of a deep recession to a stimulus in any other situation is very poor economic thinking.
1
I like how you claimed to be interested in “the details,” and then cranked up the usual vague nonsense about shiftless welfare moms and open borders.
Just by equalling the effective tax rates of the rich to the middle class (from a little bit more than 3.2% to 7.1% if memory doesn't fail me), would've already increase the federal budget by US$ 1.1 trillion per year.
So, let's begin by just following the Law, as a first step. That would've already be very radical for contemporary America.
Have the Reagan-Bush-Trump tax cuts already brought us to a level of deficit and debt that is unwise? Does that mean that investments paid with more borrowing need to be offset (paid for) with some kind of repeal of those tax cuts or some sort of tax increase? If not, what is the acceptable amount of debt to carry?
@PDXman
I think the point was that cheap enough borrowing now for investments would be paid back indirectly by higher productivity later.
1
In all the discussions of Medicare-for-all proposals, I have never completely understood the purported shortfalls that would lead to a tax supplement. Dr. Krugman says that private insurance premiums account for 6% of GDP, and as we know, healthcare accounts for about 18% of GDP. But it's hard to believe that this gap has resulted in private insurance companies paying out three times what they take in. And of course, premiums are not the only funds that support healthcare. The government already devotes huge sums to public programs that treat patients and funds to support NIH and other agencies charged with public health. Private companies and individuals get tax relief based on insurance premiums, which means government gives up revenue that could be recouped. And of course as we all know, patients have skin in the game with co-pays and deductibles.
Bottom line, I'd like Dr. Krugman (or someone else) to essentially 'balance the books': aggregate all the funds that we currently use to pay for healthcare and place that against the various costs of healthcare. Doing so might help us see whether we need additional tax revenue (and if so, how much) and on the other side of the ledger, how much we currently spend unnecessarily. I know that parts of this have been done, but a comprehensive assessment would be helpful, not just a hand-waving "To implement these proposals, we’d need a lot more revenue, like payroll taxes or a value-added tax."
1
@Ockham9
I'm not remotely an expert, and I don't know what the exact numbers are and they probably don't tally the way you're looking for, but a lot of what's spent on private healthcare goes to insurance co profits.
Also premiums are only part of what a privately insured person pays. Deductibles, co-pays and co-insurance add up.
2
Sigh. Nope.in either case.
KFF.org does an excellent job of explaining costs, and where the money goes. I recommend starting there.
1
@Diego Sure they do, those companies are so profitable.
1
Taxing fortunes is unconstitutional and impractical.
How would we evaluate each magnates assets every year?
I'd favor abolishing all lotteries.
It's how governments get cash out of the pockets of lower and middle class.
Rich are too smart for lottery. Biggest sucker bet on Earth.
6
No tax is unconstitutional. The constitution grants congress the power to tax. It doesn’t say boo about what kind of tax.
Maybe you think a wealth tax is impractical or unwise. Fine, maybe so. But constitutional it is.
@James K. Lowden I wouldn't be so sure about that. The constitution originally limited the source of federal taxation which is why the 16th Amendment was necessary to impose federal income taxation. Some tax experts have questioned the constitutionality of Warren's proposal. See e.g. https://taxfoundation.org/warren-wealth-tax-constitutionality/
"My main point now, however, is that when people ridicule progressive proposals as silly and unaffordable, they’re basically revealing their own biases and ignorance. Investment can and should be debt-financed; benefit enhancements can be largely paid for with high-end taxes."
This is an interesting conclusion. I'm curious why you didn't come to the same conclusion about Bernie Sanders' medicare for all proposal in 2016. I remember at the time you attacked him over his inexact math...so what exactly has changed your mind on this since then?
4
In my opinion, single-payer health care, combined with government-funded child care, would be an investment in productivity and economic growth. It would allow people to leave jobs they don't like (and in which they are suboptimally productive) but that provide needed benefits, in order to pursue more rewarding and productive endeavors.
82
@Anonymous
Obamacare already allows you to switch jobs without losing your healthcare (it's actually one of its biggest advantages, apart from saving an additional half a million lives a year).
That being said, I do agree that investing in healthcare IS an investment, as being healthy clearly costs businesses less and increases productivity.
12
@Anonymous.... millions agree. HC for all frees up citizens to try new jobs, open a business, get more education--- to develop their lives. The essence of American ideals, yet here it is blocked. The GOP rw pretend govt regulated HC will curtail all our freedoms.
Abroad is a different attitude to govt itself---they think citizens should get good representation for their taxation from the govt they elect. Radical?
Our corporations financing US politics hardly care if Americans are freed up to 'pursue rewarding, productive endeavors.' So we lack both the protections and the freedom that other countries have as centrist policy.
The best op ed on this is "The Fake Freedom of American Health Care" By Anu Partanen. NYT---her view as a citizen of Finland who moved here after marriage.
She says... "As a US citizen now, I wish Americans could experience the freedom of knowing that the health care system will always be there for us regardless of our employment status."
She details concrete examples here of HC hassles, anxiety, high charges, and confusion with doctors, hospitals and insurance, compared to her homeland and other Nordic countries.
A Green New Deal will not get the support of the working class (which is the whole point). A "Local" New Deal could - and would produce "green" results, in the process.
2
Public investment is very important, but I have a suspicion that we could all be taxed at 100% and there would be a lot of smart and well-meaning people who could come up with very impressive justifications for spending all of that money. So we need some way of determining when this spending needs to stop. Republicans answer this by basically opposing public investment, or by pointing to the Constitution, which is not exactly a blueprint for governing American in 2019. Democrats need to have an answer of their own, which can reassure Americans that there is some limit to their spending. I don't think they have defined this very well in the past, and it has hurt them.
4
That’s why it’s called democracy.
There’s no clear rule to decide what government should do. Once there was no Erie Canal, now there is. Once there was no social security, now there is. Once we had no standing army, now we do. And so on: FBI, SEC, EPA, you name it.
It’s called government by consent of the governed. We have (in some sense) the government we want. Whether or not we have chosen wisely or “best” is academic: it’s best because that’s what we choose, until we choose something else.
Is there a case to be made for higher taxes and greater public investment and social insurance? There is, and has been for decades. But that’s not why Medicare for All finally seems possible. Its move from nice idea to concrete proposal is not the product of its inherent benefit, but its newfound popularity.
interesting taxonomy. Maybe I'd summarize more simply as follows:
Things that stimulate growth (investment)—borrow (and repay only if needed to control inflation)
Wealth redistribution (generally supporting consumption by the poor)—tax the rich, give to the poor
Government provided services that benefit everyone (also consumption, but for everyone)—everyone pays
Seems pretty logical.
3
Dr. Krugman is, of course, right. Now, will any significant part of the media, even the New York Times, cover these issues taking into account what Dr. Krugman has said? Unfortunately, isn't it more likely that even The Times will cover these issues in the usual "on the one hand/on the other hand" way, just quoting whoever is shouting the loudest, because that's the easiest way to do stories in a rush? Is there any way to get Dr. Krugman's points (meaning the real economics of paying for various items) to the people who edit stories so that they'll point out for what they are the economically illiterate and intellectually dishonest claims that will be made, in the way that The Times now makes a point of labeling some of President Trump's lies for what they are when The Times quotes him? It's not just a matter of dueling opinions. Voters need reliable sources, off of the op-ed pages, for reality-based assessments of issues like these, and the reality-based information needs to be repeated because the junk "information" will be reiterated constantly.
1
Beneficial or not, single payer is political poison, a guaranteed Trump win if his opponent is a single payer advocate.
4
Andrew Cuomo is the prime example of why people are skeptical of government spending. When he first ran for statewide office in New York, he acknowledged that he was an old-time liberal who supports government spending for public purposes. He then said he would champion ethics reform and honest government, so that people would understand that government funds would be spent honestly. Cuomo then ran one of the most corrupt governments in New York history. New York State has spent billions on failed projects that merely lined the pockets of Cuomo supporters and contributors, while adding almost nothing to the public good. Too many members of Cuomo's inner circle have been indicted and convicted of corruption-related crimes.
If Krugman wants to champion more public spending, fine. But please tell us how to really ensure that we get what we are paying for, and not a bunch of waste and corruption.
6
Thank you - logical, financially sound and humane.
Now it's a waiting game - will the media continue to be suckers for GOP attacks and propaganda?
It was only after Trump entered the White House that the press woke up to their many blunders and failures. Since then, many journalist have performed admirably.
Can they keep it up?
We'll soon find out.
1
CUT. MILITARY. SPENDING. Good gawdamighty, why is no one talking about this? We are spending hundreds of BILLIONS of dollars every year on military bases, equipment, and soldiers that is unnecessary -- indeed, much of our military spending threatens out security (Al Queda, the Taliban, ISIS, and their permutations and combinations might well not exist were it not for out support of the Saudis and of Israel, and for our military adventurism in the Mideast). CUT. MILITARY. SPENDING.
11
Amen.
We spend nearly five times as much on our military as the next on the list (China).
Boy, Eisenhower sure was prescient.
2
The first step to improving the welfare of most Americans and the working poor, in particular, is to stop vilifying them.
9
@carl bumba
Yes, the worst social "affliction" in America is poverty. It is in our DNA.
1
Thank you Dr. Krugman. Excellent column today.
5
I see Krugman is still pushing the sexist and expensive "Medicare for Some".
He must think most of his readers fools if he supposes that they don't understand that the current fake insurance system costs monies that would be a source of revenue to support nation-wide single payer.
It's particularly insulting to see the Reagan republican (Warren) be against Medicare for All, seeing as that she was single mom in the 1970s who benefited from welfare and inexpensive state college. If she's going to go anywhere as a candidate then she has to address these huge personal failures.
2
Let's just return to the days of yore, when corporate America paid their fair share in taxes.
In 1960, corporate America's share of the federal govt's total income tax revenues was over 23%. By 2017, corporations had finagled to slash that by more than half, to 11.4% (the Socialist, Welfare Deadbeats!!).
2017 Federal tax revenues were $3.3 Trillion. If corporation's share had remained at 23%, they would have contributed an additional $383 Billion in taxes!!
FWIW, the so-called "unaffordable" Medicare-for-all proposals from so-called "radical, left-wing, socialist" (D)s are projected to cost $332 Billion/year. If corporate America continued to pay their fair tax share, we could fund health care for all citizens PLUS have enough left over to fund TANF (so-called "welfare") @ $14 Billion/year PLUS have $37 Billion left over for pocket change for our wholly-owned Congress Critters.
Return to Sane Tax Policies! Make American (Citizens) Great Again!
7
So clearly the author of the following article was wrong 3 years ago?
https://krugman.blogs.nytimes.com/2016/01/19/weakened-at-bernies/
So when someone for 2 years tirelessly advocates for what is obviously the correct solution and finally has moved the political position of a party, for no personal gain, shouldn't they get a mea culpa article?
3
And I forgot to add on the revenue bar the savings from cutting down defense expenditure. Oddly enough, you can use Charlie Grassley’s spread sheet for that. Or at least his OpEd a couple of months ago in the pages of The NY Times. A break for your assistant!
1
I read that other day, that Medicare is set to run out of enough money to pay all the bills, 3 years sooner than originally thought, and now it is in 2026. The program currently supports 60 million, about 9 million who are younger disabled people. Medicaid, the program that supports 75 million which is free, for mostly lower income, and nursing home recipients, is set to run out of enough money to pay all the bills in less than 3 years. The truth is, that the design of both programs was, and is flawed, and an adult discussion of what should be done, should be the top priority of Congress, since they are the ones who didn't tax enough for the legislation they passed that funded these programs, decades ago. So, if they can't pay for those two programs that support healthcare for 135 million, how are they going to fund any other program going forward for anything, else? Don't tell me, because I don't believe that all together, those that are running for President, could even come up with new policies that shore up these programs, or else they would of done it a decade ago!
5
The army will run out of money next year. Republicans adamantly refused to create a trust fund for it, so now we have to pay for it every year, out of current revenues. Can you believe it?
The prepayments to Medicare and social security are working as designed: to mitigate the effect of the baby boom. No one thought the funding question was solved once and for all. As the surplus runs out, well have to make adjustments. We made them before; we’ll make them again.
Medicare for All is part of a solution. By driving down costs through monopsony power, we avoid less palatable alternatives: higher taxes or reduced benefits. Deficit scolds are forever telling us those are the only two choices, but follow the money: cheaper healthcare means lower profits, and guess who lines their campaign chests?
"... enhancement can...be paid for with taxes on high incomes and large fortunes." The devil is in the details, how to ramp up taxes on the wealthy when they have so many options to avoid and evade taxes ranging from a smoking Excel spreadsheet to outright relocation to a tax haven of their choice.
1
Major system overhaul is precisely what we need to make AFFORDABLE Care a reality for all Americans, but Mr Krugman is wrong to equate that with needing "a lot more revenue".
For example, why not require drug prices in the US to be no more than 10% above the average price that drug is sold at in Canada & EU? The result would be a large reduction in what Americans pay and some increase in what Canada and EU pay and some reduction in profits of drug companies, without any new taxes.
And, why not require all businesses with say 10+ workers (whether direct employees or contractors) to provide the same private health care coverage they provide their executives or pay the ACA premiums for them instead? The result of affordable quality care would be more prevention and earlier intervention reducing actual health care spending, improved productivity and economic security, the net costs paid by shareholders to benefit all citizens, without any need to raise "a lot more revenue".
Mr Krugman, I invite you to apply your expertise to substantiating how smart system wide changes (not a failed incrementalism) should be our priority, to restore the American Dream for all who work for it.
2
1. Because there are consequences for price controls.
2. Obamacare requires businesses over 100 employees to provide plans, offers tax breaks for businesses in the 50-100 range, and subsidies for smaller businesses. If you require that of every small business, hey presto, no more small businesses.
You also cannot simply flap your hands at the costs of developing new drugs. Or makng them in quantity, for that matter.
1
Those aren’t price controls. Those are laws insisting we pay prices in line with other freely negotiated prices. If the pharmaceuticals don’t like it, they can charge more elsewhere. Maybe.
If you’re convinced high drug prices underwrite research, try getting hard numbers on what the pharmaceutical industry spends on R&D. They make big claims, but details to support those claims are scant, and what we do know suggests the claims are highly exaggerated.
We’ll set aside the question of whether or not private returns are the best guide to research aims. Cures don’t have the same profitability as chronic treatment.
I am thinking of an even more overarching reinvention of changing our whole approach to government spending and budget priorities. Let's spend as much on the departments of health and human services, education, housing, and justice as we do on defense, the military industrial complex, space exploration, and homeland security. All of these areas are equally important priorities of a well balanced and thoughtful society. Let's put our money where our mouth is and value them equally. If we can carry a trillion dollar deficit to support a huge unearned tax cut why not carry just as big a deficit for all these human necessities?
4
Surely the big systems overhauls would involve re-routing some existing spending. If everyone's on a free Medicare-for-all plan, all the current spending on private health insurance would go away. If retirement benefits became more generous, other retirement funding schemes would be less important. If college was free, all the current expenses for college would become unnecessary.
People might baulk at having one big bill instead of a bunch of smaller ones, but it's not as though the money isn't already being spent.
7
Krugman continues to maintian the federal gov has to pay for things, good & bad, with taxes or borrowing . This is just plain wrong.
The gov doesn't need your money. It can (thru the FED) create as much as it needs out of thin air. Just think about where money you pay your taxes with came from in the first place. Unless you have a printing press in your basement, it originally came from the federal gov.
But there's a catch. If the gov needs to create too much money to do the things we want it to do, we may not be able to make enough stuff to soak that money up & will have too much money chasing not enough stuff, i.e. excessive inflation. This is rare & is usually caused by shortages, e,g, of oil.
But that's easy to solve & where taxes come in. Taxes allow the gov to take back the excess money & prevent inflation. The purpose of taxes is to adjust the amount of money in the private sector. The more we can produce, the lower taxes can be.
So the way to run things is to spend money to facilitate production. Tax cuts do this, but in an inefficient way. If we cut Daddy Warbuck's taxes, he does not need to spend the money; he uses it for financial speculation. If we cut poor Joe's taxes, he spends the money on stuff--food, house paint, etc.etc. This promotes production of food, etc.
Even better if we pay Joe to fix a bridge, the money still gets into the economy, AND we get the bridge fixed.
Just remember, the federal gov will run out of money when the NFL runs out of points.
6
@Len Charlap This is sad. While it is true that the federal government can't run out of money it will have to print and print until the workers who print the money want to be payed in gold rather than your worthless dollar. And the idea of government funded demand side economics drives me up a wall. The government absolutely need our money because we give the money value. Without an understanding of the general value of the currency the currency is worthless.
3
@Russian Bot writes "The government absolutely need our money" Where did this "our money come from? Did it fall like manna from the skies? Did you print it in your basement?
As for the "worthless dollar," please read what I wrote about inflation.
Think! Don't just repeat meaningless statements.
@Len Charlap "Our money" as in the item we exchange for goods or services and we place a value on.
It could be bitcoin, gold, silver, guns, cars, tools, anything people place value on. Just because the money is printed by the US government doesn't mean anything. Your money is "insured" but it's never safe.
I did but when I got to "the federal gov will run out of money when the NFL runs out of points." brings to mind the Germany my great grandfather grow up in after WW1.
1
"Proposals in this category are literally an order of magnitude more expensive than benefit enhancements: private health insurance currently amounts to 6 percent of GDP. "
While private health insurance may now cost 6% of GDP as things are presently constituted, under a single-payer system that replaced private insurance the costs would be much lower. There would no longer be the expense of executive compensation and perks to worry about, nor the costs for the salaries of armies of actuaries, nor the profit margins enjoyed by health insurers. Claims adjustment would be greatly simplified and streamlined, further decreasing overall cost.
Furthermore, much of the remaining costs would be covered by the fact that a single-payer system can keep unit costs of medical procedures, hospital expenses, and the price of prescription drugs under direct control, saving untold billions of dollars a year.
And current government programs like Medicare, Medicaid, and VA medical care would no longer be necessary.
Surely any increase to tax rates would be covered, and probably be more than covered, by the savings to insurance premiums, including that portion of the premiums currently defrayed by employers, which the law could mandate be returned directly to worker salaries. Salaried workers would see their after-tax take-home pay INCREASE.
When expressed as a percentage of GDP, single-payer systems worldwide pay one-half to two-thirds what we pay for health care.
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@Dr. Planarian
My doctor in Belgium had his practice in his converted basement, with no secretary or nurses. A visit, booked over Internet or by phone call, cost me 30$, of which most was covered by healthcare.
The guy drove a normal car and had beers in the local pub with the rest of us. No weekend ski trips to Vail, no garage full of expensive German cars, etc.
Of course, I should also mention that his education was paid for by the Belgian government i.e. all Belgians. And that Belgium doesn't have buses with advertisement on it for suing your doctor for malpractice.
But for physicians to come down even halfway to such rates, it will take a long, long time.
3
@Dr. Planarian All the actuaries will simply move from the private sector to the public sector and healthcare will be rationed by the state. The elites will always be able to get the best care or produces for themselves and their family. Innovation in healthcare from the private sector will stop there is a reason the US has drugs and treatments other countries don't their government don't want to pay for them and therefore you can't get them. If you honestly think the government can do all of this without a tax increase you are insane. There is a reason that other countries with large safety net have high taxes on the middle class.
2
@Russian Bot
Has innovation in health care stopped in Switzerland? Germany? France? The U.K.?
And yet they all feature socialized medicine and strict control over drug prices.
And what drugs are these that we have and other nations don't? I am sorry, but if you wish to make a point, perhaps you should at least have a fact or two at your disposal rather than just making stuff up.
3
Krugman continues to make the same HUGE error on health care. He is correct that "private health insurance currently amounts to 6 percent of GDP. ." BUT one of the points of MFA would be huge savings so that 6% of GDP would not have to be replaced dollar for dollar.
In fact when you look at the data from Canada, the costs of MFA after some transition costs would be only about 47% of what we are now paying in total. That's about $1.8 TRILLION of savings each and every year if our system were as efficient as Canada's.
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@Len Charlap
And what, pray tell, happens to the many thousands of actual US citizens who make an honest living in the current health-care scheme? Collateral damage in the progressive campaign to devise the procrustian bed of health care finance?
2
@richard cheverton - Great point! And while we are at it, we should go back and support all the descendants of the thousands that worked for the buggy-whip companies.
More seriously, there is no lack of stuff that needs to be done--fixing roads & bridges, education, research etc. BTW there are plenty of support jobs in education and research that do not require a degree. That is why I support a job guarantee program like the one proposed by good old Tom Paine in 1797. The federal gov would become the employer of last resort. It would guarantee a decent job or paid training for such a job to everyone able to work. The economy works best when people are working, producing, & spending.
This would simulate production so the government could simply create the necessary funds with causing excessive inflation.
BTW I object to your use of the word "honest". Is it honest to work in a system that wastes over $1.5 TRILLION each and every year and does not even provide benefits to all those that need them?
3
“Simulate production,” so the “government could simply create.”
Could it simply create me a pony?
if you can raise funds cheaply and apply them to high-return projects, you should go ahead and borrow. And Federal borrowing costs are very low – less than 1 percent, adjusted for inflation –
But..but..but what if we increase the amount of debt and rates go up and we don't have the income to pay the interest cost?
@Jay Edward
It's not the amount of debt that drives interest rates up, it's the amount of debt relative to GNP. If the GNP increases as fast as the amount of debt, rates will not increase - and that's why we have to looking at high return projects for debt financing.
Thanks for your insights on touchy top areas. Sensibly, being Progressive can work for the good of all.
1
California--When you add up Medicare, Medicaid, Medical, Active military, Tricares, VA, Native American, federal, state and local government employees and annuitants, all of whom get government provided health care already, it amounts to almost 1/3 of the population. That is 13,000,000 people, more or less, getting government provided health care in CA already. more than the population of 45 out of 50 states! So don't tell me it can't be done!
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@Rick Your state had the chance to vote on universal health care and they didn't. The same thing as the Green New Deal. I wonder why? It's almost like they know it will be a disaster and don't want to tarnish their leftist ideology with reality.
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@Russian Bot
Funny, universal healthcare works better than the US system in all other western countries.
It also costs less money.
Take some time and look at the statistics from sites such as W.H.O.
@Rod Sheridan They why didn't they vote for it? Do democratic want people to die in the street?
And I agree the US is the worst possible system a private healthcare system with massive government regulation on top.
When we talk about how to pay for important social investments, why do we never include cutting the ridiculous amount we spend on defense?
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@La Jefa Because the Military Industrial Complex owns our Congress.
1
@La Jefa You could eliminate defense spending in the US and we would still be running a deficit each and every year. Also what about all those nice government jobs? Demand side economics and all.
1
In the marketplace, middle- and upper-income Americans pay for what they want (the low-income do too.) Even if they can buy a new car for $18K that gets them to work, most will pay $30k and more for bells and whistles, perceived safety, creature comforts, style and status. And they borrow the money and pay interest to get it. The progressive agenda has to be something the middle-class wants before they are willing to pay for it. Cue Madison Avenue. Advertising creates demand, right? It tells us about new (and improved) products. It makes us want what we didn't want before and if we want it badly enough, we convince ourselves it's an "investment" or has benefits worth the price. Proponents of Medicare for All or some other government health insurance plan must create positive demand for it that overwhelms the sticker shock strategy Republicans, insurance companies, pharma and hospital corporations are pursuing. What would middle-class workers who already have employer-subsidized insurance be getting that they don't already have? For one thing, portability. Change jobs or move to another state and your insurance follows you without lapse or penalty. For another, freedom. Want to start your own business but keep your family covered? Want to work part-time when your children are young or aging parents need care? Return to college in midlife to change careers? Progressive politicians need to sell the benefits of single-payer to the middle-class. It's a good product!
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Krugman is basically correct. Any national healthplan that did not depend on private insurance would cost roughly the same as your current insurance payments. Call it what you want, but that's what Medicare is, and everyone likes Medicare. Under single payer, you would not have those monthly health insurance payments, but you would have taxes instead. Think about that; those payments are costly. This is a point almost everyone misses. Insurance companies are a middle man; since when is paying a middle man a benefit in general? IF Mr A pays Mr C $20, why get MR B involved? I admit that sometimes insurance is beneficial, esp for health, but a national health plan would work the same way.
Now, you could also have insurance policies that would pay for better care, as they do in Canada. So, everyone should be happy with that kind of health plan.
3
The goal of a universal public plan is that everyone has access to health care, regardless of income and regardless of wealth. This is best achieved by eliminating the idea that the government will pay for everything for everyone while embracing the idea that government can protect virtually everyone from a financial catastrophe triggered by medical care costs. Legislate mandatory out of pocket deductibles, progressively larger based on income and make it illegal for any insurance to kick in until that deductible has been met. Back that deductible with “catastrophic” coverage which pays for costs beyond the deductible. This would be most efficiently accomplished through a universal national policy financed through taxes and/or “buy in” contributions. Private policies might still be available, if they could compete. Let the market decide that.
4
Right. Our tax rates are only progressive up to a certain point. Beyond that point, at which a significant part of the income is from capital and taxes are optimized by fiscal experts, the tax rate starts to decrease again. It is the result of the corruption of politics by moneyed interests.
If we can bend the taxation curve upward beyond said point, the government can raise many billions. Solidarity with the lesser fortunate is part of being a member of an advanced society. We create enough wealth to take care of everybody.
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@Liz
Liz, nice going! "We create enough wealth to take care of everybody" - I'll remember that one.
@Liz "We create enough wealth to take care of everybody." Yes the rest of us should be free to enjoy leisure. When leftist wounder why right-wingers are concerned about the direction of this country it's because the haven't a book
1
No doubt you’re inspired by Trump’s...remarkable...work ethic and thrift.
"To implement these proposals, then, we’d need a lot more revenue, which would have to come from things like payroll taxes and/or a value-added tax that hit the middle class."
Which would remove that amount of money from the overall economy and have a negative effect. Lower consumer spending (the biggest driver of the economy), reduced business profits (small business getting hurt more than large corporations), and higher unemployment. Most people in the middle class know they will be those most impacted negatively in their day to day living.
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@Ray
Obamacare alone already is saving an additional half a million American lives (= workers and consumers ... ) a decade.
And of course, a health insurance system without for profit insurance means a cheaper system, and as a consequence, a positive impact on people living on Main Street...
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The money doesn't just disappear from the economy, though. Healthcare costs go primarily to paying the salaries of healthcare workers, who will put the money right back into the economy in the form of consumer spending. Savings in private premiums for both employers and workers will also offset costs to some degree. I think this would come out to a net gain for the middle class.
1
Ray, unlike tax cuts for the rich that don't go back into the economy, taxes to pay for health care do go back into the economy. A great example is the State of Kansas which has not adopted Obama's Medicaid expansion and is losing its rural hospitals because of a dwindling, poorer and increasingly uninsured population.
Under our previous governor, we also cut taxes for schools. Schools and medical services are major sources of both economic activity and population in rural areas.
1
"if you can raise funds cheaply and apply them to high-return projects, you should go ahead and borrow"
Surely this is especially true for something like universal healthcare, where keeping your electorate healthy must surely payback in terms of productivity? In fact this was the entire basis for the UK's NHS when it was originally introduced albeit in a much reduced form.
In the US you pay an extraordinary financial cost for a health system that seems to have a relatively poor result, not least overall mortality rates.
1
For all Dr. Krugman's economic creds, I beg the question; "Why no one held Donald Trump to the same questioning standards?" Donald Trump's promise of making his healthcare plan better and cheaper than Obamacare, bore no scrutiny; no question of what it would cost. Trump's promise of creating a new national infrastructure; not a peep about costs:
The GOP seldom faces any scrutiny about costs in terms of $$$ ( or pain).
I recall myriad pieces just-like-this over every idea posited by Bernie Sanders; is Warren the new but-it-will-cost-too-much Poster Child?
We all now know Republicans have no qualms about running budget deficits with trillions in tax giveaways; so why is the left obsessing over how much things will cost to BENEFIT the majority?
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Excellent review of the fundamentals. The political prerequisite is the broadest possible electoral coalition to defeat Trump and the right wing nationalism that has brought racism to the fore. One can not underestimate the threat. That has to be the top priority.
5
The progressive proposals proposed by Elizabeth Warren and others have put forward are proposals, which would be debated and implemented not exactly the way she or others proposed. And they cost more, a lot more. But they are necessary, just to expand the US prosperity to all segments of the society.
She & others have proposed a series of tax increases on the rich who can easily afford. Many of whom are quite prepared to pay their fair share, and are actually waiting to be asked.
Of all the proposals, 4-yr-free college maybe seen as a little extravagant, and can be tabled for a later date. The most urgent are low-cost universal healthcare & higher minimum wage, which were indeed available in a slightly different way until the Reagan era. (People seem to have forgotten that Bill Clinton indeed proposed tax-hike on the rich while campaigning)
My two-cents worth: Instead of taxing wealth on $50million & above at 2% annually, make it 1% at 100 million & 2% on $5billion & above; replace inheritance tax. This will be attractive to the rich & would pass.
Instead of 70% tax on over $10miliin income make it 50% top rate on over say, $5 million. All incomes should be taxed alike on over $1 million.
Payroll tax should be cut to 1-2% on the first $20K. Lift the cap but cut again to 1% on over $200k.
These proposals are easier to pass. If the rich are taxed too much, they'll find a way to sabotage everything.
4
The overall feel I get from Mr. Krugman's piece here is one of reluctance--almost a squeamish attitude toward any publicly, i.e., tax-payer-funded programs which unarguably could benefit large sectors of the American public. And that's the point: social investment on the part of government should be a fiscal plus because citizens' taxes are being used, as an investment, in providing for the betterment of life all around, both present and future...the backbone of what were once viewed as "liberal" programs.
However, Mr. Krugman seems to need to give justification to programs and ideas which, although he ultimately gives them a thumb's up, there appears also be not a little musing going on which gives the overall impression of skepticism and a holding back.
Why do these new "progressive" ideas need to be questioned so meticulously by Mr. Krugman when so many other existing tax-funded programs seemingly go unquestioned economically, as though they are a given, say, for example, enormous expenditures for the military budget with its endless laundry lists of costs for the latest high-tech equipment which rapidly becomes obsolete?
While I certainly applaud careful analysis of any large fiscal shifts which would ultimately rearrange the status quo, a hesitant response by a respected economist doesn't really serve the public's need for distinct clarification of new economic features being proposed by not a few highly respected and visible political figures these days.
5
@Cate The most sensible cure for the US healthcare mess (inflated costs benefiting the hospital, pharmaceutical, and insurance businesses) would be a Medicare for all system. This is what our Western allies have. That said, 38 years of Reaganite propaganda has led many voters to become cynical and distrustful of government taxing them for big changes. The GOP would be delighted were the Democrats to push for such wholesale change now. More than a third of voters will vote to keep authoritarian Trump and the GOP in power. And they could well be joined by enough open-minded voters to keep them there out of fear of radical change. Let's cleanse the political system of Trumpism before pushing for radical change.
"You don’t have to be a neoliberal tool to wonder whether major system overhaul should be part of the Democratic platform right now, even if it’s something many progressives aspire to."
Yes but you are I'm afraid which is why you go on and on about the legitimacy of paying for things for people when there are so many corporations to pay for ongoing pointless wars and the continued assault on our ability to even live on our planet, from the rich. The green new deal is but a beginning, a beginning that should have begun a generation ago except that Neoliberals backed down on Gore in part because of his convictions about climate change. Neoliberals took money to keep climate change off the table and continue to do so. We cannot afford your centrist obfuscations any longer so either get with the program or you ARE the enemy.
4
Professor,
Good stuff but how about making it even easier to grasp and pitch?
What I would like you to do is create two bar graphs:
First one depicting costs of the programs (Medicare for all, free public college, childcare, environmental sanity control, childcare etc). If there are alternatives to any category (Medicare for all for free versus with pay based on age — pay-in for 50-65 for example) create another bar graph that includes that alternative).
Second one depicting revenues (tax wealth above 50 million at progressively higher rates, tax top 10 percent income progressively going to 70 percent let’s say for the top 1 Percent, tax all financial transactions involving speculative derivatives, algorithmic trading and the like, tax carried interest). Again create a bunch of sensible combinations in separate bar graphs.
The unifying theme here is each bar graph has to have the total height to be the same.
You then offer people alternative pairs to chose from.
A grad student of yours can do that in no time. You can even count it towards his or her partial fulfillment of a masters or doctoral thesis. (Honestly even an undergrad would do just fine)
The country will be thankful to you and to your grad student forever.
Thanks in advance.
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@Blunt
Tax everyone making 50,000 and above at 45%.
Then you will have the money
1
@Driven That sounds great! After taxes a family of 4 making $50k is at the poverty level.
And I forgot to add on the revenue bar the savings from cutting down defense expenditure. Oddly enough, you can use Charlie Grassley’s spread sheet for that. Or at least his OpEd a couple of months ago in the pages of The NY Times. A break for your assistant!
It seems rather odd to me that any suggestion of aiding Americans, who I might add, pay the bills, is too often derided with the cry where will the money will come from! How about larger taxes on the ultra wealthy and stopping our non ending wars in the Mideast! The war merchants have been enjoying profits from these continuing wars! Enough! No more!
121
@Vicki Scott! The real point is that aiding non-rich Americans will stimulate production because they will spend the money, not speculate with it. If the value of production increases then the government can simply create more money out of thin air, and it will NOT cause excessive inflation because of the increased production.
The more widgets there are for sale, the lower the price.
10
@Vicki Scott!
Great! But why just the "ultra" wealthy?
5
@Vicki Scott! Bravo fir pointing out the insanity in increased spending for long, protracted foreign wars!
Should the U.S. millitary were a football team, its record of dismal losses since WWII would lead to its being rated as an important minor sport!
9
Right. As a member of the Democrat Party, you must be ever vigilant, because the "where's the money coming from" question is always lurking. Reducing revenue, on the other hand, is always a good idea.
2
Expanding health coverage (Medicaid, Medicare, all of the above) is also an investment. People who can get the medical treatment and prevention that they need will be healthier. Healthier people are more productive, and their improved health positively affects the productivity of those around them.
4
If I remember the stats that are constantly bandied about, currently all healthcare spending accounts for about 18% (+/-) of GDP. So if 6% of that is private health insurance spending, then we need to find a combination of savings and new revenue that replace that 6%. Since my employer is paying currently about 12% of my salary as their share of my healthcare costs, I'm willing to pay that same 12% as a tax towards my health care. The 6% is *already* being spent/paid. The question really is how we can replace the private insurance industry, as well-loved as it is, with a "bloated government bureaucracy". Since the private insurance industry has about 20% overhead and other expenses, and Medicare currently runs about 3%, there's some argument that the "bloated bureaucracy" (or perhaps, "greedy pockets" is a better description) is -not- in the government's health care organization. So we might make up some of the 6% in 'greater efficiency'. Or, we could just lie to ourselves and say "this will pay for itself". It's worked for Republican tax cuts for decades... I think we would find that we could do a universal, government single-payer health care system for less than 19% of GDP. Every other advanced country does it already. Why can't the US?
9
@JimBrokaw: I think the simple answer is that it would be possible financially, but impossible politically.
1
In discussing large system overhauls relative to healthcare insurance, Dr. Krugman correctly states that "we'd need a lot more revenue" for a public insurance system with universal coverage. What he and many other commentators don't note at this point is that most people already pay substantially for healthcare insurance.
Is it too much to ask that commentators favoring a public insurance system stipulate that in any minimally adequate implementation the net payment, the difference in the bloated, high overhead premium payments we now make and the taxes (hopefully progressive) required in a public system, should be notably less?
3
I would like to see what the costs are.
Obviously, Socialism just refuses to die - as in a horror movie; stake after after stake may be driven through its heart - but eventually it comes back to life. The specter of a free lunch beguiles the uneducated or under-educated - thank you the NEA and UFT. I wonder just how Krugman got through college let alone win a Nobel prize in economics.
Dear foolish fellow Americans - just look across the Atlantic and observe and comprehend what socialism has done for Europe: economic stagnation - even with their paltry spending on defense since WWII. Though American taxpayers subsidized Europe'e failing socialism by disproportionate defense spending - who is going to subsidize America's socialism - should it ever be adopted? Think about that.
7
@Andy Logar
"Socialism" simply means that we decide to collectively pay for what becomes cheaper once we do so.
In all Western democracies where this principle is much more integrated in the existing law system, people today live longer and are healthier and happier.
That is why there's no excuse to instead want to ask citizens to continue to give their money away to private sector insurers, you see?
It's because without private sector, health insurance both costs less, and leads to higher quality, as ALL de facto studies have shown, that it's absurd to want to continue with the current, much more expensive system.
What we do ourselves, we do best ...
2
@Andy Logar
"just look across the Atlantic and observe and comprehend what socialism has done for Europe"
Having lived in the UK now for about 15 years, I am in a good position to comment on this.
I'll take the "socialism" here any day, especially the socialised medicine that is taxpayer-funded, government provided and free at the point of service. My daughter was successfully treated for cancer, and paid not a penny out of pocket.
The difference is in the attitude of the public. Here people are happy to support the National Health Service with their taxes, and also happy for all fellow citizens to receive health care when they need it without worrying about going bankrupt.
This is in contrast to the capitalist ethos which in the US includes the health care industry: every man for himself and the devil take the hindmost.
2
@Andy Logar
I think you need to read texts about the true meanings of "socialism", "communism", and "capitalism." Add also some basic texts about economics. Finally, read, in case you haven't, our Constitution. "Socialism" for our United States began when our states approved the Constitution. As Ms. Luisa noted, we decided to collectively pay for some things by taxes and borrowing. The "common good" is as "socialist" at it gets. The debate always has been, and always will be, what do we want our federal, state, and municipal governments to do for us, while also being workers and capitalists in private sectors.
2
We have become bi-polar, it's either hard rabid right, or hard spend it all now left. As usual, the truth falls more in the middle of the current debate, which most find boring. Being practical is boring, but government should be equally about delivery, and accountability rather than grand, and often empty, elocutions. Below is a piece from Bloomberg yesterday which shows that many so called 'socialist' countries, which few of these would call themselves, actually levy higher taxes at lower income levels than the US (ie we are already very progressive in taxation); they rely heavily on Value Added Taxes (which is a must in an era of corporate dominance), and none have wealth taxes. Their national debt levels are about half of ours, which, despite PK's saying 'the public good will offset it,' cumulative debt does ultimately matter, and we already have about $100T when agency debt is included. With these countries as progressive models, why are we inventing a new one? As to publicly funded health care, ie Medicare for All, it's a much more complex formula than just an even swap of $$. In most countries where this model is used, the government already owns the hospitals and most doctors are paid far less than ours. There are also many more doctors per capita there, which the AMA should allow here. Lastly, how about cutting our discretionary military spending first?
https://www.bloomberg.com/opinion/articles/2019-02-19/high-tax-countries-make-more-people-pay-taxes
3
"So, first off, investment – typically spending on infrastructure or research, but... it’s spending that will enhance society’s future productivity. How should we pay for that kind of outlay? ... The answer is, we shouldn’t. ... , you should go ahead and borrow."
Well, yes, IF we were not already smothering in debt for lesser things ...and, of course, with the elephant there, Social Security. The "Green New Deal" is NOT investment ... it is ANTI-investment. The only added investment that has any real rationale is fixing potholes and bridges and building nuclear power plants. AND, of course, building a wall to keep out the illegal aliens. Funny you did not mention that, we;;, not funny, and expected.
"The Affordable Care Act ... So you want some kind of pay-for. But the sums are small enough that the revenue involved could be raised by fairly narrow-gauge taxes – in particular, taxes that hit only high-income Americans."
OK, now you get to the point: SOCIALISM ... WINNERS pay, so lose, others win ... LOSERS reap, so win.
Agree with Dave M.
It makes no sense to ignore that if the total cost of healthcare in the country comes down, as in other 'normal' countries, then it is more a case of bookkeeping. In the end the federal part of the national budget grows as the private part shrinks. It is expected that the sum of the expenses shrinks. Please rewrite and rethink the structural discussion in your article.
"My main point now, however, is that when people ridicule progressive proposals as silly and unaffordable, they’re basically revealing their own biases and ignorance."
Oh please, give me a break. People who are very knowledgeable can disagree with you. You're so pompous and, yes, ridiculous.
5
@Peter
Well said. He also omits how what we borrow will be paid for. That usually means there is no answer there or intent to repay.
I find him so pompous and condescending as well.
2
"There will be demands that the candidate explain how all this will be paid for. " As long as none of them promises that Mexico will pay for it any of them should be fine.
2
Paul Krugman.
Oh my.
In your column ‘The Economics of Soaking the Rich’, you asked the question: What does Alexandria Ocasio-Cortez know about tax policy?
And you answered, ‘A lot’.
Then back in reality, AOC blew the Amazon deal. Her main protest was the 3B could be spent on something better than gifting it to Amazon.
But what she ignored was reality. There are no 3B sitting about, which NYC was ready to gift to Amazon.
It was a 3B discount on future taxes, if Amazon paid 27B in taxes (30B – 3B discount).
AOC knew nothing about how taxes are collected, she knew nothing about a tax discount, and she celebrated her win of sticking it to the man.
Even you can see that loosing 25k jobs (44k if you count all the jobs the deal would provide to the city), and at least 27B in taxes (plus gods know how much more in additional income generated as a result), is bad for every one.
Now you claim that Progressives do not have to explain how they will pay for their programs, and we should just accept them as part of normal expenditure.
NO sir. I cannot tell my wife we’re going on vacation for a week to the Caribbean and tell her it will be paid ‘out of our normal expenditure’. That’s delusional.
The Liberals and Progresives blew the deal of the decade. If you want to promote their agenda, tell us how the extra money will come from, now that we are out 27B in future income.
6
@AutumnLeaf
Good points—but as an outlander in the vast, dark forests of the west coast, I’ll add that it was Amazon that dodged a bullet in getting out of its horrible decision to go to NYC. The company would have been exposed, full-tilt, to the venality, corruption, mob-influences, sheer craziness of the New York political class. What company in its right mind would opt for that.
Two: AOC is a flake; ill-informed, shallow...but given her looks and location, has become the daaaarling of the NYC-centric media. Pure and simple. There’s no there there.
2
@AutumnLeaf umm... how much did Amazon pay in taxes this year? oh that's right $0. There is no future income from Amazon, whether they are in NYC or not.
Amazon paid $0 in federal income tax on $11.2 billion in profits for 2018.
Now they want their created (or displaced) jobs to be subsidized by government.
I don’t believe protest from the left was the real reason Amazon reduced HQ2 expansion, but rather a slowdown of some major markets (Europe) prompting a caution in cost increases.
But even if it is, it’s better to stop the race to the bottom in corporate taxes now rather than go for the quick “win”. New York doesn’t need a sale to attract business.
1
Whatever happens, you can bet that when next there is a Democrat in the White House, the Republicans will suddenly discover the deficit and will declare it THE BIGGEST PROBLEM EVER!!!!
3
A majority of American voters have attention spans that limit them to reading tweets vs articles like this. Therefore they'll never vote for someone with an agenda that needs 'splainin.
That's the real challenge.
2
How far does simply doing away with the tax cuts go toward paying the various progressive ideas? Focusing on taxes rather than even the most certain tangential benefits is simple in that it dumbs down the wonkish calculations. It should also be well-received by the mistreated masses if recent polls are accurate.
1
IT IS A MAJOR CONUNDRUMt That nobody gets up in arms about transferring wealth to the 1%. In fact, Trumps tax "overhaul" ripoff did precisely that by achieving the largest transfer of wealth historically from the 99% to the 1%. The silence about the ripoff was deafening. All across the political spectrum. Let's face it, the 99% for the most part, could be bought off cheaply by giving some small, temporary tax cuts that disappear over time, while the 1% get the vast bulk of the wealth. Nothing new there. About universal child care, it's a great idea. Long overdue. But I think that much of it is done on a cash basis that bypasses the payment of taxes on the income. So ideally there will be a massive increase in the number of identified child care workers who will be obliged to pay taxes. Still, adequate infant care may help the development of understimulated infants, whose development may be delayed by lack of teaching attachment skills to infants. The system worked well among the British when nannies were numerous. Likewise the increase in green jobs will produce more tax revenue, as more people will be earn better salaries with more benefits. What is proposed is nothing short of the restoration of the strength of the middles. The middle class that has been under attack since the days of Ronnie Ray Gun, who wanted to change the US into the same sort of limited middle class as exist south of the border. And the GOPpers have gone far in that direction. STOP GOP!!
How exactly does investing in someone that is unwilling to work have a greater return then the cost?
@William Look at President Trump...unwilling to work, great return for the 1%. A great return for the wealthy for the cost of destroying the conservative side of the Republican party.
1
Poll after poll results show a majority of Americans are in favor of a some type of single payer medical system......for themselves. Probably true for free or less expensive college tuition, child care, infrastructure improvement et al. when they impact their personal lives. As for everyone else, if it means "my" payroll taxes going towards benefiting them as well, wait a minute. That's socialism!
We should hold up the 'heavy lift' items as aspirational - goals to be met step-by-step over time. People need to see both some immediate success and something bigger to shoot for.
2
Sorry folks object to having a Nobel-winning economist tell you the honest truth about what St. Bernie’s pie in the sky costs. Even sorrier that folks won’t learn what Medicare is, what single-payer costs, why MFA is ONE KIND of universal coverage, and so on.
Oh, and could we just plain stop pretending that hey, if we just abolish insurance companies and erase those maybe a million jobs, everything’ll be peachy and health care becomes, hocus pocus, free?
I think Krugman’s right, here. I think I’m tired of seeing “leftists,” attack him without knowing anything.
1
@Robert
Dr. Krugman (who was apparently knighted/sainted by the Nobel committee) does not speak for progressives. The history of the progressive movement in America is a rich one.
1
We already spend more per capita on healthcare than any other country, twice the average, for mediocre results.
The “lefties” calling for single-payer have the facts behind them. The issue has been studied to death, and every model shows any kind of single-payer system costing less.
Let me repeat: the “cost” of the pie-in-the-sky system Sanders proposes is less than zero. The only question is how much it will save. There’s every reason to believe the savings will run to 1/3 of healthcare spending, reducing it from 18% of GDP to 12%, roughly in line with that of other wealthy nations. That’s $1 trillion a year. Not to mention an estimated 50,000 lives. Every year.
The rational argument for Medicare for All is thus incontrovertible. The hold-up is political: fear of change, and fear of lost profits. Those who rightly fear lost profits routinely stoke the fear of change in the rest of us, who stand to benefit.
1
Let's just tax anybody for any government program "we" think is good. God knows we can't allow people to keep the money they work so hard for, and let themspend it on things they might find valuable. Oh no - government, politicians and economists all know what is best for us.
You people should listen to yourselves - you're just so goodhearted about how to use our money.
4
There is such a thing as a public good. All your hard-earned money is made possible courtesy of the government providing a environment in which the economy can flourish: courts, highways, education, defense, and, yes, regulation. Wall Street needs the SEC, not vice versa; absent clean dealings, investors would go elsewhere.
Whatever you may think of good hearted tendencies, please remember Medicare for All will save the country $1 trillion annually. In all probability it will save you money directly, although that does depend on how much you make AND how the tax is assessed. Most models have 90% of people better off.
There is a tender mercy argument too: besides saving money, we will also spare 50,000 lives and the suffering of millions of others. You’re right to guess I’d favor spending more than today to alleviate that suffering, but fortunately I don’t have to.
There is a cabal in this country that wants to privatize education, too. They would return us to Dickensian times, when learning to read depended on your parents’ wealth. This country became a 20th century powerhouse by leading the world in universal education. We invented public schools, were the first to make schooling compulsory, were the first to make a university education available to all who aspired to it. In living memory the University of California and the City University of New York were tuition-free. It’s only the backsliding from 40 years of austerity and me-first capitalism that eliminated them.
I do not understand why we should worry about the increased costs a major overhaul of the healthcare system. Presumably such an overhaul will bring overall national healthcare costs more in line with those of other developed countries, saving $ trillions. So the real question is how will those savings be distributed? A redistribution downward would begin to address the increasingly discussed increase in inequality. It would be most efficiently achieved through wealth rather than income taxes.
1
My suggestion (since you asked) is that the cost of Medicare for All be borne exactly as private insurance is now, initially, through payments to Medicare in lieu of private insurance premiums. That’s enough money to make Medicare comprehensive and universal, and immediately creates a single-payer system.
Then, as Medicare exercises its monopsony power to control costs, we should expect its spending to decrease over time. The promise to corporations should be that as costs are reduced, so is the tax supporting the program. That gives corporate America two things: a guaranteed cost ceiling, and potential future savings. It gives the government something too: a bunch of monied interests looking to wring cost savings from the healthcare system. That would be a first.
Now, no system is perfect. Those same corporations might also lobby for reduced taxes by placing a greater burden on workers (deductibles etc.) or they could lobby for reduced taxes just because. We’ve seen that movie before. But at least then we’re in the realm of deciding who pays how, not whether or not to create the program.
Couldn't you reframe most of these proposed programs as investment? I don't think it's a stretch at all to think of childcare and education as investment. I think it's odd not to see it that way. And there are numbers to back it up. Small investments in early childhood care have been shown to reduce future costs. Investment in preventative health-care reduces future health-care costs. Prevention of global warming will save billions in the long term. Etc., etc. These will more than pay for themselves over time -- isn't that the definition of "investment"?
Remember the under-reported distressed hungry children and the under-reported in danger of bankruptcy and already bankrupted elderly.
Rember the decade's - long infrastructure's overlooked needs and the buried in debt college students, some as old as 65.
I do think that we need to start worrying about the deficit before interest payments become unmanageable. Sure, interest rates are low now. But that could change at a moment's notice.
I think that we need to make huge steps in making the tax code more fair. This is not by increasing the tax rates of high earnings, but by increasing tax rates on high capital gains. The rate on long term capital gains and dividends should be the same as the rate for earnings. You shouldn't get a benefit just because you have enough wealth to be an investor.
This could also result in enormous simplification of the tax code. For example, we could give companies a deduction for dividends paid. That would make companies less likely to purchase stock buybacks than to simply pay dividends. This would also remove all of the worries about double taxation for closely held corporations.
An excellent , well thought out, expert analysis of the situation actually based on economics rather than on slogans. Now if only Krugman would apologize for labeling all those programs,
which he now finds to be main stream and affordable, as, unaffordable and unrealistic 2 years ago when they were advanced by Bernie Sanders because of his enthrallment with Hillary, we would be making real progress.
3
It would be a wonkish column but Krugman should address how the Federal government can be the funding source but State and County/City governments manage the programs locally to certain standards. Some of these proposals are going to create massive entrenched costly bureaucracies if the Federal government funds and manages the process. And given different local dynamics "one size fits all" is not optimal either.
Medicare spends 98 cents on the dollar on healthcare. The private market figure is 78 cents. There’s your entrenched bureaucracy,
Local conditions. I don’t know. Do people in Alabama need different healthcare from those in Mississippi? As far as I can tell every “let the states do it” argument is really a disguised argument for doing nothing.
There's one particular thing that many of us have been aware is at the root of our health insurance problem for a very long time.
The technical economic basis for ridiculously expensive health care lies in the concept of elasticity of demand. The demand for health care, particularly emergency/ life-saving healthcare is very inelastic. What this basically means is that the demand drops very little in response to increases in prices. When considering the necessity of healthcare, it's very easy to see why this is the case, and of course the executives who run health care providers are also fully aware of this and set prices as high as they can get away with. In short, they price gouge.
This is exactly why conservative politicians and their 'say anything for a buck' policy wonks are dead wrong when they claim that the free market is what will fix our healthcare system. Common sense price controls is what will actually fix the system, and perhaps even going back to prohibiting for-profit health care like we used to do.
2
Canada spends HALF, per capita, on healthcare compared to what the US spends, and they insure all their citizens. The question is not "How do we pay for this?, " the question is "what do we do with all the extra money we will have?"
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@Robert Evans
Well-stated.
Medicare for all will be less - not more - expensive than our current private for-profit system. So, yes, it will be paid for by taxes, but not by employer contributions. When employers do not need to provide healthcare to attract and keep workers, the monies now spent on healthcare can be instead used to raise wages (yes, more likely if the workers can organize). These cost savings are always ignored by those with a monetary or ideological interest in maintaining - or worsening - the current system, a system that can create multimillionaires like the new Senator from Florida.
1
@Robert Evans,
Exactly. For a big part of that explanation, see my comment above.
All we need is a sensible Congress and Corporations to see the benefits in what Mr. Krugman writes about.
With the Tax Reform Bill and the Republican Senate, plus the Trump Administration it won't happen.
However if the Democrats take over it will happen, just not as fast as we might like it to happen. The key will be decide what should be handled first.
Perhaps when they send the census forms out these questions can be on it as well.
It will give the next Administration an idea of what the voters think. A more accurate form of polling than the way things are done now.
By the way, why doesn't the IRS participate in the Census taking process. They probably have more information than the Census Bureau.
1
We shouldn't even try to pay for a progressive agenda solely administered at the FEDERAL level. National-level programs intended to support individuals are - in general - inefficient and costly. Healthcare, public transportation and other large-scale systems of infrastructure surely need management at the federal level. But we should FIRST look for and support LOCAL government solutions to the needs of our citizens. It's really a scale problem. Federal programs for a country the size of Denmark are far more effective than those for 300 plus million. The idea of LESS Big Government - but MORE Small Government - will appeal to many conservatives and independents. And don't we want to do this? The very-real bloat of our federal government (including the military) has occurred together with the scale-increase of our private sector, i.e. the expansion of corporate/global capitalism. Inhibiting globalization and supporting small-scale commerce and government in rural towns and urban neighborhoods (which will, of course, include many short-term sacrifices that must be fairly shared) is the key to environmentally-responsible, long-term prosperity across the nation, as a whole.
1
@carl bumba
The problem is that there are no studies at all backing up your "scale" hypothesis, and lots of studies refuting it ..
The only way to get this right, is to enact science-based policies, rather than to just do some guessing and then imagine that we'll achieve our goals ...
1
@Ana Luisa
Which "lots of studies" refute it? These words, like "the only way to get it right" sound reasonable, but seem pretty empty to me. We will never 'get it right' and if we did, there would not be only 'one way'.
There are many studies in systems ecology that support bottom-up regulatory processes and their value in promoting adaptive, network organization. I suspect there are also many studies in sociology and cultural anthropology that indicate more distant, government involvement/control from above is problematic.
@carl bumba
Could you please explain how the "distance" between health insurance paid for and managed by "we the people" (as represented by the government) and those people, is somehow, in your theory, bigger than the distance between "we the people" and Wall Street insurers provide the only ... ?
In the meanwhile, Obamacare is saving an additional half a million American lives a decade (all while curbing cost increases, by the way). Isn't THAT what a health insurance system's priority should be (= health), rather than focusing on abstract debates about "distance" ... ?
At the moment we have three categories of people when it comes to Health Insurance
1. Those whose Health Insurance is paid for by their Employer or a combination of the Employer and self.
2. Those who buy their own Health Insurance privately
3. Those who can not afford Health Insurance.
If we institute a "Medicare for All" program that will insure every American Citizen and Permanent Resident, the funding will come from the following sources:
1. The Employers will continue paying for their employees Health Insurance as they are doing now except they will pay into Medicare.
2. Those who buy privately will buy the Medicare Plan that as it stands, is better than ant private plan offered by Insurance Companies. The cost will be determined by Means Testing as it is now.
3. Those who can not afford a Health Insurance will have to be helped by the most fortunate of our citizens who could easily afford to pay a little more in taxes.
This will eliminate the Insurance Middle Man saving all those billions of dollars that they make on Health Insurance.
The question is: how come Universal Health Insurance has been successfully implemented in all the countries in the Developed World and some of the Third World but not in the Greatest, Mightiest, Richest and most Generous country in the World? Do we not have enough altruism to part with a small percentage of our fortune to help our needy Fellow Americans to have access to Healthcare?
4
Is this the same Paul Krugman who just four years ago tore down every progressive proposals put forth by Bernie Sanders? In column after Coleman, Krugman blasted Bernie’s ideas and how to pay for them. What’s changed? Is it because Elizabeth Warren and Ocasio-Cortez are the messengers?
5
@Michael,
That's because the Times was firmly behind an establishment democrat that their readers supported: Hillary Clinton. The Clintons pretended to be progressives when it was convenient but this didn't usuallly show up in the speeches to Wall Street.
1
@Michael
He is a humongous fan of Warren, and says that AOC knows a lot about taxes.
The guy was against it, before he was for it.
2
@Michael Changing one's mind in the face of facts is a sign of mental flexibility and intelligence.
Like many, he saw that being reasonable whilst Republicans turn ever more brutal only keeps our country moving right. "Incrementalism", or compromising before negotiations have even started, like Klobuchar, is not what inspires people.
If anything, it has increased my respect for Dr. Krugman.
2
These typologies are helpful for understanding structural differences in government expenditures. Thank you, Dr. Krugman.
Most economic arguments opposing progressive and liberal proposals distill to variations on the "starve the beast" philosophy that is the core of Republican behavior since Reagan. Reduce taxes for the wealthy and corporations so that there is not enough funding for expansion or even maintenance of programs other than "Defense" (sic, e.g. Iraq, Vietnam). And then the wealthy and corporations donate further to Republican political candidates and their PACs (separated by only a veil). We have become a country of financial masters, procured minions and serfs. Currrent practice is: Socialism for the wealthy and capitalism for everyone else.
It's time for structural change, even if incremental, in favor of economic fairness. The typology definitions in this piece are an educating step in that direction.
5
There is a bit of flim-flam in Prof. Krugman's endorsement of the Warren "child care" proposal...and it goes to the heart of the loony, twisted definition of what constitutes "child care."
The Warren scheme is really about "child storage," where the little tykes might be confined while a mother fulfills her true function: helping a capitalist enterprise produce a profit, under the guise of a "career."
Memo to successful, well-paid, tenured women such as Ms. Warren: most "careers" are odious slogs, not spiritually or socially rewarding, greasy poles with everyone climbing toward... insecurity, layoff, downsizing, "creative destruction."
The idea that government might have a legitimate interest in ensuring that a women might opt for being a full-time, fully-functioning mother never seems to have entered the elitist, careerist, feminist mind. As Hillary memorably said, "I'm not staying home and baking cookies." Would that she had.
Hate to point this out, but child-rearing IS a "career." Just uncompensated and, increasingly, unheralded, even denigrated. There is no really meaningful government subsidy, beyond a paltry tax-break, for families (another concept of no real interest for hyper-individualistic feminists).
Like it or not, children need--biologically and psychologically--an actual, real, and, most of all, present-for-duty parent. And, in early years, most of all, a mom.
The political silence on this issue is deafening.
3
@richard cheverton
It would be great if more parents of either sex had the option, financially, to choose to stay home . Unfortunately, with a grossly underpaid workforce and "gig" jobs with few-to-no guarantees, even two people working in this sort of economy have trouble making ends meet.
Not all of us (women) who went to work in great numbers, starting in the 1970s, did so for ideological reasons. The economy changed - no more good union jobs so that the guys could be the sole breadwinners.
3
@richard cheverton
Children, in real life, needs lots of things from adults, and many of those things most parents aren't qualified enough to provide.
Study after study, for decades now, has shown that both in the West and elsewhere, the notion that at least one of those ideals must be a biological progenitor of the child in order for its education to go well, is false. A mere cultural assumption. And most people know this from experience. THAT is why nobody is supporting your idea that somehow fathers should work and mothers stay home and limit their careers to raising their own children alone.
That means that YOU are free to opt for a "career" as mother without doing anything else in your life, but you cannot possibly turn this into a political issue, and force all women to make the same choice ...
Lots of studies for instance already show that a mother who feels truly fulfilled as a human being, tends to spend much higher quality time with her kids, than a mother who has plenty of time but has to ignore all her other talents and needs.
That's because education isn't about "sacrifice", but about transmitting something of value, including the values of self-love and self-compassion ...
2
I agree with your overarching frustration that parents (dads as well as moms) are forced into being part of the capitalist machine, while non-paid labor of all kinds (parenting, volunteering for good causes, making art) are undervalued. To fix that would take a huge structural change which I'd support completely.
In the meantime, many people work not because they want to but because they have to. In this economy, many -- probably most -- families need two (or, let's say 1.5) incomes to make ends meet. Not to mention single-parent households. Childcare becomes a necessity, not a luxury. Your comments reveal not only some serious sexism, but also a lack economic-class awareness.
2
Dr. Krugman,
Why no mention of right sizing our military spending to a scaled down mission where we are not the world's police force?
Why no mention of a cost of healthcare that aligns with other developed countries in Europe and Asia that are 30% to 50% less than our costs?
The medical/pharmaceutical/legal industrial complex are about profit to them. That means offering drugs that treat symptoms rather than finding a cure. It's about sticking it to patients and insurance companies. It's about your money or your life.
If our government gets involved in providing basic healthcare for all its citizens, it could push the FDA, EPA, automakers, gun makers to provide safer foods, cleaner air and water, safer cars, and safer guns (or perhaps ban guns except for hunting and self-defense). Since our government would pay for medical visits, pharmaceuticals, and stays in hospitals, it could drive preventive care, push for drugs that cure the illness and bargain for lower costs.
After all, all other countries with excellent universal healthcare can do it, why can't we?
6
@Charlie Fieselman "Right" sizing our medical care would mean aligning treatment with those offered in other countries. I have no idea how many Americans would opt for this type of change to the standard of care. Also, we would have to address the obesity epidemic, drunk driving, and other preventable causes for health care spending.
1
"....benefit enhancements can be largely paid for with high-end taxes. Howard Schultz won’t like it, but that’s his problem."
Man, you are funny Paul, and you're right. The necessary arguments for paying for programs should be straightforward and credible, but those who hate the idea of any government spending on the people will use every false flag, every demonized trope to scuttle it and we're already seeing it play out over a year away from the election. DT and Co. are having their little hissy fit over "socialism" and the memes are flying high and wild on FB. Makes me want to deactivate my account now, before it gets any uglier.
3
@Stephen Holland
Pull the plug permanently on Facebook and live free.
1
In 2010, Americans spent 18% of GDP on healthcare, between what individuals, employers and the government contributed.
In 2018, Americans are spending 20% of a bigger GDP for healthcare, despite the fact that they are not getting additional services. Democrats claimed it would not add a thin dime to the national debt, and we are at $1.5 trillion and counting. The incremental 2% of GDP is going to big medicine, as they have increased the prices they can get away with charging from both the newly insured as well as existing insured. That's why the average insured family did not get their promised $2500 in annual savings from a reduction in cost shifting. Adding 10 million plus to the Medicaid rolls increased the cost shifting, because Medicaid reimbursement rates are lower than the cost of services. Medicare also does not always cover the cost of care, so expanding Medicare for all, with its price controls, will increase the cost per capital of Medicaid because there will be no privately insured to whom to shift costs.
3
@ebmem
Healthcare costs go up each and every year, for decades now (one of the main reasons being that the private sector constantly tries to increase its margins of profit).
What the CBO predicted is that Obamacare would CURB those cost increases, compared to what the federal government would be spending on healthcare if the bill would not have existed.
Ten years later, studies show that it slowed down cost increases (thereby cutting the expected deficit) even more than predicted.
As to the debt: Bush left with a $1.4 trillion STRUCTURAL debt. "Structural" means: which cannot be entirely eliminated within a decade - in other words, it means that the debt will go up anyhow, even if new presidents don't sign any unpaid for new law project into law..
What Obama did was cutting the Bush deficit by 2/3. The GOP's tax cuts for the wealthiest now doubled the deficit again.
To know whether a program or new bill is responsible for the debt increase during this or that year or not, you cannot just look at the debt increase itself, once you have a structural deficit, you have to ANALYZE the debt. And once you do, you cannot but observe that Democrats systematically respect the pay-as-you-go rule (= no new, unpaid for laws), whereas Republicans systematically eliminate that rule ...
3
The only thing I'd take issue with is whether Democrats should avoid a major system overhaul on their platform right now because it's very unlikely to happen. I think something like a European-style healthcare system will need to be on platforms and seriously discussed for years and years before it has a chance of being adopted, so why not start now?
2
@Alan
45% or so (some countries more if you include pension contributions, some less) is a very broad average of the top rate, i.e for those earning in excess of, say, $150,000. This is a very broad generalisation of course. It is none of my business if Americans choose to pay 20% of their GDP on health - but a little accuracy may assist.
1
@Alan
And don't forget to add in the enormous individual and corporate savings from not having to pay the outrageous fees for private health insurance. And put a dollar figure on freeing from indenture those workers stuck in jobs they hate for fear of losing "health coverage " for their family. It is at least a wash and , in fact, according to a Republican think tank analysis, medicare for all would actually save the nation $ 3 trillion over a decade.
As other commenters have pointed out, much of the cost of public health care could come from shifting current spending by individuals and companies on insurance company premiums. However, an important, cost reduction piece of government provided affordable health care will be regulation of medical services and pharmaceuticals -- no more $6000 hospital bills for someone who goes to the emergency room with chest pains and gets an EKG and blood test that reveal they are okay; no more gouging the public on prescription costs.
2
It’s one thing to borrow cheaply if you don’t have much debt to start with. We already have a 100% debt:GDP ratio. In those Scandinavian countries we all aspire to, debt is more like 40% of their GDP.
2
No, the question is...are Trump’s policies, which invest in nothing, going to fix that?
2
@Mercury S
In Krugman's category 1, investment increases productivity and as a consequence overall federal revenue, so it helps lowering the debt or debt increase rather than accelerating it (as the GOP's tax cuts for the wealthiest did).
In category 2, the deficit doesn't even go up initially, as we're talking about bills paid for by an increased tax on the wealthiest.
So only in category 3 do we have real deficit spending, and here a debate about whether doing this or instead first paying off our debt is the best choice. It's a moral choice though, a choice of what we value most, and not an economical choice - as the GOP falsely claims.
3
No one ever mentions how people who get private insurance through their employer are actually paying for it as part of their salary/compensation package. In my case a $1000 per month, and the plan is not all that good. If legislation makes my employer give me that $1000 as salary which they are currently giving to a for profit insurance company then paying a payroll tax for Medicare for all is not a burden to the middle class. If the analysis of how single payer systems are much less expensive for better coverage people will come out ahead.
9
@SCF
And for those who favor a market solution, the employer provided health insurance reduces the employee's choices to two or three very limited options. That's not a free market in any sense of the word. (I personally do not favor a market solution for health care, I favor single-payer government-provided health care.)
7
@SCF
The legislation is not going to require your employer to give you cash compensation in exchange for your having to pay higher Medicare taxes. Those at the top of the income scale will be made whole, but those who are minimum wage or median wage are not going to get an extra $12,000 per year in taxable wages.
1
I think you have missed an important consideration in "replacing employer-based private health insurance with a tax-financed public program". If this were done without changing the existing tax code most large corporations would see an immediate windfall gain in their profits by having the cost of providing health insurance eliminated. Would they give that money as a pay raise to their employees... you know the answer to that. Profits of the large companies would soar through the roof!
3
@oldguyThat is why it would require legislation to force employers who give the benefit of health insurance to still compensate the employee not just give that money to stock holders.
2
My church recently purchased a very expensive new pipe organ from a Canadian company know for making "The Cadillac" of instruments. And yet, out of all the bids from other companies (most of them American), it came in the lowest mainly because the company does not have to pay for employee healthcare in Canada. Yet another positive unintended consequence of "Medicare" for all.
7
I don't really understand that new "costs" would arise from replacing private medical insurance with a pubic insurance like medicare.
Private insurance costs money, and that money comes from somewhere. Replacing that with public insurance doesn't create new costs overall, it just shifts them to a new place (and probably reduces them, for equivalent services provided.)
The means by which money is collected to pay these costs will change, of course, But the totals should be nominally the same.
Now if, in this transition, more people receive proper medical care, then there could be new costs. I think we have to accept that as a matter of fairness. Moreover, it seems most likely that public insurance will be less costly, and this would significantly offset an increase kn numbers covered. It is worth noting that many uninsured people are forced to seek medical attention through emergency facilities, thus receiving medical care in its most expensive form. Broader coverage should eliminate this problem, something our private insurance system has been unable to accomplish.
2
What I wonder about is that with that particular 6% of the GDP being spent on 'Private Insurance', just how much of that amount really goes towards Health CARE as opposed to the pockets of the Insurance Corps, their CEO's, Boards and Shareholders?
Would the real amount be a full 6% GDP, or is it closer to 2.5% with the rest just being raked off by the CorpRats?
Why should we keep paying 'private insurance' at their exhorbitant rates which then try to deny claim whenever possible? They cost us so much more than needs be charged, and the Insurance Rentiers do Not have a 'right' to that kind of extreme profiteering, and so the Govt doing the job would have major savings if 'Profit Motives' were removed by making it a public Right to have Healthcare, instead of being forced to pay outlandish profits to a tiny group of investors.
The Major Savings come from removing it as something that can be 'insured', and instead the Government insuring that the medical bills will be covered, and NOT the 3rd yacht of the Insurance Company's CEO's second kid.
4
Other than space, I don't know why Dr. Krugman didn't note the offset of taxes by health insurance contributions by both employer and employee. He's mentioned it before.
Most of the Ring Wrong, er, Wing's arguments collapse (theoretically, certainly individuals can maintain high levels of cognitive dissonance) when pointing out other countries do it. Whatever "it" is. Free college education, universal health care, etc.
"Are you telling me that we aren't as smart as, say, Germany?" Robust economy, great benefits for employees and all of society.
Many commenting here criticize Dr. K for the alleged past sins of failing to support Bernie Sanders and the very programs he now advocates.
Dr. K's 2016 critique was multi layered. As Sanders programs were presented at the time, many made little economic sense and thus presented huge hurdles to creating a winning coalition. Additionally, many in the Sanders camp painted their critics as Neo-liberal tools when in reality most of them had the same goals. A classic example of Democrats eating each other.
2016 saw a lack of consensus between the Democrat's voter base and political class supporting the programs discussed here. It took 2 years of Trump to change the dynamic of not only the Democrats, but of the public at large. Things that weren't possible then are possible now.
Not putting global warming to the front, though, is the most pressing problem with this discussion. There is little consensus on how to alter the arc of climate change. CO2 must be made more expensive to create the necessary market incentives and make the shifting to alternative energy sources possible to prevent even greater catastrophes than we've already experienced.
The protests in France that scuttled Macron's gasoline carbon surcharge and Washington State voting down its version show how difficult a political lift this is. Comparatively, Medicare for All is a walk in the park.
Sooner than we now think, the only political coalition that will matter is the one facing up to climate change.
4
@Jim Forrester
Medicare is very popular with retirees because they are getting a free ride. The $20,000 per average beneficiary is paid $4,000 from 20% co-pays with no out of pocket maximum, $8,000 from current and previous payroll tax contributions and $8,000 from general federal revenue.
More recent retirees tend to favor Medicare Advantage plans, which substitute private insurance for traditional Medicare, and have out-of-pocket maximums and reduced co-pays and deductibles. A third of beneficiaries have elected Medicare Advantage plans, and it is able to deliver benefits for less per capita than traditional Medicare.
Those electing traditional Medicare have the option of purchasing private insurance called Medigap, which substitutes for the bulk of the 20% co-pay with no out of pocket maximum of traditional Medicare.
Under the Medicare for all proposals, both Medicare Advantage which 1/3 of the retired population has selected as well as medigap plans become illegal.
The 60 million Medicare beneficiaries are not going to support having their benefits stripped to expand the program to all, and they vote.
There is no active “Medicare for all” legislation currently in Congress so how do you know that any legislation resulting from this movement would ban private insurance? In fact it is almost certain that private insurance would continue to be available for those who can afford it, to supplement or replace any public benefit. This is the case in many European countries, including the UK. This is a ridiculous objection.
@JMcF Indeed.
The role of private insurance would change and focus more on providing extra perks like a private hospital room or repatriation. The fact that people keep their private insurance will also make universal healthcare acceptable to college educated workers.
1
Excellent article. I wish you would talk more about category three (where the pure form of Medicare for All fits). You say it would require a "lot more revenue" and you invoke payroll taxes and value added taxes that would scare off most folks. I have read studies that examine how Medicare for All can be affordable without going to such taxes. I wonder if the shock of disenfranchising insurance companies is something that you feel is too much to swallow for "America" rather than the cost. I wish you would expand on how much "a lot more" actually is. Trump tapped in the debt for 1.5 trillion and people are saying and selling things like "nobody cares" about raising the debt. You have said that if inflation and interest rates remain low, debt can rise, no problem. So, I would think the expense of "category three proposals" could be afforded. But, how much is "a lot more"? Republicans just "did it" with tax reform. To make it palatable, they simply lied to the public ($4000 reduction for middle class). Dems do the same, when in power, for it is an ago old strategy that Trump has reignited. So I think we need to know how much is "a lot more" before agreeing with your view of something like Medicare for All, even in its pure form. What's "a lot"? More than 2 trillion? More than the tax reform? I think we need to know.
2
"private health insurance currently amounts to 6 percent of GDP. To implement these proposals, then, we’d need a lot more revenue"
The talk surrounding Medicare for All, like the sentence above, always mentions the cost but neglects to mention the savings, namely the disappearance of private health insurance costs. Most people in the country are on private health insurance paid for by their employer. If instead that money goes to Medicare, which should have lower overhead costs (because of the reduction in complexity) and lower service costs (because Medicare would be able to drive down prices), there would be lower costs overall.
1
@Dave M
Traditional Medicare has price controls on services, which keeps its costs lower, hypothetically, although it results in cost shifting. The costs don't go away, they result in higher prices for others.
Medicare Advantage, which one third of participants have selected and which they can opt out of without waiting for a new enrollment period, provides care for lower cost per participant despite the fact that it is operated by private insurance companies that have to eke out profit and overhead in addition to paying for medical services.
Advocates for Medicare tout its low overhead, but ignore that the 3% is what they pay contractors to process invoices, without any controls. So Medicare will pay for three cataract surgeries where an insurance policy would not. Medicare admits that 30% of its payments are for services not provided, unnecessary or duplicative services.
Despite price controls on providers, traditional Medicare costs more per participant than Medicare Advantage, which is the privatized program that one third of beneficiaries prefer.
Medicare is able to impose its price controls because 50% of the population has private insurance, which covers the cost shifting of the one sixth of the population that has Medicare and the other proportion that has Medicaid, which pays even less than Medicare.
Big medicine is not going to accept the price levels paid for Medicaid and Medicare if it no longer has 50% to shift the costs to.
No mention of a carbon tax? You and other serious economists have recommended it but say it is a heavy gift politically. It is of course but surely there are some politicians who can advance the idea with a persuasive argument for a cut in income or other tax for middle and lower income people.
OK, thanks for this. The Times usually goes conservative on this and uses exactly what you said: "it is a heavy political lift." For years the Tilmes has pushed this "the political time is not right for Medicare for All-single payer."
But you are more flexible and thinking deeper and with more moral tone. Profit making schemes for medical care do not belong in the "for Profit, Capitalism" scheme. Universal health care belongs in the humanism category; a critical human need that everyone must have to get a good sleep at night and be productive in the morning. Too be able to grow ones mind and not worry about bankruptcy. To make plans for the future and improve one's skills; to earn your own way in life. To be happy.
National Health Care is coming; people want it and need it. Do not listen to the "socialism" baloney from the right-wing, Ayn Rand radicals. We can and will do this. Make America proud and make it a marvelous place to live and work.
3
@Frank
There is a huge difference between universal health care and universal health insurance.
Democrats like the idea of universal health insurance, because it continues the flow of cash to its big medicine crony socialists. The steady increase in insurance premiums since the inception of Obamacare are the result of the 15-20% overhead and profit to the insurers during which they have passed along the 33% increase in hospital services payments along with 24% increases in drug costs plus mark-up.
Even if you could eliminate the private plans that 50% of the population have and like along with the 20 million Medicare advantage participants like, you would not see a 15-20% reduction in healthcare costs, because the other big medicine cronies would suck up the savings and then some.
People like the idea of Medicare for all for others. They don't like it for themselves.
After all the rhetoric and rationale, Krugman's thesis comes down to: "To implement these proposals, then, we’d need a lot more revenue, which would have to come from things like payroll taxes and/or a value-added tax that hit the middle class."
That is, the Grand Collective design of more gov'ment ownership and distribution of what the citizens earn. Krugman's (and Warren's) real goal--updated, user-friendly, and "improved" USSR.
4
@Alice's Restaurant
Yes, in the case of the second and third category mentioned there by Trump, "we the people" have to decide to start investing in ourselves rather than in private sector companies.
The reason why in so many democracies that's exactly what citizens have collectively decided to do, is because eliminating the private sector means lower costs, and for things such as the military, infrastructure, health insurance, etc. very often much higher quality.
The reason why you're criticism doesn't hold any water is because your skipping this basic fact, and instead imagine that what Krugman is saying here is NOT what most Western democracies (= with a fully developed economy) today do, but what a former dictatorship with a barely developing economy did.
That's simply false, you see?
You can't join the debate if you can't even focus on WHAT is being debated.
@Alice's Restaurant
Do you (or does anybody) *really* think that what was wrong with the USSR was taxation? Hahaha (cough! cough!).
Or that proposals to raise taxes (or to reverse tax cuts) resemble, let's say, the confiscation of Ayn Rand's family's property in the 1917 revolution? (Exasperated hand gestures.)
Just raise the cap on payroll deductions for Social Security, and roll back the Trump (and, preferably Bush) tax cuts, and just about everything in the Green New Deal will be paid for.
Levy even very modest taxes on fortunes over $50 million (or $100 million if you like), and we can seriously pay down the national debt.
Tax capital gains at the same rate as earned income, and we'll be flush with money for new infrastructure projects.
"No taxation without representation" was a fine slogan. Please remember, it wasn't simply "No taxation".
3
@Alice's Restaurant
Oh, please, Alice. Go back to your restaurant's kitchen.
He's not proposing controlling the means of production, he's looking at how to pay for things almost every other "advanced" nation provides its citizens. With positive results.
Did you know that here in the capital of rugged individualism and ALLEGED low taxes, our post natal death rate for infants and mothers is at the level of Third World countries?
Really. In America? Yes. Because Texas is a micro-experiment of what happens when your ideologies prevail.
How about Andrew Yang's proposals for a UBI partially funded by a value added tax on tech companies (Amazon, Apple, Google) whose automation / outsourcing / policies have put vast numbers of Americans out of work and who miraculously avoid paying taxes?
1
@AM
If you put a value added tax on Amazon, they are going to pass that tax along to consumers. And why should consumers pay a value added tax on things they order from Amazon, and not on things they buy in brick and mortar stores? You wind up with a big pool of government cash from consumers that will be doled out at the whim of government bureaucrats.
The carbon tax works the same way. Northeast states formed the Regional Greenhouse Gas Initiative that charged utilities for their CO2 production, costs passed to consumers by the utilities, and the revenues were diverted to the general treasuries of the states.
Compare the tax system in Denmark to that of California.
The top income tax bracket in Denmark is 60.1%, the highest among the OECD countries, and that is at $50,000. In California the top income tax bracket, federal plus State, including surcharges, is around 55%. Not a lot different.
One big difference is that Denmark taxes relatively low incomes,
$50,000, at their highest tax rate. The AVERAGE income in Denmark gets taxed at a much higher rate than in .California. Denmark is not a "soak the rich" system. And it is not 71%, as proposed by AOC.
Denmark is by comparison a very small middle class country where the AVERAGE person pays a lot more tax and the AVERAGE person gets a lot more services.
Danes have a relatively uniform high work ethic, homogeneous population and they are very strict on immigration compared to America.
Denmark is not a socialist state. It is social democratic.
How relevant is Denmark, an extremely small homogeneous country, to the USA?
5
@David
1. Denmark isn't "homogeneous" at all. Don't forget that a diverse country means a country with lots of different languages, cultures and religions, NOT necessarily a country with lots of difference in color of skin ... ;-)
2. The question is rather: why would the Danish system, which is highly comparable to most European democratic systems, somehow NOT be relevant to the US ... ? Any ideas? Because we're talking about fully developed economies, a democratic political regime, and capitalist economical regime. So where's that supposedly crucial difference, more precisely ... ?
@Ana Luisa
there is an important concept here, called "scaling up".
I am asking the question, not answering the question.
Can Denmark, a country of some 4 million, which not entirely homogeneous, is extremely small and extraordinarily culturally homogeneous compared to the United States of America, where immigration is extremely restricted compared to the USA, be a role model for the USA with 350 millions and a very different history?
Does the welfare and tax system easily "scale up" from 4 million in Denmark to 350 million in the USA?
And while Denmark is not of course 100% homogeneous, the USA is infinitely more diverse in every way than Denmark.
and while we may not want America to be any other way than the way it is, we have to admit it is not Denmark.
facts count.
How about Germany? Over 80 million people and very diverse. Or the Netherlands? Also very successful and diverse, the mayor of Rotterdam is muslim btw.
Why is it necessary to raise taxes to fund a universal health care system when there is already 3.8 trillion dollars annually put into the system? At least 20% of that money goes for administrative costs to the insurance companies.
Our current system costs $3000 more per capita than the next most expensive system with lesser outcomes.
People with employer provided health insurance pay for it, they just don't know it. If health insurance premiums along with co-pays and deductibles had not kept rising, their paychecks would be larger. Does anyone with a private insurance plan really think their taxes would increase equal to the amount of their premium?
6
"You don’t have to be a neoliberal tool to wonder whether major system overhaul should be part of the Democratic platform right now."
This is a fair point, but if not now, when? The left has been yearning for universal health care for the better part of a century, and the constant refrain is. "not yet, not yet". You're a Keynesian, Paul. In the long run we're all dead.
2
@Keith
1. Obamacare perfectly allows for and was designed to achieve universal healthcare.
2. That it didn't is because the GOP attacked it and partially dismantled it.
3. As to overhauling existing systems: politically, that's only a winning message in certain specific political circumstances. THAT is what Krugman has been discussing for years, NOT the idea that somehow America wouldn't be "ready" for a much better system.
For a single payer system, isn't it reasonable to tax employers about what they typically pay for medical insurance now. Of course, all employers would need to pay. There are likely enough savings in administrative costs to cover the self-employed and unemployed in this system. If this doesn't fully cover it a tax on very high incomes could likely cover the remainder.
4
@Alan Kaplan
The taxes have to increase for everyone not just the ‘rich’.
You have to pay as well.
"You don’t have to be a neoliberal tool to wonder whether major system overhaul should be part of the Democratic platform right now, even if it’s something many progressives aspire to."
1) Calling for healthcare for all in the framework of a campaign will ensure that the proposal is discussed and argued.
And just as Sanders' proposal 'mainstreamed' the idea - which Krugman previously dismissed as politically unfeasible - so active discussion of how healthcare for all will lower costs (and improve outcomes) can, again, move the conversation further left: i.e., can change minds of some that balk at 'losing private insurance.'
A national discussion of healthcare for all its also an opportunity to gain the political and electoral support of low income uninsured and underinsured people - many of them voters that stayed home in 2016 - thus strengthening not only progressives, but the Democratic Party.
2) By educating the public about single payer, a nominee increases the chances that the most progressive, politically feasible healthcare legislation will be compromised on.
3) We shall soon see how much the public is open to healthcare for all now that Sanders has thrown his hat in the ring - which, clearly, we never would discover in this election cycle if he were not running: now healthcare for all is on the table as a proposal.
1
@Jackson
Oh, and another reason healthcare for all will get a wider hearing this time 'round:
because there'll be no right liberal - who lays claim to the African American vote and rejects single payer - effectively obstructing African American exposure to it...
...despite which, African Americans know Sanders better and have a positive view of him now:
https://www.truthdig.com/articles/bernie-bros-phenomenon-debunked-latest-sanders-poll/
Bravo, Mr. Krugman.
Over decades, the GOP has done a fine job of repetitive preaching about our enormous deficit, yet history shows us their major participation in its creation. Repetition is effective when used to obfuscate reality, something the Dems should be wary of doing as well.
The rise of the oligarchs in America reminds me of the very rich relative who regularly monitors the amount of gas he's using in his hybrid when he gets on the freeway. While he's busy looking at his gas gauge, the road ahead is decaying.
1
Intellectually honest, but still a little biased. The problem is that a full scale welfare state costs not an incremental amount but a vast amount more than what we have now. This requires vast tax increases that may make sense figuratively, but that most people are not ready for. Incrementalism is much wiser.
1
This is one of PK's best articles. Think about it, when business wants to expand, it borrows money (or sells more stock) because it knows that the future benefit will pay for the investment. Government should do the same for infrastructure improvements. What we need is an industrial policy that brings back manufacturing to provide an improved standard of living for the middle class and limit inequality. Fix the affordable care act and provide a buy-in to Medicare for 50 year-olds. These things have to be paid from increased taxes. Forget about the major the overhauls.
5
Go back and read your Bernie columns from 2015-2016. Then apologize.
Glad you've returned to the rational thought.
4
@Oh Please
Hah! Fat chance - but worthy of a 'zine piece.
Something with a title/subheading along the lines of:
Title: Slouching Grumpily Towards Single Payer
Subtitle: After years of ridiculing Sanders' support for single payer, fairweather-progressive columnist Krugman cautiously considers it...but only because Sanders ignored his attacks and thereby forced progressive healthcare onto the table
@Jackson
Good idea!
Notice that in this column Krugman compliments Warren; in another recent article, he defends AOC's math. He doesn't mention Sanders at all in either column!
(This is especially strange since Ocasio -Cortez got into politics by campaigning for Bernie.)
My theories are:
Hillary is a personal friend?
Hillary promised him a govt. position?
Hillary blackmailed him?
Bad blood with Bernie going way back?
Bernie reminds him of someone else? His Dad?
It is because I think Krugman is almost always right that I found his treatment of Sen. Sanders inexplicable. And now that other Dems. are advocating for Bernie's ideas, the economics are suddenly workable.
@Oh Please
"Recommend"
Krugman is cautious. I respect his risk-taking, outspoken stand prior to the Iraq invasion, despite incredible pressures to buy into fraudulent 'evidence,' and risks for being wrong. But that was the exception that proves the rule...
My view? Sanders is his alter ego - the one who shifted the playing field by valuing authentic commitment to a progressive value rather than for what was 'realistic' and 'practical.'
There are noneconomic reasons why we would want to, like Canada, finance expanded programs with broad-based taxes such as payroll taxes, a VAT, or general sales taxes. It leads to better policy decisions. The peculiar American approach of the "other guy" paying for everything has led to incredibly corrupt and inefficient ideas, particularly in public transportation and environmental policy. More power to Elizabeth Warren's tax ideas, but without everyone paying something the result will be perverse.
Which brings me to another Canadian lesson: Beware of a Green New Deal that works like Ontario's destruction of the utility industry and the resulting outrageously high costs. The result has been the destruction of the Ontario Liberal Party in the last election. The same thing might happen to Democrats (again).
4
I've figured, if given Medicare for all coverage, that my Federal taxes could be raised somewhere in the neighborhood of two and half times, and I would break even.
2
There is no reason to think that Medicare for All would cost more than the status quo and lots of reasons to think it would cost less. The real question is not the cost of the system, but rather who pays for it. Under the present system, ordinary working people pay a massively disproportionate share mainly to the benefit of insurance company profits.
Medicare for All would involve raising taxes. But it would also involve eliminating paying for private insurance premiums, copays, deductibles, and out-of-network fees. It would also eliminate all of the grief of constantly trying to get private insurers to pay for what they say they will. It would also eliminate the ridiculously expensive practice of the uninsured using Emergency Rooms for primary care.
Wall Street Democrats and centrists are trying to drive a wedge into the massive support for Medicare for All by framing it as "the elimination of your private insurance." Intentionally or not, Krugman's hand-wringing here plays into their hands. What people are really afraid of losing though is not their insurance, but rather their doctor and access to particular services presently covered by their insurance.
1
@Christopher
You would no longer have pay for medical liability on your home or automobile. Employers would no longer pay for
Workmans compensation medical. Gone would be the co-pays and deductibles. Gone would be a separate Veterans health care system. No more haggling with insurance companies over unpaid claims. No more medical bankruptcies.
1
@Christopher
As a Medicare recipient, I can speak positively of the program. I can go to ANY doctor in the entire country that accepts Medicare, which loosely translates into something like 99% of the doctors. There is no "out of plan" costs imposed because I am traveling. I also purchase a reasonably priced Medicare Supplement which covers most other medical costs and drugs.
Medicare does NOT force me to use specific doctors like my former employers plan required, simply because almost all doctors and health care facilities accept Medicare.
The argument that a health care plan forces you to change doctors comes from private insurance, and, unfortunately, the ACA (Obamacare). Note that the ACA is NOT government managed insurance like Medicare, but is an attempt to use subsidized private insurance to address health care needs. One of the primary problems is that the insurance companies were allowed to continue their practice of preferring "in plan providers", forcing people to change doctors.
This does not have to happen with a "Medicare for all" system.
1
@Erik Nelson
Thanks for this strong statement of how well Medicare works, Erik!
As someone who, like you, has chosen traditional Medicare (instead of the rip-off, privatized Medicare Advantage programs that continue to restrict networks of providers and demand insurance-company approval for treatments), I am convinced that most Americans don't realize how great Medicare is. It protects us from provider abuse, against gouging in provider prices--hey! let Medicare negotiate drug prices!--and is super-efficient. Beneficiaries pay small premiums unless they pull in a really solid (triple-figure) retirement income, in which case their premiums are two to three times as much. Very progressive: the wealthy pay more.
Let people opt in to Medicare if they want, paying the tiny deductible and premiums, having tons of doctors to chose from, and getting a supplemental insurance plan for what Medicare doesn't pay for. It works, and only a small percentage of Americans know that.
A tiny tax on transactions on the national security markets? A wealth tax on large fortunes? Increased income tax rates on income over 5 Mill per year? Capital gains taxed at the same rate as earned income?
3
I'll bet PK gets chided by his employer for his even handed approach to Warren. She after all is the greatest threat to the wealthy precisely because she puts forward real proposals of taxation, policy and agenda. When allowed to make her point she puts forward rational approaches that target real things.
The Times was the entity that kept haranguing on the native american thing even as most people don't care and won't care. She has also been routinely painted as a radical leftist.
If one were just to look at who scares the wealthy the most it has to be Warren. I suspect that is because her message is coherent and her approaches are well thought out. The response of the wealthy power centers suggest that she in fact is the best candidate for the people who expect economic improvement for the poor and middle class.
9
I think your ideas are based on the wrong or current model of how an economy should be run.
The current economy of maximizing profit in any and every way possible without regard for the effect that will have on society or the nations economy which the republicans have imposed on us is a colonial economy not a capitalist economy for a self governing people.
The republican economic model is a total destruction model in which they simply mine as much profit as possible from any particular business then walk away once the mine is dry never taking into consideration anything but the making of money as if that were a good thing in and of itself. Every single cultural heritage including the bible has stories of how greed is bad and destructive to society. Yet somehow the republicans get away with using hyper Christianity as moral cover and never talk about this.
The correct model is to regulate the economy and use regulation, tax incentive and penalty to induce business to think and act for long term viability and sustainability which includes long term jobs. That is the model that gave us the best years for the most people that this country has ever known.
Mr Krugman can you talk about how that was done and how we can bring it back?
6
We need to hear more details regarding “Medicare For All.” My wife and I recently went onto Medicare. We are both fortunate to be in good health and rarely seek medical care other than preventive services. We currently pay about $600 per month for Part B and a supplement policy endorsed by the AARP because we are no longer retired and have no income, just savings. That will go up to $1000 per month once we begin mandatory disbursements at age 70.5 from our retirement savings which will put us back in a higher tax bracket so that our Plan B premiums will be “means tested.” We elected to forgo Part D as we don’t anticipate needing any medications. We are not complaining, we know we are fortunate and decades of hard work and living below our means are paying off. However we fear very few understand that Medicare is not “free” and will be very angry if they believe they have been deceived.
Democratic politicians need to be able to explain these costs especially to the 180 million who currently get insurance through their employer, most of whom pay less than $600 -1000 per month on their contribution to employer plan, co-pays and deductibles. As the old adage goes, the devil resides in the details.
3
Unless your Medicare Advantage plan somehow covers pharmacy, sign up for part D, and do so right now. Today.
You WILL regret it, if you don’t.
4
@Concerned MD
Oops, typo....went “we are no longer working.”
@Concerned MD
"most of whom pay less than $600 - $1000 per month..."
And then there's the employer's share of this cost. My actual health care cost per month for a family of two was nearly $2000/month of which I paid 15% when I retired. Now I pay about $400/month for Medicare and an Advantage plan with similar co-pays and restrictions. People who get health insurance through their employment need to realize that they _are_ being taxed to pay for their health insurance, albeit invisibly. They get a benefit which they pay for through their labor. They just don't see most of the cost.
1
Krugman was one of the people that criticized Bernie Sanders in 2016 asking if Sanders' ideas were "silly and unaffordable". All the while singing the praises of Hillary's half-loaf rhetoric.Seems Bernie has brought even the Clinton shill Professor to the left! Its not what you spend, its what you spend it on. People over profits!
2
The best studies show that he major reason we pay so much more for heath care is uncontrolled pricing. Any discussion of medicare for all has to include serious price controls. It is frustrating that this continues to be ignored even by Prof. Krugman. As a physician I am witness daily to huge profiteering and price gauging. Health care is an extremely opaque market and does not work with free market principals (Should I raise the price on you while you're on the ventilator? or do you think you can "shop" for a cheaper hospital at that point?). Pricing in all facets of health care, yes even of physician salaries, needs to be brought under a system of gradual reduction. At 18% of GDP it would be rough to immediately adjust down to 10-12% GDP but a gradual downward adjustment is warranted. Pharmaceutical prices need serious control (Insulin anyone?) and surgical prices need standardizing (downward), not to mention imaging, devices, etc. Until we do this we are going to have a very difficult time covering everyone in this country adequately.
7
@ChinaDoubter
Thanks! One day in the hospital can take a decade of working class wages to pay off. (And a decade of labor for many jobs will result an array of new, health problems.) Patients and the insured are clearly financing high end medical care and research. The industrial-military-complex has been matched by our medicine-research-pharmaceutical complex. These self-serving institutions must be broken up like our financial institutions.
2
Surely Medicare for all "costs" could be dealt with using one of many transition mechanisms, designed to push employers to re-direct former employer-paid health premiums into wages? Make enrollment in Medicare for all voluntary for a transition period, and use a subsidy split between employer and employee to make it happen - and/or when an employer drops a former contribution to employees' premia, require them to show an equivalent raise to real wages or face a tax penalty. Don't let the premia go into employers' pockets. Not so hard, right?
1
Nope. Just not legal, and likely un-Constitutional.
@Barbara, your idea to incentivize potential business savings from a Medicare for All plan enactment to increase employees’s pay is great! We could get savings from nationalizing our health care (not least via presciption price negotifation), (and ending the ER as primary care provider), and give a boost to working people.
We have short-changed wage earners for 40 years in America. Essential costs have skyrocketed, while pay was flat all at the same time that we became so income unequal and Oligarchic.
"My main point now, however, is that when people ridicule progressive proposals as silly and unaffordable, they’re basically revealing their own biases and ignorance."
Often they are revealing their own selfish concerns. Much of the doomsaying will come from politicians financed by the interested donor class, or from outright paid political mercenaries like think tank "experts."
2
I agree with Krugman that major system overhaul would be a heavy political lift immediately post-Trump. We need to usher in an era of Democratic government that lasts long enough for major progressive advances, and overreach runs the risk of swinging the pendulum back toward white nationalist populism. So ... let's start with Krugman's first two categories: 1) a major green infrastructure program with the goal of building enough solar, wind and storage to make electricity generation 100% renewable by mid-Century or sooner, and environmental regulations which transition most transportation to electricity. Add major energy conservation initiatives and we have a real shot at decarbonizing the economy. 2) Offer medicare buy-in for everyone and gradually transition away from employer-based health insurance; add expansive (but needs based so we don't pay for the rich) free education on both ends, i.e. preschool and college; expand subsidies for housing, employment, etc. And pay for some of this with a wealth tax and borrow for the rest. We might not get to Denmark in the first 8 years of Democratic government after the current crooks are removed from office (by ballot or impeachment), but it's a great asymptote to approach.
3
Thanks for this logical column, Mr. Krugman. I'm sure many of us would be interested in seeing a column about the fiscal, let alone the moral, costs of our vast spending on the military and "defense". These are our tax dollars, too - why are they, and what they are spent for, not debated out in the open as well?
6
The terrorist and disingenuas argument is that the end tax rate for these obscenely high income groups is 70% of the total. They gloss over the fact the it's 70% or what ever of the adjusted income over 10 or 50 million. Think about this when you hear that Amazon will pay no tax this year. They have been very good at adjusting their income down to nothing. And tucking away some were off shore? I don't know what do you think?
4
I'd like to see Elizabeth Warren stay in the race until near the end, and then be appointed to a high-level cabinet position by the Democrat who wins. Then she can do what she does best: go after financial miscreants without being bogged down by the daily task of running the country.
The Green New Deal is an early draft of a bargaining position. You ask for the moon, then trade some of it back at the table. We learned this in the 4th grade. Duh. Of course the other side will pick the most radical ideas and use them to make the entire thing and the people who back it look ridiculous. That's how they operate. It prevents an honest discussion and biases the final outcome in their favor.
"Medicare for All" is another name for (one version of) the public option. Obama could have demanded single payer and settled for Medicare for All, but he wasn't in my 4th grade class.
4
@mlbex ACA passed by one vote; do you think Medicare for All would have passed at all?
2
Sigh. That “public option,” is not Medicare for All. It’s a government-run option for insurance, and Medicare is just insurance as well.
And, you’re hallucinating if you think Ibama could have passed Medicare for All. It’s just silly.
1
@Robert: Medicare is insurance managed by the government, not by a for-profit insurance company, although yes it does end up paying for "for profit" services.
@Berne: He could have asked for more and scared them into giving him more than he got. Instead he asked for what he wanted and settled for less.
1
Our future grandchildren will look back and likely be quite pleased that we borrowed from them to help pay for a Green New Deal that helped to avert the worst of climate change. Nor should it be too much to ask those who have benefited most from our current carbon based economy (with its negative externalities) to help pay for a transition to one that runs on renewable energy.
10
Paul forgot to mention the most important financial item facing America: Climate crisis. Yes, healthcare, Social Security, and other programs are vitally important, but I wonder about how we will afford to cope with the climate crisis ahead. It's the elephant in the room. Unless something drastic and immediate is done, many of these political conversations will be moot. We will be in survival mode and billions of people will be desperate.
7
@cheddarcheese the Green New Deal is all about the coming climate crisis. He included that.
1
We could also shave the military budget by, say, 3-4%. How much would we have if we got rid of expensive pet projects? Maybe 42 billion per year? The American public would be more safe and secure if we had access to quality health care, universal paid maternity leave, child development centers, healthy living environments (clean water, abundant green spaces, walkable areas) and educational opportunities for all.
11
@EHR Yes.
When Trump talked about the wall, he said we have more money than we know what to do with. Really.
2
Come on, Stiglitz. Come on any economists. Help us out here. Get on board! Help Paul. Help us all get on board the Green Train!
Save our country. Save our Planet. What an honor! Did you every think you would have such a role to play? Play it!
We old folks only have a few days left. Join the good fight for justice and life on earth. What a legacy!
16
This column is excellent, not necessarily substantively, but because, like it or not, Trump's irresponsible tax cuts now force us to look very carefully at every spending proposal.
6
@R.S.
The tax cuts under the previous GOP president were similarly skewed. That is the GOP's jam as well as their bread and butter. Focusing on Donald gives him too much credit.
1
This perspective comes so close to the heart of the problem, but then it misses. People think of economics and government funding like their own personal finances, when the two are worlds apart. Worse, pundits, commentators and politicians all cherry-pick the facts to support an agenda, which only serves to confuse people even more.
Take the NYC/Amazon debacle. Many complained about the $3B cost to the city. That ignores the fact that the city wasn't giving $3B away, it was just promising not to collect $3B. But that ignores the fact that the Amazon and its employees were going to use services that do cost actual money, like fire, police, transit, and sewer. But there's also the increased economic activity which helps the city, but mostly helps the more well-off business owners, property owners and landlords who see their own valuations increase.
The point is, it's more complicated. You need to look at all of the interactions.
But even that's not really true. When you are talking about a society, it's simpler. Look at the net result, _regardless_ of where the money comes from.
Take a single payer healthcare system. Yes, insurance companies account for 6% of GDP. That's because they add waste and siphon off money for profits. Streamline their function for a net gain. Despite modern mythology about the efficiency of private business, a government is not burdened with the need to make a profit. Our HC system is the most inefficient in the world.
Just fix it.
6
Instead of making promises about what they are going to deliver to the American people, I would like see Democrats hammer on what Republicans are trying to take away. Craft some simple messaging around the Republican mantra of "starving the beast": First, they cut taxes on the wealthiest citizens. This creates budget deficits. Then they claim these deficits can only be dealt with by cutting benefits to ordinary people, like social security and health insurance.
Once our candidate has painted the Republicans as benefit-takers, he or she should lay out a plan to overhaul the U.S. tax system so we can finally pay for the things we so desperately need, through a combination of raising rates on the highest incomes, taxing all income at the same rates wage-earners pay, restoring the tax on personal windfalls (i.e., inherited wealth), raising the cap on social security payroll taxes to fully fund the system, and so forth.
By first explaining a fairer, more comprehensive and more equitable system for paying for the things we believe in, Democrats could take the legs right out from underneath Republican bleating about how much these things will cost and why we can't afford them.
Everyone knows already what we need to do; now Democrats have to show Americans how we're going to pay for it.
5
Krugman tells us subsidies on the super rich could pay for Warren’s child CARE proposal. Child CARE centers keep kids safe and comfortable, but don’t provide high quality child DEVELOPMENT activities. In contrast, child DEVELOPMENT centers focus on developing children who can reach their full potential. This early preparation can help produce children who go on to be highly productive citizens, citizens who keep our country competitive in an increasingly competitive world. Actually, research shows that high quality child DEVELOPMENT centers, with teachers who have masters in child development, do pay for themselves in terms of higher earnings and less dependency when the kids become adults. In fact, they are one of the best investments around. But if Krugman is correct that universal child CARE requires subsidies from the super rich, then, by his reasoning, turning these child CARE centers into high quality child DEVELOPMENT centers should pay for itself.
4
So...Baby Einstein all around?
In the first place, Krugman also called it “child development.” In the second, adding an all-caps title doesn’t change the essential point about financing—child care’s likely a good idea, as it helps families and productivity, and likely should be thought of as something to be financed by BORROWING, not whatever “subsidies on the rich,” are.
It’s enhancements to existing programs that he wants financed with—taxes—on the wealthy.
And last, some stuff, like all-around Medicare, takes money from all.
Not sure I get you objection.
4
Like Thomas Friedman today, Dr. Krugman seems to be operating under restrictive premises. The dichotomy between big government/high regulation and small government/low regulation is false and misleading. Regulation, as well as support and services, work best when administered at their targets (and sources of revenue) and not from afar. Our federal government HAS become bloated. Without constraint, federal programs for a country our size WILL expand, get ratcheted in and live to support themselves. The "administrative state" IS real. Here's the mind stretching bit. This does NOT mean we need less government. We need MORE government - just not FEDERAL government. For our now 300 million plus country, government at the national-level is often inefficient and leads to disconnect and alienation among the very people it's intended to serve (who then don't vote which exacerbates things.) We don't need Big Government (in most cases) - we need LOTS of Small Government. The SCALE of our government should match the scale of the economic and social activity it's designed to regulate and support. The rise of globalization has occurred in parallel with the expansion of our national-level government (and our media). We need to inhibit, not promote, corporate/global capitalism. To this end, we'll need to maintain our borders and use our considerable natural and human resources to support a society that could serve those beyond our borders as a positive example, rather than a negative one.
1
"My second category is a bit harder to define, but what I’m thinking of are initiatives that . . . use subsidies to create incentives for expanding some kind of socially desirable private activity . . ."
Strategically targeted tax credits have generally been extremely effective in incentivizing socially desirable private activity. For example, the Low Income Housing Tax Credit is the most successful program in history for facilitating the development of affordable housing for low-income people.
Likewise the Historic Rehab Tax Credit has been a vital tool for preserving historic buildings, which more often than not are located in older parts of cities and towns (i.e., inner cities) which, in general, tend to be low-income areas. So, the HTC facilitates two desirable goals: preservation of historically significant buildings and spurring economic activity in the communities where those building are located.
The New Markets Tax Credit, which, despite occasional criticism in the press (based mostly on misunderstanding of how the program works), not only has been an incredible driver of economic activitiy in low-income communities, but the economic activity generated as a result of NMTC investments is a net revenue generator for the federal government. And unlike the Opportunity Zone program, projects in low-income communities financed with NMTCs must demonstrate a legitimate potential for positive low-income community impact, not just tax deferral for investors.
3
Why does no one talk about a financial transaction tax. Such a tax would raise a lot of money with very little pain.
9
Thanks to Paul for this practical template for organizing our discussions about what to do and how to pay for it.
Let's take the evergreen "roads and bridges" problem for example. We could 'save a lot of money' by not fixing them at all. Since budgets are all about money, and if reducing annual budget deficits is our paramount objective, then all we have to do is simply triage roads and bridges, filling only the most dangerous potholes while leaving others to grow until each in turn becomes the most dangerous. And let each bridge go until it becomes so unsafe it has to be closed. That is what states typically do. It is the most expensive and least efficient way to maintain our system.
I admit this is exaggerated, but not by much. Contrast this to Paul's pragmatic rational approach.
8
I think it's funny how the republicans have, through tax cuts and increases in military spending, given us a path to pay for both universal child care and free higher education/trade schooling.
All we need to do is reverse those two moves.
We need to focus on how we can optimize benefits for our society. "moderation" is not the way. Unless you have the courage to look someone in the eye who is dying due to lack of healthcare and explain to them how we need to be "moderate".
6
@Ronnie Yes! Why is no one else talking about decreasing our military spending? Especially now with Trump wanting to start a fool Space Force...
3
@Caitlin McCorkle The only senators who voted against the 2017 increase:
Bernie Sanders
Bob Corker
Kirsten Gillibrand
Patrick Leahy
Mike Lee
Jeff Merkley
Rand Paul
Ron Wyden
1
The way you described that Senator Warren may actually be a very good candidate to vote for. Thanks for clarification.
7
I don't worry about the government having enough money, I worry about what it does with it. I worry about the money going to the right people, those who really need it or can put it to good, efficient use, not middlemen who inflate prices and provide bad, if any, service. I know there's always a degree of corruption and incompetence in government, but, to me, living in New York City, it feels like there's too much, way too much. As Lawrence Summers asks: "How could our society have regressed to the point where a bridge that could be built in less than a year one century ago takes five times as long to repair today?"
8
@mijosc
I have the exact same concerns --about private companies. From Lehmann Brothers and Adelphia to PG&E, Bernie Madoff and Volkswagon to Wells Fargo, Halliburton and Facebook to Enron, HealthSouth and Tyco to Trump University, private sector players exhibit unrivalled corruption and incompetence (not to mention inefficiency). And when they go bankrupt, your pension disappears with them.
1
While much of this argument is obviously sound and logical I think to be fair it should be pointed out that a lot of the scepticism is due to a lack of faith in modern DC to institute reforms both efficiently and with a minimum amount of graft and corruption. I believe a lot of voters get that Universal Health Care would be to the benefit of all, it's just they aren't ready to gamble their hard earned money to see if you can build it properly .
5
Absolutely right. Opposition to social programs always relied on the fear of higher taxes rather than the benefit the programs might bring to society. By the way, when did you ever hear a conservative politician reject building a new aircraft carrier or nuclear submarine or upgraded intercontinental ballistic missile based on the fear of paying higher taxes. We always seem to have enough money and taxing authority to wage war.
Taxes that provide real benefits are taxes well worth paying.
12
"You can argue that most middle-class families would be better off in the end, that the extra benefits would more than compensate for the higher taxes. And you’d probably be right. But this would be a much heavier political lift. You don’t have to be a neoliberal tool to wonder whether major system overhaul should be part of the Democratic platform right now, even if it’s something many progressives aspire to."
One of K's better pieces. The answer to the concern noted above is to mobilize voters! Millions and millions of poor and working poor folks do not vote. Mobilize, and K's issue is likely solved. Young people get it.
6
True single payer would lower healthcare costs for most individuals and certainly for the aggregate. But replacing 6-7% of GDP in the economy means a lot of job displacement, career change,etc. It’s almost inconceivable that we could do this in this country, not in one election cycle. But, why don’t we hear the complete analysis from the candidates so we can decide? I’m afraid Bernie glosses it over too much, so it’s left to Warren to outline it better, or Professor Krugman.
All this wonkishness aside, let’s agree that getting Trump out of there is our first priority. So for now, offering the Medicare option is the most effective thing we can do, which should help in shoring up Obamacare.
The Greedy Oleaginous Plutocrats will offer nothing helpful on healthcare; you can count on that.
9
This will indeed be the question of the season, since none of these programs come without a price.
That said, no one ever asks how we will pay for the endless wars. As I recall, Bush simply kept the costs of the invasion and occupation of Iraq off the books.
No one ever asks how we will pay for the absurd tax cuts that go directly into the savings accounts of the richest of the rich, rather than back to those who could use those dollars to spend in their communities.
No one even asks how can we pay for Donald Trump's regular trips to go golfing, which cost the tax payer millions of dollars.
This should be more a question of how can we afford not to have a well educated and healthy population. If we value the contributions all Americans can make to our nation's prosperity, then we should put our values first and invest in them.
8
I really don't have the latest WHO data( recent years) numbers, but I do know that our economic allies, as a group pay almost half what the US pays (which is the highest in the World) as a percentage of GDP, for health care. This has been true for past 3 decades that I know of.
What this means is that the average US citizen could save about half what they pay with insurance if we adopted any one of those countries (economic allies) health care system. The example is no health insurance payments. No co-pays, no deductibles. Just a health care tax which could be as much as half what you pay now.
There is also a bonus with goverment run health care that our allies have realized. Most of them live long than Americans. Check the WHO...and don't get fooled again.
7
I have. It ain’t that simple.
We already pay a tax, a tax without representation I might add, in the form of insurance premiums. Much of which goes to paying for millions dollar salaries and billion dollar bonuses. We stop paying those and Medicare for All is within our grasp.
It is time for US to look facts in the eye: 40 years after the New Deal America was humming right along; 40 years after trickle down reaganomics and we can't afford to fill our pot holes, while more money is being hoarded by a small group of people than has ever before existed in the history of mankind.
republicans wail and whine about leaving our children with a debt in the future but care not a fig about leaving them an uninhabitable planet.
15
Like the rest of western societies this country needs a VAT tax.
3
There are many comments today that claim Medicare For All would magically reduce costs. How? The services and procedures covered by Medicare are those facing the most acute price increases, while pay for service healthcare is either steady or falling. If you want to bash the status quo, don't you have to admit that 2/3 of healthcare is already under the government umbrella and honestly address what the effect has been?
4
@FreddyB
It won’t—but I can guarantee that it will reduce quality and access.
In fact, it will be even more expensive when the screaming starts at the loss of those two metrics above.
1
Medicare, like HMOs, does not reduce quality. Access is a prob, but that’s a primary care doc shortage, not the black helicopters.
Paying for medicare for all should be a no brainer. When I looked at my W2 this year there was a box with the amount paid for my family health insurance plan by my employer. It was ~ $25,000 add to that what I pay. Add the employer contribution to my salary and I pay a significantly larger percentage for health care than I did for my healthcare while I lived in Germany. The heath care there paid everything no deductibles or copays. It cost me 14.9 % of my salary. My plan here has deductibles and copays of a up to $35 per visit. Plus co-pays for prescriptions.
Convert my employer contribution to a tax pay for insurance without deductibles or co-pays, remove the cost of admin and executive salaries and viola easily paid for medicare for all.
14
You did not pay that whole 25K. And people will balk at 14.9% tax increases.
Thanks for the attempt to organize thinking around the nitty-gritty of expanding socially desirable programs . We need environmentally necessary programs to be included somewhere.
I despaired a little when I saw Warrens' well considered and present idea attacked harshly by the right, but also under fire from the left for not promising 100% of child care for everyone.
I wish the the adjective "free" could be banned entirely; Nothing is ever free, everything in the budget represents a choice made, and implies that there is a funding stream dedicated to executing the program. Medical care in other countries is paid with high taxes, and sometimes aided with private insurance. Is "free" college necessary for all, or for those without the means? Does a New York style program have promise, for instance?
Other countries with, to my mind, better approaches to health care and social programs have not operated as if there is a money tree, but have struggled with how to achieve the best coverage that they can afford. But it seems that the difference is that all or most "sides" agree that certain services - healthcare - are necessities, not privileges. Are we there yet?
And everything should be on the table. But few people have the appetite to delve into every issue. So it is important to illuminate the issues simply but accurately.
it will be important - on the Democrat's side - to be able to unify being proposals which are achievable
7
Child care and Medicare-for-all are noble goals, but neither can be realized overnight, and neither will gain public support until practical road maps are presented by the advocates.
National child care support would be simple and direct if we follow the examples of the social democracies. A monthly stipend for each child, along with Medicare coverage, would lift American children out of poverty and neglect. The child stipend would be deposited in a bank account directed by the mother of the child.
A direct and simple approach to universal Medicare can be realized by organizing and re-purposing bits and pieces of existing federal health care programs. It need not require a huge expansion of government staff. The existing Medicare Administration provides policy and overall direction. The administrative and clerical support for Medicare expansion could be created by restructuring private Medicare Advantage providers as Medicare contractors. Medicare coverage and subsidies could be distributed through the Obamacare marketplace.
Both universal Medicare and Social Security need a degree of independence from the vagaries of a dysfunctional Congress and the party politics of the President and his appointed Cabinet. These essential programs should be set up as public corporations with charters and revenue sources. They should not continue to serve as whipping boys for “big government” opponents.
1
Answer this, Paul: If all other major countries can afford Health Care For All what can't the richest country on earth? Why so we have the greatest percentage of people living in poverty of any other major country? What is there to argue about?
These are Bernie Sanders argument, which your column does not answer.
8
@JFP -- indeed. Nor does Dr. Krugman address arguments over "god is one, god is three," or why the neutrino exists.
The American health-care system tied to employer-provided insurance (that is a deductible expense to the corporation, rather than a taxable benefit to the recipient) is largely an accident of WWII that became entrenched.
The question of poverty levels in the USA is a complicated one, but you misstate Bernie's claim, that was "child poverty is higher in America than any other major country."
The fact check on this is "mostly false" ... go and read it:
https://www.politifact.com/truth-o-meter/statements/2015/jul/08/bernie-sanders/sanders-child-poverty-higher-america-any-other-maj/
2
For openers, Bernie proposed MEDICARE for all, not health care for all. Learn the diff between “universal,” and “single-payer,”: Bernie’s is ONE WAY to get to universal, NOT the only way.
What's the real alternative to the Green New Deal? Extinction, for some of us baby boomers, for our children, our grandchildren, and most certainly our great grandchildren. The sooner we embrace that reality and begin to act accordingly, the better chance we have of not totally destroying the ecosystems that sustain our life on Planet Earth. Climate change denial is proving to be the equivalent of shouting "fire" in a crowded theater and should not be protected speech under the First Amendment.
10
@Jack -- arguments of the form "what is the real alternative" are almost always suspect, and in this case completely risible, because the "GND" is NOT A PLAN. It's a slogan and a wish-list; most of which has nothing to do with climate.
What is your ACTUAL PLAN?
If we as a nation are to actually do anything we need a price on carbon ... one way or another that means a "carbon tax."
I favor a broad (all sources of fossil carbon, no exceptions, no "grandfathering") carbon tax that is 100% rebated per capita to all adult citizens residing in the US; with all other fuel/energy taxes and subsidies being repealed. (However it may not be practical to repeal Price-Anderson ... a real problem of its own.)
To be effective and to allow the biofuel subsidies to be repealed while maintaining effective parity requires the carbon tax to start at about $40 - $50 per ton of CO2.
I agree government cannot be run like a business. Because, business can go out of business, but government can’t go out of business. I agree that investment can be made with borrowed money or revenue raised from taxes on wealthy. I also agree that structural changes of Medicare for all is complicated as stated in the article. I suggest that employer based insurance coverage should be made mandatory to all employers. Unemployed can buy into Medicare. Alternatively, we can make Medicare for all with the stipulation that all employers pay for health insurance for their employees into Medicare. Otherwise, Medicare for all would be a boom to employers, because the savings from not paying the insurance will not be passed on to employees in the form of wage increases. Elizabeth Warren is leading with specific policy proposals and I would like to see all other candidates come up with their own policies instead of providing a hand waving criticism.
8
@Kodali
Your statement —“revenue raised by taxes on the wealthy”—-why isn’t revenue raised on taxes from myself and the middle class? That is where the most money is located.
If you want stuff—you pay for it.
Why can't we have MFA? Because almost everyone in the USA *already* has government subsidized health coverage.
-If you have employer coverage, there is a massive tax subsidy.
-Or, you have Medicare, Medicaid, VA, CHIP, ACA, etc.
The entire medical-industrial complex-- not just insurance companies-- can charge pretty much what they like, because the employer tax subsidy creates a sequestered revenue flow.
That's why we pay twice as much as other countries for the same or poorer results.
So, who is going to vote for MFA, and who is going to oppose it vehemently, and have vast funds to put into that opposition?
It really gets tiresome to hear this MFA stuff-- the Obama administration had really, really, smart people figuring out how to "change the paradigm". They did it, but *just barely* got the law passed, because even on the D side, the industry influence was so great, and the people with employer plans, including unions, were not on board.
Instead of using the foundation those smart people provided, which made government intervention in the market a viable concept, we have childish young folks and some childish old folks yammering about a politically infeasible "solution" that would probably take as long to implement as an incremental approach.
7
@arty -- put more simply, big business loves being able to use employer-based health-care just as much today as it did during WW II, for exactly the same reason: it is a nice golden-handcuff to keep employees, that amounts to an enormous tax subsidy of big-business.
Little businesses get the shaft, as do the self-employed.
Changing healthcare is a political nightmare.
2
I'm not going to get into the right or wrongs of the issues. But I will start with a wealth tax isn't going to bring enough to pat for Medicare for all. No way no how. If we tax wealth at the rates you wealthy or the capital for the dust. Does anyone at all remember what happened when Hollande tried it in France? in not well:
https://www.forbes.com/sites/jonhartley/2015/02/02/frances-75-supertax-failure-a-blow-to-pikettys-economics/#23e282c15df2
Bluntly all it will it do is shift the wealth to other countries.
2nd: For those yelling that we can run the presses until they melt and just keep issuing money to pay for these programs?
Sorry wrong answer. A US dollar that no one over seas will take for anything because it is worth less then the currency of Zimbabwe isn't a good or even adequate answer.
3rd: For those saying Government efficiency will make up the difference? Government & efficiency in the same sentence? Riiiight.
I don't dispute a change in healthcare is needed! But we need a REAL conversation on how to pay for it or any other programs. Not a pretty bait & switch for the voters. The realities are most of what is being passed around to pay for it is more Fantasy then the Arabian Nights. The reality remains no one as given an honest proposal of how it can be paid for and out of WHOSE pockets. The actual probably won't change out of whose pockets is the question?
4
The money we currently spend on health care will pay for medicare for all.
7
@David
Not a chance the numbers DO NOT add up!
3
@David -- true, but you are missing something: medicare doesn't reimburse physicians and hospitals comparably to other insurance. MFA amounts to a massive federally-mandated price cut for the whole medical enterprise.
Cutting costs in the American healthcare system is necessary, but you had better figure out how to do that, not just impose a massive cost shock.
The last three Republican tax cuts were debt-financed. It is time to repeal those suckers and replace them with a tax system that works for all of America and not just for the top 10%.
12
@RueGiven that 47% of federal income tax filers pay nothing, are you suggesting that if everybody paid a little that would "work for all"?
To quote (as best I can) a rich uncle retired from the insurance industry:
"Private insurance cannot compete with government. We have administrative costs, advertising costs, executive compensation, shareholder compensation and have to cover medical costs plus make a profit."
I was floored when he made this statement. As an arch conservative he had just made the case for a public option. Unstandering why health care is so expensive in this country is not so difficult. This is not tennis shoes it is a necessary service. The free market approach is neither efficient nor serving the public well. Insurance companies do what all companies do best serve themselves first.
In addition to real health care reform I want candidates to advocate for real taxes reform. The latest tax legislation is not reform but a buttressing of the regressive taxation policies of the last 40 years.
17
Dr. Krugman is right on about investments in theory - if they have a significantly positive expected return compared to the interest rate, they should be automatic.
In practice, the risk of waste, fraud and abuse and the cost of proper oversight seems so high in many areas of government investment that we need some mechanism to force hard choices - even though these are hard choices that many businesses might not have to make. This is not to say that government should never borrow, but that the borrowing should be to fulfill a need that cannot or is not being met elsewhere - most obviously, the military, but also R & D in some areas as well as some forms of environmental protection and some others I am not listing - areas with largely non-financial outcomes where typical ROI calculations may be of limited usefulness.
This is especially true at the state and local level, where many government can easily be overwhelmed - and why many such governments require a balanced budget or special approvals to borrow. The federal government needs more flexibility than this, but it should not abandon the goal.
1
Dr. Krugman:
It is very interesting your article of today. I studied "Public Finances" and no economist ever came with that "cost/benefit" approach in public investment
so, "tax origin" of new projects would not be important.
Great!
3
I'm very interested in the New Green Deal and I think we'll need a "damn the torpedos" approach to environmental spending in the next administration. America did more than its share to get us in this mess, we have to lead everyone out. However, with the deficit running as high as we can assume it will after the reign of the Mad King, how will be justify more borrowing?
2
@mark I guess Krugman believes we have to trust his forecasts about the GND paying for itself in the long run because it is an investment, with no need for pay-fors. GND has a high social return, you see. You just have to believe the climate forecasts, as they were generated by scientists with very good numbers. Just believe.
2
@mark, and @jerry brown --
The GND is not a PLAN ..,. it's just a slogan. And very little of it is really about CO2 (or methane) ... it's mostly green-washing AOC's inchoate socialist revolution ... paying those unwilling to work and all. (that was no "proof-reading error," folks)
If you want to make a rational plan let's hear it. Mine starts with
* CARBON TAX, 100% rebated per capita to adult citizens, residing in the US. (This is quite progressive.)
* Federal construction and ownership of a 48-state (with ties to Mexico and Canada) HVDC electric grid capable of making the 48-states a single ISO/RTO, this means being able to move electric power across the country.
* low-cost loans and subsidies to the poor to enable energy-efficiency retrofits of homes and small businesses: better insulation, windows, and heating/air-conditioning.
* investments in public transit ... within reason
1
Included in the progressive agenda should be fourth item: undoing the terrible damage done by Trump. we need to find a way to bring he liberal and conservative agendas a little closer together.
Paying for ....? What on the case of paying for a non-progressive agenda such as the current conservative agenda, oops, a 1.2 trillion debt from a surplus position. What happened? Your title is biased it seems.
No mention of cutting the military budget?
Well, well, well. Kind of a shibboleth, of course, for a NYTs neolib to discuss that.
But still. Krugman does live in the USA and should know these things.
**In fiscal year 2015, military spending is projected to account for 54 percent of all federal discretionary spending, a total of $598.5 billion.**
It's grown since then.
3
There is no "thumbs up" emoji here, otherwise I would give it!!!!
2
It never ceases to amaze me how easy it is for liberals to spend other people’s money.
2
@michael sherman md
It is even more stunning to see how easy it is to extract money from the population by paying workers less than fair pay, monopolizing services, etc.
Capitalism is a one way street: money always go to capital holders, not to salaried workers. Who’s money it is than?
1
@michael sherman md -- it never ceases to amaze me that the wealthy fail to remember the lessons of the French and Russian revolutions, or the fall of Rome.
You already lost when you start with how to pay for it. In a fair world, that would be the right way to do it, but we live in a fascist world, where hate and ignorance are the norm.
Given that premise, Liberals always lose in the realm of public opinion while hate and fear always win. The system is bad and getting worse.
1
Nobody likes paying taxes, something so obviously true that it's hardly worth noting - except that a large part of it is because conservatives/libertarians/oligarchs, etc. have spent decades and huge sums of money promoting the memes:
• Government is a black hole where taxes go in and nothing good comes out.
• Government wastes money and can't do anything as well as business.
• Politicians use 'free money' and other stuff just to buy votes.
• "Those people" are getting stuff they don't deserve with your money.
• Government makes everything worse - starve the beast.
• Relying on government for anything turns people into dependent serfs with no freedom.
• Americans pay higher taxes than anybody.
The wonder is that there isn't more hatred of government and taxes.
If we were faced with Hitler today, the cost/benefit case would likely argue that letting him keep Europe would be cheaper than trying to overthrow him, and we would still be able to do business with him - in fact it would be simpler without having to go through all those different governments.
No interstate highway system - too expensive, and how would we pay for it? (One way it turns out is the externalized cost of climate change - but that's another story. Also 'too expensive to fix.')
No internet. No GPS. Breathable air and drinkable water? Fuhgeddaboutit.
And that doesn't even begin to touch on all the other things government does.
To make a small start on changing this, go to http://governmentisgood.com
6
"a “Medicare for All” proposal that involves allowing people to buy in to government insurance, rather than offering that insurance free of charge."
"allows"? Leftwing gobbledygook.
As in "the government allows people to pay taxes." What about the Green Deal Unwilling to Work types? Will they be made to be "allowed" to non-work? Sounds like the grunting of Napoleon and Snoball in Animal Farm. Nice "non-work," if you can get it. The eerie sensation of someone reaching for your wallet. First they came for the children--a nationalized nursery--then the teenagers (the Green Youth) will need attention, then the workers (and non-workers) will be made to be allowed to join a government collective, etc. etc. Non-workers of the Green World, Unite!
3
Please devote an article to a Federal financial services tax.
1
You’re gonna get cut off at Starbucks.....
1
Dick Gregory used to joke about sitting in at a lunch counter for nine months and finding out that when they finally integrated, they didn’t have what he wanted.
Trump’s supporters have already been waiting two years.
3
Why are there never any questions about our Republican overlords who take all our tax money and spend in on tax cuts for the super wealthy (or wars and bombs)? Why do mindless democrats feel the need to explain wanting better care or better work or better lives?
8
If there’s one thing Republicans are good at, it’s consistent messaging, even when the message is seriously tainted. Think “death panels,” “death taxes,” and, of course, the old, reliable, and once-again-popular, “Socialism!” (Not that most rank-and-file GOP voters could even define “socialism” accurately—doesn’t matter).
The entire Democratic party needs to address this, quickly and firmly; else I can easily envision them losing in 2020 to demagogic attacks in a manner similar to the disaster of 2016. Every Democratic candidate should repeat endlessly this mantra that describes, simply, accurately, succinctly, what the GOP alternative (and status quo) really is, “Socialism for corporations and the wealthy and rugged individualism for the rest of us.” Another good descriptor of GOP policy is, “Privatized profits, socialized costs.”
I always appreciate Dr. Krugman’s insights, this piece included. But wonkishness won’t win the war; good messaging will.
6
1. Investment: "....society’s future productivity."
Defined broadly to include children--wanted, loved, chosen and well educated in a healthy environment--as well as payoffs to private investors and savings in crime costs.
2. Enhancement: of "existing public program or...socially desirable private activity" Like health care? C'mon--it's certainly an investment--everyone (almost) benefits from a healthy population--even beyond epidemics including families, coworkers, employers and governments.
Health and education are primary goods--desired by all regardless of life-style (the deluded and psychopathic excepted.)
Besides--given Diminishing Marginal Utility, the 1% be taxed at a 70% + top rate before it hurts ("true princesses" don't count.)
3. "major system overhaul...a tax-financed public program"
It's not just about tax. First is property law (what makes it yours, mine or the public's). Second, is labor law--employee rights-employer duties go beyond slavery, serfdom, indentured servitude.
No standards of job performance or "compensation" (yes--that's right) should be set so high/low that only those without families or who neglect their families can meet them. That would be an incoherent value system.
Overhaul includes health education (children and practitioners--they could afford lower fees if they weren't drowning in student loans); it includes for profit or for religion hospitals.
30 countries outrank the US (31) and Cuba (32). Reality beats theory.
Even us moderates really really want universal health care. But, it’s more politics than policy. To win, the Democrats need a simple and powerful response to the Republican narrative that liberals just tax and spend. Haven’t seen that yet. Calling Republicans stupid or worse - “voting against their own self-interest” - feeds directly into another (effective) Republican narrative that liberals are elites who think they know what’s best for everyone. So what are we getting from the anointed progressive royalty right now? Increase the top marginal rate to 70-90%. Just like in the good old days. Clever. This will fail because (a) it’s so predictable, it’s a gift to the Republicans; and (b) if history is our guide, despite the high marginal rate, the average taxes paid by rich Americans weren’t that much higher in 1950 than they are today. Progressive politicians like the idea of a high marginal rate because it’s a good sound bite and they know that progressive voters, spell-bound by anything that appears to punish the rich, won’t bother to figure out what it really means. The Republicans, of course, will merely use that as a cudgel, to devastating effect in the states that matter.
5
The U.S. spends more on "defense" than the next seven largest national military budgets combined. According to many analysts, an honest accounting would put the U.S. military budget at $1 trillion -- in comparison, China spends $215 billion, and Russia $70 billion. Why do we need to spend 5 times more than China and 12 times more than Russia on "defense"? The question is rarely asked in public discourse because it threatens the Sacred Cash Cow of what President Eisenhower famously named the Military Industrial Complex.
Yet talk about spending on health care, child care, education, real human needs, and howls of derision and mockery arise from the Serious People who oversee government policy. "Who's going to pay for it?" they cry out... There's something profoundly wrong with this nation's priorities. Donald Trump is merely the most obvious symptom of a much larger moral rot.
5
I would say that you just made a fairly centrist proposition, tilting left.
But you should not reflexively take a swing at people being critical, it is not only that people have biases and ignorance. When I hear "free" something I cringe. When I hear securing a job for everybody I cringe less, but I cringe. When I hear income with no strings attached I cringe again. All this loose talk swamps your three clean categories, to the political benefit of the republicans.
And as a reminder, the republicans won without a "major intellectual" figure. They won with with a despicable figure as the head of their ticket. Hopefully, the democrats do not confuse character with intellectual acumen. (Please!)
1
Krugman the Progressive Economist is at it once again. Instead of looking at the various Democrat candidates' socialist proposals like an economist--he looks at them...well...like a socialist. In his world, government programs are always worth it--and always pay for themselves.
Absent from Krugman's machinations are any assessments of our current entitlement programs.
--Social Security--headed toward insolvency
--Medicare--headed toward insolvency
--Medicaid--headed toward insolvency
But logically, like all good socialists, Krugman asserts new programs will be different--that they will be prudent "investments". And he sells them like all such programs, "They'll only cost a little bit more--and will provide a net benefit--and you'll love them!"--right up until the time these programs predictably become insolvent.
Absent is any history of what really happens to costs. They always spiral out of control and begin adding to our debt.
Meanwhile, Mr. Krugman--please tell us what has happened as a result of the Trump Tax Cuts! According to the Committee For A Responsible Federal Budget:
"Nominal revenue did increase, according to Treasury's fiscal year-end report, which shows that total federal tax revenue is up $14 billion, or 0.4 percent, between FY 2018 and FY 2017".
So much for the tax cuts not paying for themselves--and in truth, the positive effects haven't even had time to fully take effect. As of yet, very few have filed tax returns under the new law.
5
Tax the rich til there ain't no rich no more. No more builders, no more companies hiring, happening here in Connecticut and making real estate much more affordable as peoples biggest asset finds no buyers. And talk about real estate taxes. When did they get so big. Oh yeah-police unions. See-overtaxation does work-except if you work really hard. Then you gotta go-to another state.
2
In my 70's, I am so cynical that I truly think the progressive changes that are needed just won't happen until we have a massive, unforgivable, worst ever depression.
That was how we got Social Security, and many other social programs, when the ordinary citizen felt the terror of poverty and homelessness.
As it is, it is just too easy for the bootlickers of the right to divide us into racial, and economic and gender groups.
Hope I am wrong, and reason prevails this election season.
But before that depression ever hit our political class would get us into a massive World War...
Hugh
3
Bless you Dr Krugman for some serious policy discussions, and bless the Democrats for encouraging the same. I'm so tired of the Trump/GOP/Fox News pablum.
2
for once, Krugman got it right (possibly, because he is a multi-millionaire himself): the pie in the sky hopes and wishes of the liberal coastal mandarin socialists of the Democrat party (or as they say in Russki "dermokrat") will come at a great coast to the average Joe: anyone for a 50% income tax on a $70K annual salary here? Well, that is what they are paying in Finland. Social medicine anyone? That will come with lowering medical salaries (meaning, doctor and nurse shortages eventually) and under-investment into medical facilities (meaning: lines for medical services and drugs - those of medical kind - migrating to the black market). We have been through it in various European countries. The Democrat party is simply undermining the foundations of this society. Why? - that is another question entirely.
1
I wish I could produce Dr. Krugman on demand every time some loudmouth right winger, or especially Mitch McConnell, starts in with their condescending claptrap about "tax and spend" Democrats or whatever other hypocritical trickster speechifying they have up their sleeves.
I especially wish the average American was not drowning in innumeracy, and was better educated about how governments and economies can function for the overall good of society.
5
We need to better explain the meaning of marginal tax rates.
In my experience when say, a 50% tax bracket on the highest wage earners is mentioned, there is apocalyptic brushback with "punishing success!" and "why would anyone work hard!" blather. When it is carefully explained that no, the 50% only kicks in on what you earn over, say $10 million, the reaction is a calm, "oh....well that makes sense". The average person does not understand this and is therefore easily fooled by the misinformation and propaganda of the right.
The last thing Republicans ever want to discuss is the much higher marginal rates after World War II and the vast economic prosperity and expansion of the middle class that followed. Why Dems don't simply argue that we need to go back to this much fairer tax code is beyond me to understand.
Instead, we let the Republicans call this radicalism! socialism!! blah blah blah and get away with it every time.
5
How do we pay? Well, we pay dearly for our grotesque inequality, our low-wage sharecroppers, our elite of luxury. We don't talk equality much, we don't look there. The rich are in charge of the message and they're feeling pretty good. Yes, maybe health care for all, but leave the billionaires alone, leave those with hundreds of millions alone: they've 'earned' it.
Ah, earnings from the country that built itself and saw the powerful work their way into campaigns, politics, the courts by way of oceans of lobbyists and lawyers. Shame on US. Great shame.
So, whenever we're (those with message control) ready, we should talk of the grace and honor of equality. Riches, avarice, selfish dreams - be gone.
2
Although investments can be debt financed, it's usually a better idea to have a lot of the cash on hand first, whether you are a government, a business, or an individual. That is finance 101 unless you have a Nobel Prize or are a "major intellectual figure" and can make it up as you go along, with your nose in the air. As for getting the "high-end" to pay more so others can get "benefit enhancements," that is what we are already doing. That is also called redistribution, or legalized theft. According to the Tax Policy Foundation, the top quintile already pays 66 percent of federal taxes, and the top two quintiles pay 85 percent of federal taxes. That is neither fair nor sustainable. Going further could only be described as socialist, even if the majority tyranizes the minority through the election of anyone like Senators Warren or Sanders.
https://www.google.com/search?q=who+pays+federal+taxes&tbm=isch&source=iu&ictx=1&fir=i4oiU-DbRRENEM%253A%252CqhJPz_Afe79vfM%252C_&usg=AI4_-kTW76-sIDlTAo27n-HnVROwYhU5-A&sa=X&ved=2ahUKEwjUrJzTqMrgAhWnV98KHcGDBPwQ9QEwAHoECAAQCA#imgrc=i4oiU-DbRRENEM:
"Much of what seems to be in the Green New Deal..."
Once again you crack me up Dr. K! Warren has actual policy proposals that could be passed as legislation. On the other hand, the Green New Deal is a list. A list! Hooray for AOC!
Let the sceptics and conservative tell us all about how terrible life is in Scandinavia and Germany comparatively.
They don't spend $12 billion on soybean farmer welfare. That is true. They don't operate twelve aircraft carriers. That is true.
2
@stewart bolinger
The EU heavily subsidies famers. And they can spend less on defense because we spend more, and have agreed to come to their aid. Even DJT can see the unfairness in that.
1
While I fully support the #GreenNewDeal with its intersectional solutions to climate change and economic and racial justice, there is one huge expense I worry the austerity-for-you-but-not-for-me crowd will try to slot in to that area hasn't been discussed. Where will the costs of retreating from our coasts go? What combination of state and federal monies will need to be spent to create new cities, roads, rail corridors, to relocate the millions who will no longer be able to live along our low-lying coasts as seas rise? We have 12 years to stop rebuilding in those areas and invest that money into where the climate change we have created will force us to move to.
How Obamacare was paid for:
My health insurance doubled.
4
Truly VOODOO economics.
I think the characterization of different spending is very useful and would help the internal debate within the party. A shame it cannot be hashed out behind closed doors.
And sadly, to win, the party needs a handsome 50 year old white man to run. None in sight.
None of this will beat Trump in the interior of the country. Maybe should be state focused programs to build credibility. But the country’s view is clear. Government is incompetent. Politicians are controlled by special interests or stupid or corrupt. So how does anyone swing the country to vote for any of this
Republicans have the simple answer. Bribe the people with tax cuts and subsidies. Cash in the pocket always Trumps complicated stories.
But will be fun to watch the debates and knife throwing
To quote perhaps the greatest female leader of modern times...
Prime Minister of Great Britain Margaret Thatcher
"The problem with socialism is that eventually you run out of other people's money to spend."
4
It's too expensive not to support infrastructure and human health, education and well-being. We are seeing the results of years of neglect and thoughtlessness when the financially irresponsible, pretending to be responsible, act like ostrich's with their heads in the sand.
3
Paul, Paul, Paul, "critics’ bad economics than about the GND’s logic." What logic?? Giving $$ to those who don't "Feel like working"? Really? Really? Changing to LED's costing $1,693/apartment with "Union" labor? Really? REALLY?
2
Critics of suggested programs or changes in the social fabric push back because they do not want the program or change in the first place. There needs to be some agreement that something is needed, then decide how to make it work. The critics of a program should be pushed back also to defend their naysayism.
We are long past the time when Democrats promised "a chicken in every pot." Now they must have a well thought out financial structure of whatever they support. Just taxing the rich doesn't make it.
1
How do Finland, Norway, Sweden, and Switzerland, among the other countries with high happiness indecies, pay for their munificent social programs ?
1
recall that mr. trump is a president elected on policies, not character -- the policy of building the wall and making mexico pay for it, of breaking treaties to negotiate better treaties, and so on.
policies are also just talking points and brag talk until they are drafted and passed as law by congress. so every presidential candidate's policy proposals must be interpreted in terms of policy that the house of representatives is likely to stomach.
it's this twin electoral stupidity -- voting for a candidate based on his or her promises rather than character, and voting for executive policies without assurance of legislative support -- that gets us a criminal for chief executive and a congress that can't even pass a bad check.
Mr. Krugman, when do people get free Medicare? One is charged for Social Security during ones working years (Medicare comes out of ones Social Security benefits). Then one continues to be charged after retirement.
2
With respect, we need to be talking about major system overhauls now. We need to keep talking about them moving forward, and we should have talked about them a lot more the past few decades instead of ceding economic discussions to the virtues of tax cuts for the wealthy.
System overhauls are critical investments in our commons, a point long forgotten about in public discourse.
We didn't build our original power grid or telephone system by fretting about the cost. We focused on the benefits. Now, nobody thinks twice about using electricity or making phone calls unless they suddenly lose access.
We didn't expand our highway system or embrace air travel by fretting about the cost. We focused on the benefits. Now, nobody particularly worries about the underpinnings of travel except for the traffic jams and delays.
We didn't go to the moon or create the Internet by fretting about the cost. We focused on the benefits. We got a lot of new technologies out of our initial space ventures, including GPS, and I cannot even begin to discuss the ways the Internet overlays modern life.
By building the commons, we built the US. For the most part, these past several decades we have let our commons stagnate while other countries have taken the lead, and it shows.
If we cannot argue why a modest tax increase on the middle class would improve their long-term health and security as well as saving them money in both the short and long term, we're showing our failures as debaters.
2
Medicare for All need not, contra Krugman, be paid for with a payroll tax or VAT. That’s political suicide and a sop to corporations.
The right way to finance Medicare for All is a corporate tax, a dollar-for-dollar payment to the federal government in lieu of private insurance premiums. That will raise enough to make Medicare both universal and comprehensive.
Over time, Medicare, as a monopsonist, will drive down prices. As it does, the fees charged to corporations should be commensurately reduced.
That way, the promise of universal healthcare is no additional burden to those who don’t currently bear it outright, and future savings to those who do. Just a promise not to raise rates for 5 years ought to elicit near universal buy-in from corporations, which otherwise face inexorable cost increases.
I think Krugman is letting his political strategic thinking color his economic analysis. I think he thinks Medicare for All is still politically unattainable, and so tries to explain why, without considering ways in which it might be made more palatable and politically attractive.
No New Taxes, George Bush pere promised. It’s a winning pledge. We can have Medicare for All with no new taxes. Just a fee in lieu of payment of premiums.
Imagine it, Paul.
2
This very useful article makes an excellent start on careful and serious consideration of what Democratic national leadership would mean for the budget and tax levels. It provides a structure for thinking about budgetary issues that I hope all Democratic candidates will follow.
As to health insurance, incidentally, I don't understand why we can't have Medicare for All as well as private insurance. Medicare would be just another competitor for what is becoming an increasingly concentrated business, and that seems to me like a good thing.
5
Mr. Trump and his minions wax poetic about #MAGA, returning to a time like the 1950's. If we look there, we can easily see how investment can work wonders.
At that time, we lived in a far different world with marginal tax rates as high as 91%. Despite some systemic injustices particularly to people of color, we exploded the middle class in part through the original GI Bill which educated a huge swath of American veterans and catapulted them into the middle class. Their higher earnings produced a better life, higher income and higher taxes than they would have paid, more than compensating for the costs to front their GI Bill benefits.
Before American follows the path of Sunshine Desserts of Reginald Perrin fame, with more and more letters of the firm falling from its building with each episode of the late BBC show, we need to invest in ourselves and our own country. Letters serially falling from a sign in a comedy series is funny; falling interstates (Minnesota I-35 bridge, etc.) are not.
8
For investment and enhancement, Krugman echos my thoughts exactly. For a system overhaul though, I think this column is more than a little vague. We're bordering on dismissive here.
I'm not convinced Medicare for all requires payroll or VAT taxes. Not in the way Krugman is suggesting anyway. Granted, whether public, private, or mixed, health care is going to represent a significant portion of our economy. Changing the system dramatically is going to disrupt our near term cost versus benefit.
However, you need to consider the elimination of employer based insurance as part of the equation. How much does a company pay to support an employees health care? How much does the employee pay to support their own health care? We can talk about co-pays and prescription expenses too if you want.
If you substitute all these expense with tax funded health care plan, you've already chopped a huge portion of the 6 percent GDP figure. Add to that Warren's wealth tax and you're even closer. In the longer term, you're going to see efficiencies in the cost of care and drugs. That 6 percent figure grows even smaller. We can potentially finance the structural transition with some debt as well.
Point being: A Medicare for all recipient doesn't need to see their payroll tax increase at all. We just need to crunch the numbers and figure out what gets us to the goal. The heavy political lifting comes from private industry lobbying against the effort. Health care is a revenue stream for them.
6
We can have a serious discussion about these programs when Democrats finally start speaking honestly about the cost. EVERYONE pays more in taxes in European countries where these programs exist. There aren't enough wealthy people to carry that burden, here or there. Income taxes, consumption taxes, gas taxes, real estate taxes, and social security charges far in excess of ours are standard in Europe. As a result, the average worker takes home a smaller paycheck in Europe than in the USA. Most Americans might be fine with all of that. Or not. But it MUST be acknowledged!
7
@joinparis, I think that this article indeed spoke honestly about the cost.
Yes, the average worker takes home a smaller paycheck in Europe than in the USA. 50 years ago the average European paycheck was much smaller still, so the gap is closing fast.
However, the average family in the EU has to pay much less for quality health care, education, pensions, unemployment protection, and a host of other of life's important amenities. That MUST be acknowledged!
2
Start with eliminating the ban on negotiating drug prices for Medicare. Then add line item savings to push back on the GOP arguments over healthcare.
The costs will be so out of control in the near future the medical system will collapse because doctors are leaving practice when faced with the insanity. In my area (outside Boston/Cambridge proper) in Massachusetts finding a doctor is an increasing challenge by the month. Wait til the GOP further attacks Medicare if you really want to see a tipping point.
5
A well-reasoned, easy-to-understand, and thoughtfully compelling analysis. It can serve as the foundation for serious and considered debate, and should be required reading for all presidential candidates and, I daresay, for elected officials and candidates generally.
12
Social Security tax has a cap on it. Why? Take the ceiling off Social Security tax and apply it to other forms of compensation not currently subject to the tax. If those earning less than $128,400 can pay social security, those earning over that can most certainly pay taxes on amounts above that level. Mitch McConnell is already advocating for cuts to medicare, social security and other programs. He started when the ink was hardly dry on the tax cut bill for the rich. Lifting the cap on Social Security would help alleviate some of his angst about paying for social programs. Then we could concentrate on finding other ways to right the imbalance created by that tax cut. It is customary for most of us to take out loans or mortgages for major expenses like housing or autos and appliances. It should not be too hard to explain to the American public that we need to do the same for infrastructure projects, by selling bonds and borrowing the money. Medical care, child care, and higher education, need to be affordable not necessarily free. For profit medical insurance and drug programs are insanity in itself. Child care should be an extension of our public education system. Expand Headstart. We may not be able to institute all the programs needed all at once; but, at least take care of what is doable now, and work on solutions for the rest in a methodical fashion.
14
@John Warnock Question is whether the benefits will increase for those paying commensurate with the cap removal. If they do, there is little point and a lot of downside to having the Govt taking money, using it as a slush fund and then returning it (ha!)
If benefits are not provided in line with the increase, this is just a 14% tax hike on all income over 125k. And in places like CA, NY the marginal rate (which is what matters for growth, NOT the average rate), will approach levels as high or higher than many European countries for many dual career couples (like me and my spouse) (e.g. many people are not aware that a total marginal rate above 55% in Denmark qualifies the taxpayer for some relief -- even they know it starts to hurt)
2
PAUL KRUGMAN some help please...
"How should we pay for that kind of outlay?"
"The answer is, we shouldn’t."
"it has a high social return. So we should just do it, without looking for pay-fors."
I read and reread and cannot figure out what you are saying because of the "The answer is, we shouldn’t."
2
@stonezen: He's arguing that, just as in a business, you shouldn't necessarily look to balance your books at the end of each year if borrowing and investing (and incurring debt) now will lead to greater returns in the future. In other words, it will be paid for, and then some, in the future through higher economic development.
Krugman means that, unlike tax cuts, social investment really pays for itself.
Many kinds of social investment return $10 for each $1 invested. If taxed at 20% — the rate of federal taxation since Truman — that’s $2 in the federal treasury for each dollar spent, never mind $8 in the pockets of Americans.
It means when you increase infrastructure spending it pays for itself because it creates jobs both during and after and you are creating infrastructure, improved roads, bridges, high speed internet...you name it, that dives further economic grow.
As a counter point, when all you do is cut taxes largely for the already wealthy and large corporations, you don’t really incentivize further investment as is often argued but incentivize hoarding of money through higher untaxed income for the wealthy and leave less for the government to spend on public goods.
2
Another benefit of a single-payer health insurance like government-run health care is the spread of risk. Because all people would be covered under one plan, the risk of the very ill would be spread among healthier individuals, making health care more cost effective.
12
First, I agree that when interest rates are low it is time to do long term payback projects. I well remember 15% interest rates and the havoc they bring. Second, somehow federal programs never seem to be cut. Are all the programs that have been put in place actually delivering what was promised and are worthy of continuation? I doubt it. Third, both parties are guilty of citing deficits when they are against something. My Rep. came out against the wall in part because of deficit reasons. I do not care about the wall, but, deficits were cited. Fourth, there are too many competing massive spending ideas. If climate really is a massive, life threatening problem, then candidates would be seen by me as more honorable to say that this is what we really need to face first. Finally, let’s see the numbers. Some things can be done with debt, some things can be accomplished by taxes on wealthier folks, but, some honesty on what will be required of the rest of us would be appreciated. My guess is that the 1% can pay for everything is quite a fallacy, but, let’s see the numbers.
6
Some programs do diminish. There’s no GI bill anymore rural electrification was accomplished. The Vietnam War is over. It’s just no one holds a ribbon-cutting ceremony when something draws to a close.
Other programs diminish through neglect, whether feckless or malign. Pell grants used to pay for college; now $5000 is just a piece of the puzzle. States used to underwrite their universities to a far greater extent than today; that’s the genesis of the student debt industry.
The necessity of doing things can’t be hamstrung by the suspicion they’ll go off the rails. We need Medicare for All. Medicare has demonstrated its cost-effectiveness. Is it perfect? No. Will there be arguments about how to fix it? In the inimitable words of Sarah Palin, you betcha. But in the interim, while it’s being perfected, it will do enormous good by saving lives and money. And the political pressure to keep it on the rails will be enormous, witness the popularity of social security and the national healthcare systems around the world.
1
We should replace the payroll tax with a VAT or National Sales Tax except for 4% paid by the employee. This would leave the progressive\insurance nature of the tax intact, broaden the base and move the employer's contribution to point of sale. Which in effect would lower the cost of US goods and services and raise them on imports, robots and automation.
The other 4% the employee could use to opt into a state pension much like an annuity. This would be run through the creation of a State bank like North Dakota has. The bank then invests anti-cyclical to the business cycle and instate before sending the funds to Wall Street for diversification. The goal would be to invest in entities that would pay a usage fee so it could later be sold to the private sector or made into a public utility.
Allowing ALL a state's citizens to opt in would broaden the base and fix the current demographic issues. This would be a one-time fix to many public pension plans and would begin the process of moving pensions off the bargaining table and into the hands of a public-sector banker.
The VAT would end up being 1-2% unless a financial transaction tax were included and then it would be lower. In addition, 3 personal days, 2 weeks vacation a year and raising\indexing the minimum wage to $10 an hour could be included as part of this. Along the lines of the EITC because of the number of people holding multiple part time jobs.
1
Paul, I think there's a fourth category you might want to consider - gains through efficiency optimization programs. Medicare-For-All falls into that.
If we continue on the same course we're on for healthcare, we'll spend about $50 trillion over the next 10 years. But, if we could institute Medicare-For-All today, we'd spend around $40 trillion. So, we'd save a trillion dollars per year over the next decade.
Those savings come from controlling provider and prescription costs, certainly. But it would also come from organizational efficiency gains, because combining all our national healthcare systems into one would eliminate the vast administrative redundancies which exist today in administering all these programs separately.
There would still be new costs associated with such a new system, like retraining people who lost jobs, and conversions of the various systems. But the savings would be real, and would improve revenue while not requiring new taxes.
Of course, repealing the recent tax plan changes would help improve government revenues, too. I don't know which category that would fit into. "Restoration of fairness and sanity", perhaps.
6
When it comes to universal health care I really cannot understand what all the naysayers are whining about. The math is simple: If you replace private health insurance with single-payer Medicare for all yes, there will be a tax increase. But it will be a fraction of what you are overpaying in insurance premiums and all the middlemen involved in the business of health. A family of four that pays $16,000 to $32,000 a year for a health plan, depending on what it covers, may have to pay $2,000 a year more in Medicare taxes. So who comes out ahead?
13
why would government run healthcare cost more than our current system? We are already paying for private insurance - if those funds went to uncle sam instead, they should be able to provide similar care without added cost, right? And the ability of single payer to cut costs should allow coverage of the rest of the people who aren't covered. Please explain why such a restructuring should be a (net) cost.
5
@Tom
I may not address your question but I want to quote (as best I can) from a rich uncle retired from the insurance industry.
"Private insurance cannot compete with government. We have administrative costs, advertising costs, executive compensation, shareholder compensation and have to cover medical costs plus make a profit."
I was floored when he made this statement. As an arch conservative he had just made the case for a public option. Unstandering why health care is so expensive in this country is not so difficult. This is not tennis shoes it is a necessary service. The free market approach is neither efficient nor serving the public well. Insurance companies do what all companies do best serve themselves first.
10
@Lady in Green
thanks! that totally supports my point - we are already paying for health care and it should just get cheaper if it is single payer (like it is for rest of the modern world). I hate the argument that universal healthcare will cost trillions ... it will cost nothing more (maybe less) than what we are paying.
Perpetual war is expensive and perpetual war is the condition of empires--Roman, English, etc.
Now that the imperial US is out of the closet, maybe somebody might stress the benefits of trading off between "defense" and domestic spending.
10
What you aren't saying here with respect to the ACA and insurance plans is that some things would go away. If we replaced individual health plans with a Medicare for all plan the money we spend on premiums could be used instead to fund Medicare for all. We could eliminate deductibles, out of network costs, and improve what is covered (add dental care, hearing aids, and stop the narrow networks). If everyone is contributing and able to receive care when and where they need it as opposed to when they can afford it, our overall health might improve.
For the last 40 years we've been catering to a very small segment of Americans: the richest of the rich. Their taxes have not increased. They do not pay their fair share when it comes to Social Security because of the cap on the amount of income taxed to pay for it. A good many solvency problems would disappear if that cap was eliminated and a certain amount at the bottom exempted from the tax. There is nothing wrong with expecting the richest people and corporations to contribute their fair share to the country they inhabit.
Other countries pay for their progressive programs. In fact other countries look at our country with horror when they see how skimpy our social safety net is. They cannot imagine denying medical care to citizens who need it. In America we deny citizens all sorts of things. We force people into poverty. For a rich country we are very stingy.
17
The Treasury debt and deficit has one benefit - it will put a stop to all the borrow and spend proposals like those contemplated here. In a few years, Treasury Interest Expense will consume about 50% of income taxes and Defense will take the rest. When the world wakes up to this irreversible catastrophe, the Treasury Market will come to a halt followed by a financial crisis that will change the world.
@LMJr Exactly why “donor class” republicans have run up the debt and Cut taxes rather than reformed taxes.
The debt, somehow, was a disaster under Obama, but somehow Not during 2 Cheney/Bush Tax Cuts and 2 Wars; OR now., after more Tax Cuts.
Pure Hypocrisy.
@PDM
None of them can be trusted, but the problem remains.
As usual a good well thought out column by Mr Krugman. One suggestion as to where the money is coming from, is that we can cut out a large chunk of the "defense budget."
10
An interesting read. But do not put "Medicare for All" into the major expenditure category. That is only necessary if it is implemented all at once.
If it is phased in over time the reduction in healthcare costs should more than pay for the expansion of coverage. Start with reducing the eligibility age to 60, then go to 55, then 50 . . . before you know it, everyone is eligible for medicare. People will retire earlier without having to worry about how to pay for health insurance.
The insurance industry will fight it tooth and nail, knowing their "market" will be reduced to supplemental policies, that Medicare Part A is fully covered by the government.
Others will fight it because it reduces their profits. But where are those profits going, anyway? It is not the physicians and nurses that make the big bucks in healthcare, but the administrators, venture capitalists, and big investors.
You also must realize that Medicare is not free. We pay for it as a payroll deduction just like Social Security. Although eligible, I still have health insurance through work, and still have Social Security and Medicare deducted from my paycheck. Eliminate the cap on SS and Medicare payments, and make ALL income subject to those taxes, and the funding problems for those programs go away.
14
Actually, the insurance companies might stand up and cheer, provided that we allow people to buy supplemental insurance for things a Medicare for All program doesn’t cover. We already do that now. Seniors on Medicare frequently buy “medigap” policies that do this.
Insurance companies aren’t in the business of paying for medical care. They’re in the business of collecting premiums and investing them. Premiums that have to be paid out to doctors and hospitals can’t be invested. Health insurance companies simply don’t want to cover people who are likely to need medical care like aging people. If you shift the bulk of the cost of medical care to the government, the insurance companies can still be profitable by selling more “medigap” policies with relatively low premiums to a wider market.
5
@Martin Kobren
"frequently"? Almost always. Medicare Part A is only for inpatient hospitalization - it does nothing to cover normal illness and injury, doctor's visits, prescription costs, etc.
Part B is supplemental - combined with A, it brings Medicare to a regular health insurance plan. It costs extra, and is from insurance companies
Part C kind of combines A and B, but usually only covers under a specific provider so is not good if you travel. It usually costs extra.
Part D covers medications - if your medication is on their formulary, which may change from year to year. It costs extra, or may be a part of a Part C plan,
Since I am eligible, I have looked into it but do not yet know how I will approach it. Right now only Part A is paid for by your payroll deductions over the years.
I take issue with your statement that the insurance industry is into investment. It appears to me that they are about receiving payment for policies, then denying coverage. They want your money, but don't want to pay any claims. That is true for ANY form of insurance, whether it be auto, home, life, health, etc. It has been my experience that unless you have a policy through a true mutual insurance company, they do not have your interests at heart and are concerned only for the greed of their executives and stockholders.
4
Since all federal bonds are federal IOUs denominated to be repaid only in US dollars, which are nothing more than other federal IOUs, then the federal government does not borrow. It issues! By issuing bonds it simply is creating one category of federal IOUs that is convertible to other federal IOUs -- that in turn, and by law, must be accepted in payment for all debts public and private. Read what it says in the lower left hand corner of any banknote in your wallet. Debts are something intended to be repaid. IOUs that must, by law, be accepted in payment of all debts public and private hardly qualify as debt, since they can only be repaid with more of themselves. Confusing isn't it?
2
@Penseur As happened in the last century we paid all debts, public and private, with cheaper dollars.
2
Interesting but let’s get real. The GOP found a way to destroy financial programs that assist real Americans. Ms. Warren understand policy and taxes. I trust her and the Democratic Party to address the issues of unfairness in this greed capitalist economy.
People need to stop parroting “how are we going to pay for it “and start thinking proactively on how we are going to save the economy for everyone.
Time for Wall Street to get on board otherwise we will be destroyed by our inability to face the truth in plain sight.
The people will decide who will control our economy. New Yorkers informed our politicians and Amazon we no longer believe the lie.
6
I have been writing for a while now that as a compromise "political lift" position, allowing a buy-in to Medicare or to a public option for anyone who wants to would be something that is politically feasible.
And, it has various political and economic advantages, in that it provides the thin end of the wedge to start separating health insurance from employment status, which might help to reduce kleptocratic employer power over workers, more of whom could quit lousy working situations if they didn't have to stay for the coverage; it would likely also free up a greater number of budding entrepreneurs, and it would cause less and slower disruption to the insurance industry, who, as much as we despise it, is a big, influential lobbying roadblock to a single payer system. Under Medicare "for whoever wants it", there might even be a place for them in supplemental coverage, as there is now for seniors, but their clout would be lessened.
And, given the large pool of people who I suspect would opt in over time, it could probably pay for itself, or come close, with lower premiums and out of pocket costs than any private plans can offer, as PK hints at.
9
If all you have is voluntary buy-in, when does Medicare become universal? If on Day 1, it’s immediately universal, you need new revenue because no one’s bought in yet. If it’s not universal on Day 1, when does it become universal? When there’s enough money?
The goal is to cover everyone, comprehensively, at total lower cost than now. The means to that end is monopsony: a single payer that puts downward pressure on prices. An optional buy-in defers that goal until never, because monopsony power never occurs, or is too uncertain to garner political support.
The 2/3 of Americans covered by private health insurance will doubtless need reassurance. One way is to ask: do you know anyone on Medicare who regrets it? Another is to ask: how secure is you coverage? Private insurance is at the whim of the employer. What’s covered is at the whim of the insurer. Leave your job, move, watch your employer change providers or reduce its contribution or adopt a cheaper plan. Any of those can happen, do normally happen in the course of a lifetime. Never mind those who cling to or take jobs because of health insurance, when they’d rather start a business or write a book.
Gradualism is tempting because it seems safe. But “safe” doesn’t describe private health insurance. Cheaper, better, and more secure is available only one way: universal healthcare.
We currently spend about $600 billion a year on defense. Can we re-order our priorities a bit and use a portion of that money to pay for some of our country's other pressing needs?
15
@Tony Good luck fighting the Military Industrial Complex on that. They own the Washington Beltway.
@Tony
Yes, Tony, let's spend $3 Billion on Defense against Ignorance!
@Tony
All the Bigs (Military Industrial Complex, Big Pharma, Big Health Insurance, etc.) will fight against any moves that threaten their profit centers. Fewer than ten Democratic Senators (and fewer than forty Democratic Congressmen/women) voted "nay" in the 2018 defense appropriation bill. BigPharma is upping its lobbying budget, sensing the threat in the air. We, "the people", have big battles ahead, no question!
1
question for Paul
if all current health insurance premiums (including paid by employers) combined were put toward Medicare For All, less the insurance co. profits of course, so the pool goes even further, what would the shortfall (vs the total cost of Medicare for all) be, if there even is one?
6
Its my understanding that the IRS budget has not increased since 2010 and its work force is 25% less. It seems like we need more effort to challenge the complicated maneuvers companies and very wealthy employ to evade taxes.
29
There are many good ideas here that some commenters fail to grasp. For example, the notion that infrastructure is an investment that can be paid for with debt over time, while health insurance requires a different means of financing. Dr. Krugman, along with JM Keynes, has taught us the value of government spending time and again, and history has proven both of them to be correct. Deficit hawks should learn someday, but I am not optimistic since they do not let facts interfere with their beliefs. As for health insurance, the largest problem with Obamacare is that it lets the foxes (insurance companies) guard the hens (patients). A public option (with public premiums) that competes with private insurance would help to restrain this. Health insurance companies waste massive dollars on advertising, rent, shareholders and executive salaries that a government system would not need. Private insurers would then need to compete on service, not marketing, with things like less wasteful and expensive gatekeepers and executives. This level of competition should mollify the right since it would be nothing more than a market that pits government against private entities. Lastly, we need to call out military spending for what it is; welfare for military contractors. Weapons, ships, planes and other stuff add cost without value. We are the most armed nation in the world. Wouldn't infrastructure be a better use of those dollars?
17
@MPS
Right on. See my response to Tom above.
Why is the immediate question: "How do we pay for it?" Always asked of a Democratic proposal? I don't remember the question in the face of the disastrous, rammed-through tax cut, the spending for military, and of course anything else the Republicans deem "necessary." It's so tedious.
24
@CarolSon
Because Republicans are paying the vast majority of the taxes???
"That is, in fact, how Obamacare was financed: the revenue component came almost entirely from taxes on high incomes"
Krugman apparently thinks $250,000 per year is "high" income because those who made that were taxed to help pay for Obamacare.
2
@john fisher
$250,000 seems like a high annual income to me. It's more than my wife and I made together when we both earned our peak incomes as public school teachers in New York and Connecticut, two of the highest paying states for teachers. We were both department chairs, too. (We've retired for
two years.)
5
@john fisher
Um, well... For the vast majority of Americans, $250K is high income. The average American family earns about $60K. Why isn't it high?
4
“250,000” is high income?? When you pay taxes it is based on “taxable income” which would imply that the gross income might be in the order of $300,000. The AVERAGE FAMILY income in the US is $60,000 per year the last time that I checked. So yes, FIVE times the average should be considered HIGH
4
Krugman's analysis is valuable, to be sure.
But for years I've ranted one fundamental aspect of America's attitude toward the social contract.
We, including too many Democrats, argue incessantly about whether we can afford health care, education, basic quality of life for all.
The truth has never been that we can't "afford" to do these things. The truth, which Republicans particularly avoid facing, is that we don't want to do these things.
Until we face that reality, we won't make significant social progress.
6
@Barking Doggerel
It's the old Calvinist/Social Darwinist mentality--no one should get any services or help that they don't "deserve"' unfortunately, "deserve" is defined circularly--if you are worthy, you've already shown it by being smart enough and hard working enough to be affluent, and if you're not affluent, you obviously aren't deserving, so resources are just wasted on you.
We really have to combat this mentality, which is still present in large measure among our libertarian oligarchs (even if they've long since forgotten its religious origins) if we want to 'want to".
1
This helps much. Thank you. I understand more now about several big topical issues at the fore of the Democrat's emerging platform for 2020. That said, I've yet to meet a hard line Libertarian or right wing Republican uncomfortable with their lack of information or willing to engage is walking in another's pair of shoes. It's a problem. The constitutionally protected rights of the individual to forego empathy has created at least two modern day political parties with platforms grounded in sociopathy. It's difficult to imagine where investments in infrastructure and publicly funded healthcare would fit within such a schema.
6
“Medicare for All” proposal that involves allowing people to buy in to government insurance, rather than offering that insurance free of charge.” was always the means. It was never free. That is and was a Republican lie. If Americans are given the choice of buying Medicare they will, because it is cheaper, better, and more thorough. If Americans are compelled to buy Medicare insurance, Republicans will lie about “government takeover” no choices, death panels... Far better to offer a Public Option and let individuals choose.
6
Pul, they ought to look at tax laws, all the loopholes, all the ways in which wealthy people supposedly legally evade taxes, ie with the blessings of Uncle Sam. The Trumps have done it for decades. And right in front of our very own eyes amazon is sitting on a gigantic profit, without having to pay taxes. These are the invisible and visible ways in which the US government and treasury cheat themselves out of funds, precious money that can be build towards a huge safety net, from birth to old age to death, ensuring good health well being education, safety safety safety net.
6
Problem with all these discussions, IMHO, is that there is both the presumption that all existing expenditures are sacred and that money itself is a conserved substance. The US spends incomprehensibly vast amounts of money overseas making life miserable for other countries and protecting US financial interests. And probably greasing some wheels at home and abroad for all the right people. There is plenty of money for infrastructure and healthcare (even if we refuse to cut back on the waste and profiteering) if we ease back on killing others. Its not an amount issue as much as a choices we make issue.
On a personal level, money does behave like a conserved substance. Not so much on a macro scale -- witness the vast amounts that appear and disappear from financial manipulations. What we forget is that money is an abstraction whose rules we made up and generally agree to follow -- but not everybody and not always. So money can be created and destroyed by acts of will by institutions and governments. There is nothing with the finality of gravity around this abstraction we call money -- so the constraints are more a statement of will than any physical law. It really is all about choices -- and our statements about what we can and cannot afford says a lot about our own values.
15
Paul, I would like some numbers on this (wonkish). Seeing just the thought process is nice but hard numbers help convince....at least me.
3
The basic functions of the United States government are listed in the Constitution. They are: 'To form a more perfect Union'; 'To establish Justice'; 'To insure domestic Tranquility'; 'To provide for the common defense'; 'To promote the general Welfare'; and 'To secure the Blessings of Liberty.'
It is not a stretch to say that free market healthcare has not promoted the general welfare. My health ins. premiums have gone 135% in 2 years with a near 40% increase in the deductible. This is happening to many others
The Defense Dept. sees climate change as a looming, real threat. It is at the border.
Both of these issues are threats to domestic tranquility or the stability of the nation. If I add up the costs of the Bush and Trump tax cuts and the Iraq war, that is near $12 trillion
and neither of these issues were dealt with. Can we not claw back some of the tax cuts to pay for the very real threats to the country?
18
The part about paying for robust Medicare is where my question lies. It would have the enormous benefits of lowering the cost of individual health care for the economy as a whole. And, it would improve public health dramatically. It could make payments to pharma fair and reasonable, one huge source of our current system's cost. It could make individual health care more consistent, and that would be a huge benefit for each of us. We would have far fewer cases of cancers going undetected until they reach the 4th stage, for example. And, it would remove one of the major causes of anxiety in our society -- medical bankruptcy. So, here is where balancing the economy instead of balancing the budget -- the goal of Modern Monetary theorist Stephanie Kelton -- makes the most sense to me. And, that is why I would like Paul to engage in a public discussion with her or some other MMT advocate.
6
Seems to me we would be much better off if the Democrats would advocate for universal health care rather than Medicare for all. People will resist signing on to what they perceive as government takeover of a benefit they receive from their employer with no concept of cost beyond whatever out of pocket costs they incur. For many employees of large corporations those costs are small. Corporations deduct the cost of employee health insurance but still have a huge cost. We would all benefit if corporations would work with government to implement universal coverage and offload the huge cost of providing health insurance to employees. Obamacare would seem to provide platform for starting the process.
1
@DCN, Medicare includes the private options of supplemental coverage and alternate, full-service private coverage - that's what Medicare Advantage is. Medicare for All, simply by the nature of Medicare, includes the option of private coverage.
I can't believe so many people do not understand this. Medicare would have to be significantly changed to NOT include private options.
One of the goals of universal coverage has to be divorcing health care from employment. The system we have now significantly limits individual freedom. Ever talk to a Canadian about this?
An aside: please stop calling the ACA "Obamacare"; it was a right-wing idea to start with.
@John D.. fully understand Medicare Advantage. I am covered by a Medicare Advantage plan. I also know what the ACA is. Universal health care must be the goal but can only happen when people understand. They currently do not. The left does not get that this will not be accomplished in one huge leap. It may take much longer than necessary if Bernie manages to get Trump elected for a second term
paid parental leave, free childcare, free after school care, free college, free healthcare, free eldercare...do people understand that there is no free lunch?...I'm all for increased taxes on the wealthy, but that would need to be used, first of all, to pay down the debt, infrastructure, and necessary climate change proposals...addressing those issues would take over a decade...
3
@Jim
Paid parental leave is a business payment, free childcare at least Warren's version of it is not free for everyone. I've not heard of any free eldercare from any candidate. I agree there is no free lunch. However, lowering Medicare to say 55 or 50 using the current system has some great benefits but keeps a good system that works for those 65+ going as it is. Many other industrialized 1st world countries do these things, yet America cannot?
9
@Bikerman Meidcare is not free in any way. You have co-pays, deductibles, premiums, and it covers only 80 percent. You need a Medigap policy, a Drug policy. Our Medicare premiums for one person are hundreds of dollars a month. it is not "free" in any way.
2
Whenever we talk about paying for social needs we begin with the assumption that our current federal budget makes sense. It does not.
We are currently spending nearly a trillion dollars a year on military and military related expenses.
We hide many of the costs. Things like the Veterans Administration are not considered. Neither do we count our nuclear weapons program that is neatly tucked away in the Energy Department.
And we don't count the debt on war waged with borrowed money. Iraq and Afghanistan may have cost us between 4 and 5 trillion dollars and blew up the deficit. The amounts are so staggering that we have no way of even getting an accurate accounting.
The DOD asked for 690 billion for the military so Congress gave them 700 billion and Trump did one better and added another 70 billion on top of that.
In contrast, China borrowed trillions from itself to bail out from the 2008 recession and spent that money on infrastructure.
They built whole new cities. The reduced labor unrest and increased their housing stock with these construction jobs. They invested in education and technology and in 25 years they lifted 800 million people out of abject poverty.
We on the other hand developed a new generation of missiles, miniaturized nuclear weapons, foreclosed on 7 million families and went gleefully into year 18 of endless war.
The obvious answer to funding any progressive agenda is simple. Change our priorities!
75
@Drspock: Benjamin Spock, MLK, William Sloan Coffin, George Wald and millions more would clap and cheer. Thank you. I like Lady K's poetic justice proposal - immediate middle class tax relief that might juice the economy real people live in, actually expand the tax base and lastingly increase revenue. Contingent on that, the happy persuit of better priorities for all the years thereafter. Just hope the outgoing powers don't scorch the earth. Bush 1 left Clinton Somolia, Bush 2 left Obama war, debt, and a crash.
3
The political right lost its political right to criticize proposals that would not immediately pay for themselves when they passed the Ryan-McConnell-Trump tax cut that exploded the deficit.
21
The question which should frame this discussion is "what do we want America to look like". Look at the Fragile State Index to see some of the characteristics of successful and failed states. Look where America is.
Those countries at the top have health care, affordable education, good roads, social security systems for the elderly (of which I am one). They also have low levels of inequality. We are coming to share some of the characteristics of failed states. A repressive criminal justice system, failed education for those at the bottom, wage stagnation, declining life expectancy.
The critical factor which Professor Krugman fails to discuss is the concentration of wealth and inequality in the United States. The money for all this is hidden in offshore bank accounts.
The system is rigged to transfer money from the bottom 90 percent to the top. The data over time demonstrates the redistribution of wealth in America.
When I grew up in Texas, my tuition at the University of Texas at Austin was free.
The 1 percent benefits immensely from what all of us pay for. They consume an educated and healthy work force, the rule of law, national defense protects them and so forth.
Citizens United means the 1 percent controls Congress.
The alternative for them should be life in Pakistan or Zimbabwe. They can contribute to America or leave it.
Or they can live in a gated community patrolled by tanks.
Or they can contribute their fair share to America
Vietnam Vet,
39
A week or so ago I asked for more specifics and lo here we are. Thank you, the article is clear and leaves room for further refinement - even debate - on the third category. Like from MrC's comment today. If we make it to 11/20, it may well be a new day as another man said.
8
What a great way of looking at potential funding for progressive programs! I'm as frustrated as anyone at GOP insistence that tax cuts, defense spending, and corporate handouts will "pay for themselves" but that any spending that helps ordinary Americans must be funded in gory detail. I love the idea of just flipping the argument on them. But you know that won't really work. The GOP has mastered the art of scaremongering - persuading those who would be helped and should support a program, say single payer healthcare into opposing it - on grounds that "But where is all that money going to come from- Bigger taxes on you the ordinary American worker!" I think Elizabeth Warren's approach in this regard is better. Yes she's taking a lot of heat for proposed tax increases, but she's neutralizing the "who's going to pay for it argument" from the outset.
12
"I don’t know whether Warren will or even should get the nomination. But she’s a major intellectual figure,"
So far, from everything you say about her, she seems to be the best person for the job. What is her downside?
From my perspective, I think her negatives are minor. There are mistakes in her past like labeling herself an "American Indian". But, assuming nothing else comes out, she looks pretty clean compared to the other candidates. ( Especially,
one candidate whose past TRUMPS them all.)
And she has a whiny voice.
But have we fallen so far as a nation that "a major intellectual figure" isn't a good choice for president? Especially, when that person's intellect has been applied to consumer finances, a subject that is a major problem in this country? Who's better?
9
The fact is, the US is awash in money. What has changed is the concentration. We have plenty available to spend on social programs - it's to be found in medical spending waste and the obscenely bloated military budget. But I have little doubt that too great a slice of the electorate will once again succumb to propaganda outlets in the excusive service of wealth. Hope I'm wrong, but I've been observing for a long time, and the political trend line isn't favorable, and hasn't been since Reagan. It's called killing the commons. And it's killing the country.
12
Bring back the draft with a selective component rather than birthday lottery. Allow the various branches to pick and choose who they want from an all inclusive pool of every 18 year old male in public schools nationwide. Conscripts can be paid a monthly stipend ($25?) to cover essentials like soap, toothpaste and detergent. They can be housed cheaply in wood frame open bay barracks and eat in chow tents like generations before them as all their other needs are covered. They can be required to remain single as a further cost reduction. This would practically eliminate the 23% of military sending that goes to personnel costs.
2
@Michael
I take some hope in looking at who supported Bernie in the 2016 primaries - people in rural areas (especially with open primaries) supported him by a whopping lot, while those in cities generally went for Clinton. This tells me that Bernie-like, for-the-common-good proposals have much backing among all sorts of Americans, no matter where they live.
1
Professor Krugman, right on all counts. I have lived many years in each of Canada, the UK, France and the Netherlands. Here in the US, when I hear people state universal health care could never be paid for because it costs so much, I can only cringe, and feel sorry for people so ill-informed about how things work. As an individual, my access to excellent universal health care in all of the above countries cost me substantially less, in cash terms, than the cost to me in the US for less access to more questionable health care. $8,000 in taxes and or contributions / year in countries with mandatory, sometimes single payer, universal health care is a lot less than $12,000 in insurance premiums.
14
President Trump is already stating that the Democrats are the party for Higher Taxes. This is a clear, concise and easy to remember message on voting day. From AOC to Bernie, I have seen no indication on how any of these programs would be funded except by more taxes. I would love to see these candidates dig in their heels and uncover waste and cut backs from other services to fund their new initiatives. Of course, you can argue that's the Republican mindset (govt is too big and wasteful already) which further paints the Democrats into a corner.
5
@AntiDoxDak Raising taxes is necessary to fund government. Lowering taxes does not raise revenues. It always increases the deficit with no returns except to individuals who benefit most. Lowering taxes on the rich harms all other tax payers. 70% marginal tax rate on the wealthiest funded the greatest expansion in our infrastructure, the defeat of Nazis. Some people have made the mistake of saying that WWII ended the Great Depression. It was massive government spending and higher marginal taxes that ended the Great Depression. We can spend far more on infrastructure, education, and healthcare without long term concerns, because each of them is an investment in the future.
Paul, I am disappointed. You usually profess wonkish solutions that are based in economic fact and theory. One may agree or disagree with your bases or conclusions, but one always admires the logic you follow. In this piece, you abandon logic and use the time honored technique perfected by the Russians; propaganda. That is, you call something different so you can pretend it's something else. You, and others on the left, are falling into the trap of approving extra spending without extra revenue by calling it investments. Nonsense. The debt is way to large to engage in such fantasy.
3
@Dr B: the debt is large because of tax expenditures and wars, full stop. The only major tax changes in the last 20 years were the tax cuts of Bush and Trump. The almost two decades of war added trillions to the debt.
Debt nannies always come out when spending proposals to actually benefit the citizenry are made; they are silent when truly imprudent tax cuts go into effect. Debt nannies simply have no credibility.
13
As an employer of about 60 people, I know a little about the cost of healthcare. Healthcare insurance costs for an average worker making $22/ hour is about $10 an hour with the employee paying about $3/ hour and my company paying about $7 / hour for family coverage. That's just health insurance - not other benefits btw.
My annual premiums increase at about 11% p.a. Most of that is picked up by the company as the employee contribution is capped by the affordability rules within the ACA. So the average increase in healthcare insurance is equal to about a 5% pay increase for my employees. That's baked in - before inflation pay raises etc. So don't be surprised that wage increases are slow in coming - wage increases are being eaten up by increases in health insurance premiums. In most other advanced countries in the world, healthcare is single payer based at about half % cost I pay for my workers.
So lets be clear, single payer healthcare would be the biggest single saving my business could ever imagine. It would be HUUGGE. Oh and by the way, it would save me a lot of administration costs. Single payer ....yes please .
468
@MrC
We have a small company of about 15 employees, the company pays 100% of family healthcare. As you stated, the cost of healthcare increases yearly, therefore you analysis is right on the money, single payer...yes please.
85
@MrC
Couldn't agree more. I did the calculations too and lowering Medicare to 55 saved $6000 per employee even if you doubled the companies contribution to Medicare for that employee. In addition those 55+ could retire earlier if they chose to and start a business of their own or just make room for a younger person to take their job. More importantly if a job is lost they don't lose their healthcare coverage. It's so much better than the current system which basically is lose a job, get sick, go bankrupt.
86
@MrC
Thank you, thank you, thank you, for being so honest and stating what anyone who thinks, or has worked somewhere insurance is “provided”, can figure out.
You need to let all your employees know that, and tell them, yes under single payer you mght pay more in taxes, but your salary could also go up since I am not paying your insurance. And if we can eliminate much of insurance overhead, eliminate arguing with insurance companies on the phone over benefits, and negotiate costs, you will be money and time ahead.
56
Government subsidized day care is something that that all candidates and political parties should and must be supporting. But support is not enough, what is also needed are credible plans on how to pay for this and Jo’s it would work. A vision also requires ways in which voters can support.
1
PK writes
"You can argue that most middle-class families would be better off in the end, that the extra benefits would more than compensate for the higher taxes. And you’d probably be right."
OBVIOUSLY right it's simple arithmetic.
But this would be a much heavier political lift. You don’t have to be a neoliberal tool to wonder whether major system overhaul should be part of the Democratic platform right now, even if it’s something many progressives aspire to.
Probably right here too. It's more important right now that Dems win than that they move to the left.
Pitch a "big tent" Let the democratic socialists and medicare for all advocates push for these things in a Dem controlled Congress
4
Wouldn’t a sound economic analysis or business plan also consider where efficiencies could be obtained and resources shifted prior to investing further? And also consider if new investments had value, proposing metics to assess those investments? Of course it would, but such thinking is absent in the column, which uncritically accepts every progressive program, and assumes access to money is not limited. These are proposals meant to pander to the Democratic base, who are assured that “others” will pay for the benefits.
2
@LTJ Just because every T and I is not crossed does not mean that discussions of progressive programs should not take place. Most western liberal democracies have this stuff already, and believe it or not, we're not raving socialists clammering at the gates. (or wall) In Canada, we laugh at the your lack of health insurance, your mortgage meltdown bank corruption, and your dumb jingism. My country is not perfect, and there is much to admire about the US. This stuff is financially doable. You are a rich country with a large population base. Now just find the political will.
In the 1960s I went to college on the GI bill which paid me around $500 a month (that would be about $8,000 in today's dollars). I more than paid that back over the years in terms of the increased taxes I paid because of that education. Education is an investment. I would like to see a GI bill type of program available to young people following two years of a public service job.
18
@Herman
"Education is an investment." Sure, but most investments have a point of diminishing returns and we are well past that point in formal education.
@FreddyB
NO. In my home area, we have a lack of educated workers, particularly in computers. Two of my three step-daughters are doing very well, simply due to their college degrees; the third is on her way to a degree in nursing.
There is now end to the benefits of an affordable education. Bring back universal education; I'd be thrilled to pay a bit more in tax for such a public good!
@FreddyB, as long as there are those who have no idea of the real world consequences of wrecking the climate that made civilization possible, we haven't yet come within a million miles of the point of "diminishing returns" of education.
In your taxonomy, you should also call out government spending which is discretionary and requires a congressional annual budget, like education, the environment and defense. These programs carry no fiscal liability, just political.
And call out non discretionary spending, which is on auto pilot in perpetuity, like social security, Medicare, and the ACA. These programs carry astronomical fiscal liability as well as political.
(Non discretionary spending is by far the largest part of government spending.)
Will the green deal, child care, free college, and universal health care be discretionary or non-discretionary? That is what economists should be discussing.
1
With regard to the Medicare-for-All proposal or the Medicare-Buy-In proposal, there is a somewhat hidden pot of money that needs to be accounted for. Currently, under employer-provided insurance programs, the employer picks up anywhere from 50 to 75% of the cost of those programs with the remainder being covered by the employee. With either Medicare proposal, the employer-provided programs would go away. So to be equitable, employers should pay the government the same monies they are currently paying for employee health care. Otherwise, it would be a huge windfall for employers.
5
@Steve no, the employers should pay the employees "the same monies" (or similar monies)
3
@Jim
Yes, because this is , supposedly, in lieu of actual pay check compensation!!!!
Cultural shifts and unintended consequence. Modern women have been around in the West from Greek times? Back whem Moses wandered the desert? They started going to college about 60 years ago. They got good jobs earned a good living and married men in similar circumstances. The golden age of living in a rent controled luxury apartments and owning a vacation home was over. Realtor discovered the two paycheck marriage and prices rose. Working class women now have to work. They usually marry working class guys. There's a huge difference in what a acouple of college graduates can earn. Not all work some stay home and take care of the kids. Most need some kind of day care.
It's not all about "Where's the money coming from." It's also about where it's going. Wealthy people living in wealthy neighborhoods have the best schools would they have the best childcare? Maybe you haven't heard people saying "There're stealing our children now." People are scared their children are being told what to think by people who have no right to do so. Home schooling became common place for good reasons at least to those who practice it.
2
I have a good job with solid medical benefits but I still pay nearly $8,000 per year to insure my family. I have been out of graduate school for 15 years but I'm still paying student loans. I have two kids who (hopefully) will be in college in the not too distant future. They will have kids at some point and I hope that they won't struggle to afford childcare when they are new in careers, hope to buy homes, and or have limited income. I'm in the middle class but all of these expenses make life tight and impact retirement savings. For people with less money these expenses can be overwhelming. I also know that I'm not outside of the norm. A majority of us in the lower and middle classes are already paying significant amounts of money for the benefits people say we can't pay for if they become government run. Given all of this, I can't see why there should be any reluctance among democrats to push for radical reform. I would rather higher taxes and a uniform system than $8,000 in insurance premiums plus co-pays and out of pocket costs. I would rather higher taxes than debt for both me and my kids as they enter college. I would rather slightly higher taxes than saddling my kids with difficult decisions regarding in-affordable child care. We're already paying for these things, just without getting full benefits. Democrats need to do more to point out how people are already paying for these things.
21
@Merlot
The "Middle Class" is misleading , as is the "poverty level for a family of 4". It takes AT LEAST $75,000 to decently raise a family of 4 these days. That doesn't include savings for retirement or child care costs or HEALTH CARE. Can we please get real with cost of living details?
Heads in the sand have the Republicans .
1
Since I don't make $75,000 per year I know exactly how tight a "middle class" existence can be in this country and understand the term is relative. That said, cost of living in different locations is also a factor. Where I live I can make it on my income although it is tight. In other places I could not and that impacts where I have chosen to pursue jobs and live. But all of that said, I also do think Middle Class still applies, particularly when I compare my situation and long term prospects to those of people I grew up with in a very rural small town or others I see in the city. Despite tight economics, education, current future job/salary prospects, benefits, pensions, etc. all factor into what I think push people into a Middle Class status. Poverty levels are completely unrealistic, but I don't think anything I have said is unrealistic about cost. I'm also not clear on your last comment about Republican's having their heads in the sand. Forget Republicans, they are so far out of this discussion that it isn't even worth engaging. Democrats have their heads in the sand on what it really costs to live, and that is what is scary if we want to push a real progressive agenda.
Much of discussion concerning spending/investment (two very different things) has centered around the former. The right has controlled the conversation making it about "entitlements". The very word itself has a tinge of red herring to it, poisoning the well.
This makes a discussion about actual investment (the spending of billions of dollars on large scale infrastructure and research projects) an uphill battle. After all, it's too easy for the right to say "we can't afford that", when we are still stuck defending the ACA and existing welfare programs.
To a degree, we have had this backwards. The GND is a notable exception, except for the fact that as of yet it is not being marketed to the public in terms of its long-term fiscal returns, rather as an expensive green initiative. It is difficult to win the center over (however misguided they may be), when we are not quantifying the long-term economic benefits, of which the GND certainly has. Most people however, DO understand that investment is different than spending, and understand a return is expected. This messaging should not be so difficult for the Democratic party to communicate. Messaging has never been a strong point of the party however and I am dubious about them pulling this one off.
2
Great article! The only methodology I would add is the nationalization of certain monopolies and/or industries that could serve as revenue-generating MNCs and public utilities.
For instance, if you nationalized Apple, Google, Microsoft, Amazon, Koch Industries, Verizon, AT&T and a couple food franchises--u pay the owners 500 million dollars 1 time- take over country's revenues, raise salaries there 20%, and then take the rest of the money for national revenues, you could easily finances all these projects and raise minimum wage to 60K a year, because in effect you would be allowing other countries to pay your taxes for you.
I think there should be a serious conversation about nationalization of some companies that act as bad actors and should be public utilities. Google has essentially monopolized entrepreneurialism, and they are destroying the fabric of society. What they do should be a public utility and I can guarantee that that pitch could be made to their employees EASILY. They would only be too happy to NOT be doing evil, and get rid of their profiteering and earth-plundering owners.
The same goes for pretty much all of the other country's listed above. In nationalizing them, we could finance the Green New Deal and seriously raise the living standards in this country. These people are never going to fix that. Look at homelessness in Silicon Valley, all that money and such apathy to other people's pain. We should nationalize these terrorist's means of production
@nickgregor. Great idea! If we had nationalized Bell Telephone ( you may be too young to remember them) we would all still be using rotary dial landline phones.
1
@nickgregor "pay the owners 500 million dollars 1 time" ...
Most of the companies you cite are public, which means there are thousands of "owners". Are they all going to get "500 million dollars 1 time" ?
That's called socialism and has never worked @nickgregor
It all comes down to the ratio of producers to consumers. That's why the anti-work and anti-worker progressive policies will always fail.
2
Professor Krugman, as always, you make a well-reasoned argument, but how to ensure the signal breaks through the noise? Americans (and I include most journalists here, especially TV journalists), for the most part, do not like to think, it gives them a headache. We would rather bolt down a simple hamburger of an idea with a side of Freedom Fries, even at the risk of indigestion, than to suspend disbelief long enough to learn something. Can't we get you your own Neil DeGrasse Tyson-styleTV show so you can reprise your project to educate us in that subject we all asidiously avoided studying, namely economics? This way we can dispel such invidious myths standing between our intellectual sloth and understanding, like the idea that we should adopt not the principles of macro economics and micro economics, but 'home' economics, i.e., the government budget should be operated under the same principles as our home budgets and thus we spend no money until the national debt is retired. I fear only when you drag us over that hill will your important and cogent argument on paying for social benefits get the hearing it deserves.
8
Healthcare in the US is 17% of GDP.
In every EU country it ranges between 10-12% of GDP.
Question:
When the US finally goes to universal single payer, what will we do with the 5% of GDP savings?
My answer:
Invest the 5% of GDP savings in:
1) education
2) infrastructure
3) scientific research
12
Yes, borrow for investment in infrastructure, always with green new energy in mind (and don't let sweetheart deals dribble away the money.)
re benefits I wonder if the private health insurers pay proper taxes on their 6% of GDP. If not, good riddance. Payroll or value added would be much fairer. And Medicare for all must be seen for what it is--a cost reduction.
Sure, a wealth tax is long overdue especially since Trump's "tax reform." But "tax" can be twisted for political purposes as we saw last year. So it must be clear to the voters who's paying and who will receive the benefits.
The major system overhaul I see as the true heavy lift is forcing our fossil fuel exporters to cease and desist choking the planet. Let them meet our needs while we invest in green energy--after that, leave it in the ground. I hope the dems and repubs don't succeed in deep-sixing the Green New Deal.
Thanks for the reminder that we can borrow at 1% to defeat the strategies of our pampered 1%.
3
Warren is a "major intellectual figure" lacking character who falsely claimed for many years to be Native American for her own personal and political gain at the expense of others.
Even "minor intellectual figures" know a fraud when they see one.
As Senator Blumenthal ironically stated
"False in one, false in all".
6
I think much of the electorate does not understand that Medicare for all is a trade-off. They do understand that Medicare for all needs to be supported by a tax increase, but they do not seem to grasp that this will also come with a reduction in their outlay for health insurance premiums, co-pays and all many other out-of-pocket medical expenses.
The Democrats need to make it clear how a change to a Medicare for all system impacts the average American family financially. I don't think they are there yet.
12
@NY->TX
I also wonder if the electorate understands the trade-off of quality and timeliness? Both will be markedly decreased from what we have today.
6
Democratic presidential candidates are calling for programs to serve the people. Which is in stark contrast to Republicans who cut taxes to serve the wealthy. "There will be demands that the candidate explain how all this will be paid for." The answer to that question comes directly from Republicans.
Democrats can adopt the same rationale as Republicans: the Democratic supported programs, like Republican tax cuts, will pay for themselves.
Take Medicare for all. They say it would run up the debt. Nothing could be further from the truth. By expanding Medicare to all Americans the workforce will be healthier and more productive. The productivity increase will drive the GDP into double digits. The American public will save on greed-serving insurance premiums and the surplus tax revenues from the soaring GDP will pay down the national debt.
Take tuition free public colleges. The public will be better educated, better prepared for productive careers. That will drive up the GDP, increasing tax revenues which more than pay for the program.
Take universal childcare. Mothers will become more productive, put in more time at work, drive up the GDP, increasing tax revenues which more than pay for the program.
Thank you Republicans! You demand programs pay for themselves. Democrats have programs that do that, just like you claim your tax cuts will pay for themselves. The evidence will be in the years ahead, long following their enactment.
Who says Republicans have never made sense?
12
@JABarry Great messaging! The Democrats really need to do a complete retake on their messaging, which is generally either MIA or just awful.
2
Great article. Happy to see someone focusing on economic impacts as opposed to social and religious prejudices. Where would ever increasing defense costs be placed in your categories of increased government spending? Americans are willing to squander insane amounts on defense. I suggest that the issue is not where do we find the money, but rather how do we allocate available funds (whether tax dollars or borrowing). As you note at the outset of the article, even R's are willing to increase debt dramatically when it suits their purposes. We need to change the thinking of the American voter with regard to where the government can best spend the money it has or borrows.
6
I would love to see the proponents of increased military spending called to account for the social benefits of that spending. And just how they plan to pay for it all.
But that never seems to happen. Somehow, projects designed to create death and destruction get a pass on the social litmus test.
The reason, of course, is the military-industrial complex. It's become so big that we don't even talk about it.
18
@Duane McPherson the VA is the largest single payer system in the Americas. Sadly, it's so bad that it has killed any expansion of single payer. Unaccountable government bureaucracies are dangerous. I hurt every day due to VA incompetence.
Our employer-provided healthcare has an annual cost of around $20k (family of four). We pay a fraction — maybe 1/4 — of that amount in premiums deducted from pay. The employer, in this case a large Fortune 500 company, picks up the balance, which comprises a portion of my husband’s “total benefits & compensation package.” In addition to the insurance itself, the company spends on producing materials to market its offerings, materials to promote “wellness” (because unhealthy employees adversely affect its healthcare payouts), and the employees or agency who write, design, and distribute all of said materials. Because they are self-insured, they also pay an insurance company to administer all the healthcare enrollment and claims.
I have never understood why employers are not onboard with a universal healthcare plan, whether it’s Medicare for All or some other system that takes the onus of providing healthcare insurance off their backs. Even if large companies were forced to pay a per employee tax (including all part timers), surely they’d be in a better position than having to pay upwards of 2/3-3/4 of employees’ healthcare premiums, as well as the ancillary costs of providing healthcare coverage?
I’d love to see Prof Krugman write a column on such a topic.
18
@EWood I understand that employers can deduct health insurance payments from their taxes, as a business expense. So in reality all us taxpayers are already paying for everyone's healthcare.
3
@EWood I too have often wondered why corporate America apparently does not want to unload it's healthcare costs on the public. I'd be extremely interested to know Dr. Krugman's take, and I join your request that he consider writing on the topic. I do think part of the answer is because employer provided healthcare is tax free. Companies get to fully deduct as an expense anything they pay for health insurance and employees don't have to pay tax on the value of the benefit. This is the largest tax expenditure in our tax system - CBO estimates that the cost is about 1.6% of GDP. Second, companies well understand that employees are deterred from changing jobs - and especially deterred from starting a business or working for themselves - for fear of losing their health insurance. Many, especially older, workers are willing to take a lower wage to have the security of having a health insurance benefit. It may be that much of the cost of insurance is recovered by the lower wages companies can pay because health insurance is tied to employment.
5
@EWood I wonder the same thing. However I was thinking that the companies that provide health insurance to their employees, and pay for part or most of the cost, would be required to pay the same amount to the employees as a raise. Then the employees would pay for their medicare tax out of the increased income. Of course middle class tax brackets would have to be adjusted to compensate for the increased income. I don't understand why no one talks about this huge amount of money sitting there in the health insurance pile.
This is an excellent overview. You do hint that there is a limit to the value of debt financed investments in our economy. Is there a way to define that limit? A percentage of GDP? Please keep on this subject with more detailed, numeric observations
3
We've just given corporations a big tax cut. Medicare for all, paid for entirely by the federal government would be another cost reduction for them - did you say private health insurance (usually employer paid) is 6% of GDP? So why not have them pay a tax in place of their current healthcare benefit? Net it would cost them less because they would not have the overhead cost of administering the healthcare system.
If all employers did it would help small employers most - they struggle with that overhead. If big corporations want they could still offer "supplemental" insurance to sweeten the pot for their workers.
4
Universal (aka free) child care is simply a child tax credit in a different guise. In a world that cannot support the humans we already have at a middle class standard of living without massive environmental degradation, it is unwise to encourage higher rates of procreation via any form of public subsidy. Zero (and especially negative) population growth is a good thing for the planet and our survival as a species. Given the negative externality of bringing children into an already crowded world, a strong case can be made for an annual tax surcharge (not a credit) that increases exponentially on offspring beyond one child per family.
15
@Earl W.
A better way to accomplish this goal would be a provide free contraceptives - they are remarkably cheap - and free abortion to all who desire one. Couple those efforts with comprehensive sex education in schools that does not allow parents to opt out their children or for religious groups to set the curriculum, and the desired reduction is underway. At least a quarter of all pregnancies are unplanned as it is. Eliminate that as a first step.
@Earl W. - a species that doesn't reproduce itself soon goes extinct.
@jay It will take three or four generations to bring about an order of magnitude reduction in the earth's human population if couples limit themselves to only one child. But perhaps I missed the more serious point you were raising; please elaborate.
1
What disturbs me most is that the hyperboles about money are simply used as a weapon to shoot down the messenger.
The GOP has perfectioned this strategy. And while it used to work well for them I'm inclined to believe this will help them no more. The GOP had every opportunity to govern, and they failed completely. You cannot be against everything and then not come up with a viable alternative (Obamacare repeal).
Voters are finally recognising that the GOP doesn't have plans at all, just cheap rhetoric to retain power. And we have Trump to thank for this. He is the epitome of hot air and no substance.
25
It is important that focus on presidential politics be shared with local down-ballot candidates as the pendulum swings the the left. This should include state houses as well.
It won't do much good if Elizabeth Warren is elected president if her seat in the Senate is taken by a conservative. (Unlikely but you see the point.)
A democratic president will need majorities in both houses to begin to undo the damage and move a progressive agenda forward.
8
The needs of the American people have not been addressed for more than a generation. Neo-liberal ideas have transformed government provided essential services into commodities that generate huge profits for the profiteers. The price for the service went up; and the quality of the service declined. Profit should never be the motive for educating a generation of children, maintaining an efficient system of infrastructure, providing clean air, drinkable water, and food that is safe for consumption.
Congress, particularly its Republican caucus, has shrugged every time there were protests that their three major tax overhauls would impose huge deficits on the America's budgets under Reagan, W. Bush, and Donald Trump. Deficits, they said, no longer matter. The most affluent and the business community laughed all the way to the bank.
It' time for Americans to shrug when the very same beneficiaries of three huge tax reformations start a mantra that the government can't afford a response to address essential needs of the citizenry. Progressive proposals didn't just materialize. They represent a response to the essential needs that a growing majority of Americans are seeing in an age of wealth concentration and corporatism.
8
Mr. Krugman,
you are paying a service to this country by showing the intellectual fallacies of the masters of the universe that disguise their greed with pseudo-economic arguments.
As a fellow economist, it has always pained me why economics has been conflated in the public discourse with Chicago school economics, whose flaws are easy to see for trained economists.
The public's mistrust of science may indeed have something to do with the talking heads' professed blind faith in the market; while the same talking heads rig the market to their benefit and the public is left behind by an economy where income does not equal added value to society. Case in point: how much more does a financier earn than the school teacher that has spent years educating our youth?
It makes economic sense to educate our youth so they can fly and create firms and jobs, liberate employees from the scare on non-healthcare coverage so they can become entrepreneurs, tax the wealthy so they share some affinity with the rest of us and because their gains were only possible in a highly civilized society paid for by taxes, and regulate monopolies so they don't hurt the flow of innovation.
It makes economic sense to create a society with a safety net, so that inequality does not create permanent social tensions that hurt growth; and to invest in green technologies so that our children and grandchildren may enjoy their time on earth.
Economics is, after all, the science of how to achieve the common good.
27
We need to tax more, regardless of what new programs we undertake, or whether we undertake any at all. Interest rates in general, and interest rates on US government borrowing in particular, are low now. That doesn't make it ok to keep our debt at a level where even a modest increase in interest rates would be catastrophic.
We shouldn't have cut taxes while spending trillions of dollars on pointless wars. We shouldn't have cut taxes while spending additional trillions of dollars on military pork that doesn't even serve any military purpose. We shouldn't have cut taxes while the projected costs skyrocketed for existing commitments to medical and retirement expenditures. But we did, and now we've got a debt that would be extremely painful to make payments on if interest rates were in the upper half of the historically normal range. We need to pay that debt down now, while interest rates and unemployment are both low.
3
Dear Professor Krugman:
The American taxpayer deserves an credible explanation of how their further indebtedness will generate a return, be that economic or social, or both, as the indebtedness will most certainly require debt service; currently paid for mostly by more debt.
In my opinion we are way too flippant regarding the manner in which we are indebting the future for our own benefit. Be that with increased spending and/or reduced revenue.
One example of our current fiscal irresponsibility is that the interstate road system was built in the 1950s and 60s and now, much wealthier as a nation, we struggle to maintain that vital investment. And we want to pour on more programs with no real idea of how a return will maintain them?
We need to have some honest understanding of the end-game of our continued buildup of debt and the requsite debt service, as we do of the end-game of how lowering our tax revenues impacts our ability to service our debt (understanding that the Republicans desire to starve government entitlements off by reducing revenue to it).
I am a social liberal and a fiscal conservative. We need move beyond the mindset of "tax the rich to feed the poor till there are no rich no more".
MB
5
The reset of the developed world has this figured out n healthcare. There should be no profit incentive in health INSURANCE. Medicare and Medicaid can perform the INSURANCE function for a significantly lower cost. We do not have a healthcare problem in this country. We do have a health insurance problem. And people are paying with their lives.
Make government insurance available to anyone who wishes to purchase it. Some of it will be funded with tax dollars. The rest comes from the individual.
The republicans are all talk and most of that lies. Better, cheaper healthcare? Where is that Mr. Trump? Oh, It is the pockets of the super rich, that's where it is. Too bad for the rest of us.
6
Child care is not a major issue. Here we are, heading for less jobs due to AI and robots, and we're worried about child care?
4
Green vs Growth
’Green vs growth’ is a false choice created by those who prefer the existing system.
Like any ‘new technology’ green energy needs startup help in order to create a healthier future which also provides employment for people.
The existing oil industry has received assistance and subsidies over the past century. We built roads and subdivisions, encouraged the use of oil in industry and assured a continual supply through all means, up to and including war. Meanwhile mass transit received little support; perhaps this is why the urban / rural divide cuts so deeply.
And ‘green energy’ has a tough time under the Trump administration.
Here are 2 items, one from the early days of his presidency and the other in the present.
1 One of the first actions Trump took was to ok a hotly contested pipeline in the Dakotas being built by ETP, whose chief executive donated $100,000 to his campaign.
2 This week the TVA votes on the future of one of it’s inefficient coal powered generating plants which receives the bulk of its coal from Murray Energy. Robert Murray is a major Trump supporter. Trump has intervened to keep the plant open; they vote Thursday.
We are not seeing the need to create future development and deny the simple logic that future growth has to be created by investment now.
This is the essence of complacency, an affliction that successful societies are vulnerable to.
We must do better.
6
The Democrats should push programs that deliver benefits that would be broadly wanted. There are two issues -- getting people to vote for them and paying for them. I think the first is more important; clearly paying for them is a problem with real solutions. The programs really needed are universal day care for children, health care, defined benefit pensions,maternity/paternity leave and nominal tuition for public universities and colleges. Then of course big public projects like high speed rail and this should be sold as the reindustrisalization of America.
2
Think outside the box. Tax exempt entitities and tax deferred entities should have a small surtax on their total assets to be allocated by the government half to deficit reduction and half to progressive bottom up job retraining programs in a public private partnership. No new debt created.
Medicare for all should be a base plan or plans with a maximum benefit of one million dollars and various deductibles offered by private insurers. Medicare will supplement those plans starting with a million dollar deductible. It will be sold as a medigap plan that reinsures the risk of catastrophic illness.
It is time to recognize political reality and synthesize the potential of competing ideas and fresh ideas
A tax on something as ephemeral as 'wealth' seems on its face to be unwieldy and imprecise. Better are suggestions that are more transaction-based, like earned income, dividends, interest, and capital gains. Maybe add a small transaction fee whenever 'wealth' is used to collateralize loans.
1
"Many of those demands will be made in bad faith, from people who never ask the same questions about tax cuts."
Dr. Krugman makes sense, and therein lies the problem. Because sense, particularly the common variety, doesn't exist in the upcoming war we're about to fight.
Democrats can hire 1000 accountants to do the math, but be slayed by one tweet from Donald Trump. Already he plans to brand the entire party as socialists and renegades, ready to open up our borders to drug dealers, etc. etc.
Unfortunately we live in a country whose citizens have lost their sense of collective responsibility for the well-being of all Americans.
So, to find the perfect formula to assuage critics and prove Democrats are fiscally responsible (unlike their opponents) will be the tallest order and maybe not even possible in today's culture of lies.
But whichever Democratic candidate develops the perfect formula of figures and fixes, well-packaged and fully paid for in a sensible, responsible way, may just win the final argument.
9
These discussions are useless. It doesn’t matter how beneficial social services would be for people and how they could be financed. The rich control the economy and they ain’t getting up off it. A few words of dissent and Bezos headed for the door in NYC. They are also real good at turning us against each other. Just watch the Kochs and their think tanks at work. Voting? Well, good.luck. Wake me up when a few counties in Pennsylvania, Ohio or wherever decide for me.
1
Medicare for All -- it's time to get started. But first we need to figure out how to implement Medicare for All. That's the heavy lift.
Healthcare is about 18% of GDP. Changes in the healthcare system will affect the livelihood of large numbers of real people who work hard to deliver healthcare. It will also affect the health and lives of large numbers of real people who rely on the healthcare system for deal with emergencies and chronic conditions. We need to assure healthcare workers and patients that they won't be left behind by change. Thought, caution, transparency and a measure of humility will be needed if Medicare for All is to succeed.
The greatest threat to Medicare for All is the crony capitalism that has become endemic in the healthcare system. Drug makers, medical device makers, supply and service companies, hospitals, nursing homes, insurers, the AMA and similar organizations, physicians, psychologists, administrators all profit from the healthcare system. They lobby Congress, the administration and the administrative agencies aggressively and persistently. They have been successful in molding the healthcare system to meet their revenue and profit goals. Healthcare is uniquely vulnerable to regulatory capture. If their power and influence cannot be curtailed the cost of healthcare will balloon form 18% to 25% of GDP within a few years.
8
@OldBoatMan
Heres that little tap on the shoulder bud - our great healthcare depends on innovation. Without innovation, we'd still be using old drugs and devices that were a fraction as effective. Innovation comes from investment. Drug and device companies make investments, hundreds of millions of dollars, in order to innovate our drugs and devices. Engineers who come up with the devices, paying top rated surgeons to test them out, millions to clinical trials, and then many more millions introducing them to the medical community. Those investments are made with the hope of a windfall profit. Some don't work out, and the ones that do have to recover the cost of the ones that don't. In the end, without the hope of a windfall profit, those hundreds of millions of dollars will not be invested. therefore innovation would come to a screeching halt. I realize profits in healthcare breaks your liberal heart, but that's how the real world works.
Govt run healthcare doesn't pay for that innovation either. Consider that with these calls for "medicare for all."
2
@Sports Medicine Foundational research is funded by the government, look up NIH.
Take that one step further and incubate ideas with further funding, and keep any profits in the system to continue growing and innovating.
No need to stuff CEO's and shareholders pockets.
1
@Sports Medicine So much of the "innovation" you speak of grows out of basic research performed with NIH grants and out of government funding that directly and indirectly supports clinical research. Medicare is prohibited by law from negotiating drug prices. It is just more privatization of profit and socialization of cost.
3
The category defined as "investments" uses the logic of business: find a high return investment and borrow against it. Two problems: first, in business there's a quantified benefit or return. Government investment typically can't do that - it's always "believe me". Second, in business there's a limit to how much you can borrow before you put yourself into junk bond status which increases borrowing costs. The Federal Government just prints more money. So the logic used to justify borrowing by the government just doesn't make sense.
Benefit enhancements financed by taxing the rich assumes that everyone agrees that the rich should fund the poor(er). The don't. This is why this will never work. Why can't we live under the economic reality of limited resources? Why can't we say "enough" when it comes to benefits and work on re-prioritizing what we already spend? Yes the pie can enlarge, but it's so large already - let's start better dividing up the pie.
2
The universal vs employee covered health care cost argument vis a vis increased taxes has never been quite clear to me. Krugman points out a more universal system would increase taxes. But right now I have a couple hundred dollars deducted from my biweekly paycheck that is my contribution to our company's health insurance plan. Personally I'd rather pay another 50 or 100 dollars in taxes per paycheck, and get the 200 dollars in my wallet, seems I'd be ahead in the end. Plus if my small company could get out of the health care business it would have knock on effects. We wouldn't spend significant time, and at least $10,000 in salary time, for the various people involved in strategizing and evaluating which insurance plan we should go with each year to keep costs under control and maintain good benefits. Our single HR person could spend more time doing HR instead of health benefits seminars, etc. It might improve worker attitudes, since the company would no longer be responsible for chipping away at their health insurance by reducing benefits and increasing deductibles to keep costs contained. While I understand that getting companies out of the health care payment business would have it's own complications (not to mention incurring the lobbying wrath of the multi-billion dollar business that has built up around helping business navigate the health insurance market), it seems there are simple benefits beyond taxes that never get discussed. What am I missing?
43
Let's just default on the interest on the national debt. Pay the face value only. Maybe print greenbacks to buy the bonds back if necessary. Getting rid of interest payments would free up a lot of money. And who would it hit? People with lots of wealth.
@Robert David South
Defaulting on interest doesn't work that way. Try it on your auto loan or mortgage. It's much worse when a government does it. America's borrowing interest rate would skyrocket. Pension funds, which mainly serve the middle class and poor, would be ruined. And rule of law would be over if the government can just refuse to pay what it owes.
1
The Federal government’s fiscal position is constrained by the Trump tax cuts. GWB changed Clinton’s surplus into deficits by his tax cuts and an unnecessary war in Iraq. The only way to expand social and infrastructure spending without larger deficits is to increase taxes. A good start would be to increase tax rates to a pre-GWB era.
6
I am always amazed how even really smart people like Prof. Krugman can fail to make the connection on the healthcare overhaul.
It is NOT a new tax to create Medicare for All, it is a redirection of the 6% of GDP that is already being spent on healthcare. All the insurance premiums (company and individual), all the co-pays and out of pocket spending, all the company spending on benefit management companies, all the healthcare administration spending on coding and insurance management gets redirected to a much more efficient single payer (with a single price list for services, and no middlemen gobbling up huge profits).
6% of GDP is hanging out there to be redirected to a much more efficient and equitable system (like most other civilized countries); we just have to do it.
27
So basically, Krugman's solution to how we should do things is the same solution every Democrat always has: ignore the cost of most of it, tax the rich for the rest. And when that doesn't cover it, tax everyone else!
Got it.
1
@Dave K. Not a bad idea at all. But Krugman (like you) thinks backward. It should be: first: universal health care. Then: how should it be paid for. Since it will avoid the health insurance bureaucracies, it will be cheaper than Obama care. So it will be a net win for the country. End of story.
3
@Dave K.
You might want to honestly look at the other side of the coin. What have the Trump/Republican tax cuts accomplished?
Maybe a sugar high for the stock market. Most of the corporate tax cuts have gone to stock buy backs, and the top 1% have, again, been the ones who benefited most from that legislation. Trickle down theory is a sham. Further, greed, selfishness and ignorance will not move our country forward. If you truly want to grow our economy... grow the middle class. this is not rocket science, it a win,win solution.
If a country spends roughly $ 1 trillion (if you include Homeland security, the nuclear weapons under DOE, etc.) on "defense" it is not poor. Its priorities are. If you cut the defense budget by 50% we would have the money to pay for a vey progressive agenda indeed!
20
The cost of government programs is a daunting political obstacle for any candidate with a progressive agenda (which by default is a problem only for Democrats). But why? The answer is that the general public tends to evaluate such proposals from their personal, household perspective: their credit card or student debt, their mortgage payments, the grocery bills, etc. As a result, there is, politically speaking, a built-in hesitation or reluctance by voters to favor proposals (like Medicare for All) once they hear of the projected costs, especially if those costs have to be covered by tax increases.
Politically, Republicans are masters of exacerbating this not unnatural fear, and the news media most often plays along by its typical analysis that follows a familiar script: "Candidate X is proposing a huge new government program to insure that every one receives health care, but (and here's the inevitable "but") households would be hit with huge new taxes to help pay for the proposal."
The cumulative impact of this over time has been to stymie progress on numerous societal ills, such as environmental degradation, infrastructure improvements, health care, etc. Only one Party attempts to push the progressive agenda; the other rather gleefully attacks it as ruining the American way of life.
2
@Paul Bernish
Thank you for your comment. Media talking heads invariably frame government proposals in this fashion, benefits first then the “but”, where the listener/viewer inevitably tunes out. With the help of superficial media coverage of issues conservatives/Repubs haven’t had to work very hard to stymie progress.
1
Why do people so often seem to ignore the reality that the cost of Medicare for All will be largely offset by the fact that we will no longer need to pay for private insurance? People hate these payments, to say nothing of the dreaded annual meeting where we all find out how much the costs are going up this year. We should be hammering this point every chance we get, and not just to counter the way the Republicans constantly harp about the necessity of new taxes. Plus, if we construct an even modestly progressive tax structure to pay for it all, the total costs for most people could actually go down.
6
I'm grateful--quite regularly--for Dr. Krugman's informed and clear breakdowns of fiscal reality, like this one. Even the ones he labels "wonkish" are, for me, darn helpful! I think his suggestion, in the third paragraph, of a "rough typology of spending proposals," with required submissions by each candidate, would be a crucial tool for assessing campaigns. With other commenters, I'd like him to fold in brisk critique, and even point toward meaningful reform, of two other fiscal 'big dogs:' the massive levels of tax avoidance by corporations, and that third rail of all third rails, the sacrosanct defense budget in the days of endless war.
17
This piece highlights one of the most difficult problems for Democrats/Progressives in developing a more progressive society: Dr. Krugman's essay is simply too difficult an explanation for how we can actually fund important programs in the U.S. (Programs, mind you, that would in the long-term make the U.S. more productive). Conservatives have learned to keep discussions about budgets, spending and taxes quite simple. They successfully reduce the discussion to the following:
1) Taxes are theft
2) Businesses and the wealthy pay too much in taxes
3) Government should be run like a business
4) Government is the enemy and creates more problems than it solves
Conservatives have managed to reduce the conversation to simple ideas that most people (those who really don't understand how the world works) consume like junk food. Why do you think Americans tell pollsters they want new roads, schools, infrastructure, a better health care system, etc., but these never materialize? Because, at the personal level, Americans have been convinced that government is not the solution and that paying into that system is somehow a waste. I'm not optimistic that any serious conversation raised by Democrats about fiscal policy will go very far with a population that simply doesn't understand how things work.
30
Krugman is still ignoring the fact that every other industrialized nation gives better healthcare to all of its citizens for less than 60% of what the U.S. pays. That means that we could give better healthcare to all citizens for what we are already paying in taxes now. There is no way around this simple math, but Krugman keeps ignoring the argument. Our taxes already pay 60% of all healthcare spending in the U.S. And large chunks of that goes to emergency room spending that never should have happened. If the problems had been treated at the appropriate time by the appropriate provider it would have been far more effective and far less expensive than the emergency room.
There would probably be large transition costs, but in the long run they become meaningless because the savings they would pay for the transition. And better health means higher productivity.
And Krugman thinks that only early education is an investment? How is all education not an investment? We have 20 somethings mortgaging their lives to invest in their futures. Helping them with that is an investment in Our future. Investing in students doing research made this country the most highly advanced civilization in history until we slashed investment in basic research and educating researchers.
If programming a machine is an investment than so is educating the most advanced machines we have, us.
Don't borrow. Repeal and replace the Trump tax cuts with high taxes on the 1% to invest in the general welfare.
26
Taxing the very wealthy at high rates appeals to me being decidedly not very wealthy.
But is it a disincentive as the usual actors would say?
There's an interesting graph here:
https://bradfordtaxinstitute.com/Free_Resources/Federal-Income-Tax-Rates.aspx
Top income rates were at their highest from about 1945 to 1980. I seem to remember a great many people getting very wealthy during those years. The Oracle of Omaha comes to mind.
The 21st century billionaires have gotten filthy rich with very low tax rates and at the expense of the decidedly not very wealthy.
28
@Fred
Thank you, Fred, for that link. I am tempted to use that 1913 form 1040 to submit my federal tax return this year. Only kidding, of course, and the history of top marginal brackets after that is instructive. War is expensive. Let's try to have less of it.
2
The essence of this article is stated in such a timid and veiled way that you might easily miss it. Translated in plain English, it says: “Making Medicare for All and the dismantlement of private health insurance plans part of the Democratic platform for 2020 is a major political liability”.
This comes after Mr. Krugman, supporting Hillary Clinton before the election in 2016, showed how unrealistic were Bernie Sanders’ economic proposals, including Medicare for All. He got furiously criticized by the far left activists, and he recanted in the last six months, at least kind of endorsing some of the lately fashionable extreme economic proposals, coming from AOC and similar others.
But Mr. Krugman appears to know very well that a real debate on Medicare for All would be disastrous for the Democrats, hence this trial balloon: a delicate, almost invisible signal to put it on the back burner.
1
I am neither rich nor wealthy and, yes, I am jealous of how much money US billionaires have. However, what Elizabeth Warren and her ilk are proposing sounds like old-school Communism: From each according to his (or her) ability, to each according to his (or her) need.
While income tax is authorized by the 16th Amendment to the Constitution, nowhere does the Constitution nor any of its Amendments authorize government confiscation of accumulated wealth.
Besides, not only will those affected fight such confiscation, they will also find ways to move their wealth offshore to places where such tax policies are not in place. (Breaking news: The richest man in the UK has just announced he is moving to Monaco for its financial breaks; expect similar movement of wealth if Elizabeth Warren gets her wealth tax.)
Let's all admit that "progressive" really means "socialist." And, as Margaret Thatcher so aptly put it, "The problem with socialism is that sooner or later you run out of other people's money."
4
@Mal T
Watch your language. Under Eisenhower and many a Republican president thereafter or decades we had higher income tax rates, estate tax rates and a luxury tax. MDs made less $$ before Medicare, Medicaid -- more charity medicine. (Were there fewer lawyers and was greed less good?)
Ask that words be concretely defined -- not equivalents. E.g. does Socialist mean dog? The word I am afraid of is inflation!
It's odd that the U.S. has spent nearly a trillion dollars on an unnecessary and destructive war in Iraq, and has given a trillion dollars in tax cuts mostly to the rich, but somehow can never find any money for health care, education or poverty. Other countries can, so what's the problem? It's not the money, it's the mere lack of political will.
184
@Gary "other countries" tax their people at 50% plus. Middle-class salaries, that is ($50-70k). If you would like that, go ahead, join the Comm.., I am sorry, the Democrat party.
1
@Yulia Berkovitz No such thing as the "Democrat" party, no need to tax at 50% either. Our health care system is a tangled mess of profit taking at the expense of actually providing care. The average family plan "provided" by an employer is about $20,000, that coverage could be provided by a non-profit single payer at a cost of about $12,000 or less. That's $8,000 that could go into the pocket of the worker, or more. so go ahead, raise his taxes $4000, still a net financial gain.
6
@John Griswold You are correct. Insurance for my family through my employer was $11,400 for the year with a $10,000 out of pocket max expense. We dropped $21,400 in total medical expenses in 2018. The price for Cobra was $1,600/month. Then they contest every payment when you reach the 10k threshold. This is INSANE!
2
Part of the solution is to tax ALL income the same and to eliminate the loopholes which allow individuals and corporations to pay no taxes. Not only would that raise a significant amount of tax revenue, it would also make our tax system fair.
6
Dear Paul,
Very clear and correct. The major healthcare shift will be a non-starter with Americans. Too much uncertainty coupled with broad government revenue shifts will not fly. Incremental programs like improving Obamacare, which is now understood and supported broadly, and increased child care and perhaps improved education finance have a good chance for acceptance. Paying for them by increased taxes on the wealthy seems to have support as well. I think the hardest part is to convince Americans about the investments. They may see this as money going to projects with no discernible individual benefit. I think most Americans have no idea what the New Deal was so how can they relate to Green New Deal? Call it Infrastructure for America, IFA, and include a mix of carbon trapping initiatives, renewable energy, nuclear energy and transportation funding to bring us into the ultra low carbon era. The carbon trapping is needed not only to meet the goals but to bring along constituents dependent on hydrocarbon for their livelihoods. This will provide secure high paying jobs in the private sector albeit via government investment. Hard to paint that as socialism and will resonate in Texas, Louisiana, Kentucky, Oklahoma and the Dakotas.
3
It saddens me that Paul Krugman doesn't see expansion of healthcare programs as an investment, whether he means economically or socially. Employers basically threw in the towel as our sole health insurance provider two decades ago. Temp-to-perm work, layoffs crafted to cull the sick and disabled out of the work force, part-time or contract workers are all admissions that providing health insurance for the work force is an economic burden and a competitive disadvantage.
I am a valuable worker; educated, highly skilled, thoughtful, willing to work for the greater good of the company and the larger picture. Instead I have been on unemployment five times, changed careers just as many times, and made life choices based on which states provided the most protection to the working disabled. All of the economic investments cited in this column require a strong, healthy workforce after all. I am about to embark on a long-delayed major surgery while under-employed for one simple reason: attempting to keep my job and make use of the health insurance benefits only put my life --literally -- in the hands of my employer instead of in my own hands. The emotional cost of trying to make that balance work for 2.5 decades was too high. The economic cost of cycling me in and out of the workforce when I can contribute mightily is something our culture, our economists, our leaders seem unwilling or unable to calculate.
8
So far Warren's proposals for new taxes are a multiple larger than her proposals for new spending. I wasn't aware anyone was complaining about how she was planning to pay for her child care initiative. If there really are such people, they are clearly arguing in bad faith.
1
"Proposals in this category are literally an order of magnitude more expensive than benefit enhancements: "
Krugman includes universal medicare in this category, which is extremely disappointing. given that he has seemed more supportive in recent months of this "heavy lift".
Medicare is significantly less expensive than what precedes it and what precedes it costs each citizen twice as much of their own money, on average, than medical care in other advanced nations.
Seems like a pretty light lift to move that money from investors and insurance companies into the pockets of working Americans.
The heavy lift is pouring all that capital into the world's most inefficient health care system- exactly the type of American corporate corruption that damages America's competitiveness in world trade as significantly as our failing education system.
It is more than disappointing to read Krugman blithely dismissing universal medicare without a clear explanation. Please Paul, if you have a case, spell it out.
12
This is a great column and I agree that Senator Warren is "a major intellectual figure, and is pushing her party toward serious policy discussion in a way that will have huge influence whatever her personal trajectory." I like her because she has a finely tuned sense of morality and fairness.
I am not a politician but I do know it takes a lot of savvy and great communications skills to explain and educate the voters on our system and the changes that you would proposed to make life better for the most Americans.
Actually, I hate to lose her from the Senate. She is very effective and can do a lot of good for the U.S. and the World in the Senate.
I want to get her involve in the scaling of solutions to global warming in an international framework -- I see her as an internationalist that can help the U.S. and the World transition to a sustainable future without disrupting the global economy. It must be done and it will require some thinking about how we can affect a global mobilization on climate.
One suggestion is very cheap electric power. It is not easy. We should explore space solar financed by an international organization, like the World Bank or a new Bretton Woods type organization.
I note that China has recently announced that they will go after developing space solar. https://www.engadget.com/2019/02/18/china-solar-farm-power-station-space-2025/
James Powell and I have written a few wonkish books on this system, "Spaceship Earth" and "Silent Earth."
2
@james jordan
I agree with you about Warren but do not see her as presidential. I would love to see a democrat win the presidency and appoint her to a cabinet post; which one? She has knowledge and progressive ideas in many areas so the choice would be a nice challenge.
1
Debt financing doesn't completely solve the problem, because over 30yrs time the debt still has to be serviced. This means programs that need to be on-going cannot be debt financed, the need a steady stream of funds. It would work for infrastructure, but not UCC.
How about spending on fuels reduction in western forests. Let's put our high schoolers to work. Draft them for two weeks after school gets out in the late spring. Cut and stack that dead wood and make some money for summer vacation. They could be managed by forest service employees, teachers, and veterans.
Let's get started!
2
Paul is right. Rather than increase payroll taxes that impact most significantly the middle class these progressive social programs and infrastructure spending should either be financed by progressive taxation on the extremely affluent or by debt financing at low interest rates. This way their impact can help maximally decrease the extreme social and income inequality that plagues our society at this moment.
3
Spot on with the observation that it may not be wise to run the government like a business. Individual 1 and Howard Schultz are two good (but for different reasons) example.
But what about another Seattle CEO? Jeff Bezos?
Some CEOs can actually grasp the notion of returns not captured within the notions of traditional accounting interpretation. But that's what your column was really all about.
@DG Amazon has never turned a profit. They veered away from purveryor of books into an online yard sale of cheaply made goods.
Although many of the Democratic candidates say they support Medicare For All, I have not seen detailed plans for how any would implement it.
I can imagine a new Democratic president and administration sending a bill to Congress in 2021 which, if passed, would establish Medicare coverage for all citizens and other legal residents of the United States at the start of the fiscal year on October 1, 2022. The bill would also include payroll taxes on employees matched by employers to cover the costs.
I can also imagine a new Democratic president and his administration taking a more piecemeal approach. That could mean lowering the Medicare eligibility age to 60 on October 1, 2022, and smaller tax increases to pay for coverage of that group. This Medicare coverage would have to include the dependents currently covered by employer's family health insurance plans, as these dependents may have always relied that person's employee health insurance benefits for coverage.
Subsequently every year, another 5 to 10 year age cohort could be added to Medicare coverage eligibility until everyone is covered. Taxes to pay for expanded Medicare coverage would increase as the number of people receiving coverage increased.
Private Insurance Companies could offer Medicare recipients Medicare Supplemental Insurance, Medicare Advantage Plans, and plans which cover things excluded by Medicare such as Dental, Optical and Hearing. They could also sell coverage to non-permanent residents.
1
Sir, you complete me. I’m a lifelong democrat, now 60. I’m getting impatient, and ready to rumble, for the future of my two Granddaughters. Here’s MY list :
A new Fair Deal: Work, and be paid a livable wage. Attend School, study hard, pass your Classes, get Tuition help. Childcare sudsidies for the bottom half in income, for Families OR single Parents working OR attending School. Help for younger Families, in low cost loans to purchase houses. AND the great big cherry on my Sundae : Medicare For ALL. It’s the only way to escape the hegemony off Big Pharma and the parasitical
“ health “ Insurance Companies. The time of pandering to the Rich and connected is over. It’s “ WE THE PEOPLE “. NOT we, the wealthy. Seriously.
113
Professor Krugman of course leaves a few things out. Currently at this time US interest rates are close to three percent, but inflation now seems to be picking up right now close to 2.5 . So interest rates will have to increase three months ago it was over three percent. If inflation increases more or if it looks set to continue to increase then interest rates will have to go up maybe dramatically. Also US now spends some 320B a year on interest payments . Increasing to 900B in 2028. Local and State governments are in debt to over 1T mostly pension obligations. Elizabeth wants to put forward a wealth tax to pay for this . But wealth taxes may not be constitutional and many countries have ended them because they are difficult to enforce and collect. Professor Krugman keeps saying that to expand and pay for all of these programs only require a fraction of some percent of GDP but if GDP is only growing one or two percent then all of your economic growth will be spent on new activities so in the end there will be no net economic growth . Look to Europe to see how that works. As the government spends more and more of GDP growth declines. Krugman may admire Europe but it has been over the last ten years an economic failure. It's growth rate is now a dismal .6 percent. If you remove Germany and the Netherlands its probably negative.
1
Then you must be in favor of Medicare for All which is less expensive than for profit health care, the most expensive health care in the world.
And maybe you would consider that investing in the health and education of citizens would bring a better pay off than throwing another trillion or two on our bloated military industrial complex.
And certainly in the long run the New Green Deal would be less expensive than endless wars for oil and the cost of clean up and repair after ever-worsening hurricanes, floods, droughts, fires over and over and over again.
11
The federal government put a man on the moon, built the Interstate Highway System, and it should build a high-speed rail system that connects all the major U.S. cities, their ports and airports. This is an investment we must make to compete with China and the European Union that already have such systems that allow their manufactures goods to be transported more quickly and at less cost than highways filled with slow-moving polluting trucks or trains moving sluggishly and unsafely over a 19th century rail system. Instead, we have Trump suing California to get their funds for a high-speed rail project returned. Instead, if we want jobs we have to invest where corporations cannot. A 21st century high-speed rail system running on green energy is essential both for our economy (GDP) and our environment (GND).
16
@Paul Wortman
A 300 mph, no emissions, all-weather, passenger and freight truck carrying National Maglev Network built mainly along the Interstate Highway rights-of-way is much cheaper to build, operate, maintain than HSR. See www.magneticglide.com for concept. It operates at 5 cents per passenger mile and 10 cents per ton mile. This system should be tested so that it can compete with offerings from Japan, Germany, & China.
Maglev was proposed by the late Senator Pat Moynihan when he was chairman of the Senate Transportation Committee in 1986. I was a staffer and was invited to his hearings because it was one of the many solutions offered to save energy and provide economic significant public benefits.
For example, investment in Moynihan's RD&TE program required $750 million for a 5-year program with a return that would pay every American about $1,000 per person annually in reduced travel and cost of goods.
Moynihan's bill passed the Senate but was opposed in the House by vested transport interests.
Senator Moynihan introduced me to Drs. James Powell and Gordon Danby who had invented superconducting Maglev in 1966. Their system uniquely has the power to carry highway trucks in roll-on, roll-off carriers, and operate in a monorail and planar mode giving it the capability to use existing rail stations, bridges, etc.
In an effort to place Maglev back into the competition for future funding, James Powell and I wrote a book about the idea, in "The Fight for Maglev".
6
"But there are some real questions about the fiscal side of a progressive agenda.
Well, I have some thoughts about that, ...".
Nice thoughts and analysis.
I think PK should run for president.
Krugman 2020!
3
Transition excess military spending to high speed rail, insulation incentives, wind, solar, and other self reliance initiatives.
Israel or China could destroy half the world on a fraction of our military budget. Let's close military bases along with equivalent funding for economic development in the affected area.
This business of building embassies, water and sewer plants in otherworld should instead be driven into USA for investment and jobs
3
I propose to look at the revenue side first. Let us return to the tax schedules of the Eisenhower administration (corrected for inflation) The 91% top marginal rate would come in at around $3 million annual income. We didn't need a revolution to get from there to here and it should not take a revolution to go back. The high marginal tax rate will encourage employers to pay more, buy more capital goods and invest in R & D. If we can regain some control over the Army attached to our insurance company of a country there should then be enough money to make the capital investments we need including in our health. Some call AOC a radical, what will they call Ike?
41
@shiboleth
During the Eisenhower era and beyond we also had FREE College and University education in NYC: aka CCNY -- ever heard of it Dr. Krugman? And costs elsewhere were much lower than today. Less football and sports, fewer amenities of certain types, and lower administrative costs across the board.
Bernie's supposed DREAM was once a reality long before the term Democratic Socialism.
Cap gains tax breaks must be eliminated; estate taxes reinstated at lower levels...
BTW Medicaid and Medicare did a lot to make many people including MDs very wealthy. I remember when!
11
How's about taking some of your "investment" in the military, by far the most in the world, and applying it to social and needed regulatory programs.
60
One dimensional view. The key and overlooked question is one of competence. If the spreadsheet says we should build high speed rail to Hawaii would any company take on the project? No. Because no one is competent to actually build it. The Federal Government has a long history of mismanagement, waste, fraud and abuse. I would be far more inclined to support Progressive programs if I had even the slightest belief the government could actually pull them off.
4
@Captain Roger Cite examples of long history of mismanagement, waste, fraud and abuse. Explain the Space Race, the Manhattan Project, the interstate highway system, federal investment in basic science, the development of the Internet in your response. The federal gov't may strike out sometimes but it has driven in a lot of runs too.
33
Perhaps some of these projects could be private/public joint projects.
1
@Captain Roger
The Republican party has a long history of accusing the government of waste while doing all it can to create waste via privatization of public goods and services. Trump is going to take funds for service member housing, which is presently contracted out with no oversight and maintained in slum-like conditions, to pay for his wall. That is an example of where the real mismanagement, waste and fraud arises.
Get rid of the government contractors with their cost overruns and massive fraud. Have the military maintain themselves as they always did, and soldiers will have better housing and less junk food. While we are at it, get the preferential status of evangelicals out of the military, too. If soldiers don't want to go to church services on base, they should be allowed to do whatever they wish with their time.
2
"...when people ridicule progressive proposals as silly and unaffordable, they’re basically revealing their own biases and ignorance."
Paul, when you ridicule tax cuts on wealthier people as silly and unaffordable, don't you reveal your own biases and ignorance?
"Investment can and should be debt-financed; benefit enhancements can be largely paid for with high-end taxes."
"Investment" always means "Spending", Paul. Benefit enhancements" means "spending more on things that already exist". Regardless of how you spin this, you always think government should spend taxpayer money on things that were never intended in the Constitution.
"Howard Schultz won’t like it, but that’s his problem."
There are a lot of people who don't like the progressive agenda, Paul.
10
@hm1342
Are you ready to give up Social Security, Medicare, farm subsidies, highway spending and 80% of military spending which is unnecessary for our national defense? These were all progressive programs that were not in the Constitution.
4
@hm1342 Then there are a lot of people who do not agree with public financing of initiatives that benefit the whole of society. When you rely on the Constitution to keep your fists tightly closed around "your" money, you deny your responsibility to the system that allowed you to earn that money. Of course Krugman is talking about spending money. You just don't care what happens if we don't.
1
@Cathy: "When you rely on the Constitution to keep your fists tightly closed around "your" money, you deny your responsibility to the system that allowed you to earn that money."
The founders relied on the design of the Constitution to keep the federal government from getting too big. And you're right about what I earn is "my" money, just as what you earn is "your" money. No one is stopping you from giving more of your money to any level of government. Your premise about "responsibility" is backwards. Government doesn't allow you to earn money unless you work for said government. The Constitution was written to limit the power of the federal government. Most government power was supposed to be at the state and local level. Government does not grant you rights - you already have them. Government is supposed to be our servant and not our master.
"Of course Krugman is talking about spending money. You just don't care what happens if we don't."
Krugman talks about spending other people's money, and he doesn't care how much. The federal government was never intended to be the nation's piggy bank and our country was not founded to devolve into a massive entitlement state.
2
Most Americans are paying for health care out of their salaries- even if listed as benefits. Per-capita, our health care system costs about double the average that wealthy nations pay and those nations cover all their citizens. That per-capita figure includes people in this country not even covered.
If universal medicare in enacted and we "only" reduce our costs by, say, 30% (instead of cutting them in half to match the international norm), how does that savings not got to salaried workers? Companies would or at least could be required to convert what they are now paying to insure their workers into raises equivalent to their current expenses.
No one cares if their taxes go up if their salaries go up significantly more.
The only Americans who suffer are investors in our medical industrial complex- the profiteers of, by far, the least efficient health care system on the planet.
Paul, how is this a heavy lift? Do you have stocks in the medical industry by any chance?
15
@alan
Whenever there is the usual republican tax theft (cut), there is also the usual electioneering of how it is all going to ''trickle down'' to the average worker, and that all will benefit greatly.
Usually what happens is that there is a stock buy back and the average worker sees nothing. This is the same for any tax ''amnesty'' which happens almost as frequently.
The only heavy lift will be for the actual savings (there will be massive amounts thereof even @ 30%) to be translated back to the workers. What is most likely to happen is for the businesses/corporations to try and pocket the most amount.
I would like to hear how the candidates are going to tackle this issue, because changing over to a Single Payer system is all but inevitable. Just a matter of time to join the rest of the industrialized world.
What will be the exact mechanisms ?
8
"benefit enhancements can be largely paid for with high-end taxes."
Krugman remains convinced the monopoly currency creator, government, is just like households. It must get money to fund programs from taxes (or borrowing). All he must do to convince me that this is true is tell me where taxpayers (or lenders-to-government) get the dollars to do those activities if the government doesn't spend them out into the economy first.
"But what about that National 'Debt,'" you ask....
That's not like household debt. it's like bank debt. Your bank account is your asset, but what is it to the bank? It's the money they owe you...their liability...their debt.
When you write a check, you're assigning a portion of the bank's debt to the payee. Currency is simply checks made out to "cash" in fixed amounts...and it appears on the books of our central bank (the "Fed") as a liability, too.
Now imagine a mob of depositors marching down to their bank to demand that its debt be made smaller ("How dare you let us have such big accounts!")... Not very sensible, is it?
The National 'Debt' panic is a kind of public insanity that we get to see every so often. When the Fed executes significant 'Debt' reductions (e.g. the Clinton surplus), 100% of the time, a Great Depression-sized hole in the economy appears.
See https://www.huffingtonpost.com/l-randall-wray/the-federal-budget-is-not_b_457404.html
Krugman still doesn't get it.
1
The problem isn't one of economics. The problem is what do all of these proposals do regarding population growth.
Climate change, health care, jobs, etc., are all a problem of too many people in too small of a space.
With tremendous government assistance as the socialists are proposing, there will be no incentive for people to ask themselves this question when considering having a child: "Can we afford it now?" Or asking that question when having their sixth child.
Unless people first save for what they want, there will be no incentive to ask these questions of themselves. It is what people used to ask: "Can I afford it?"
With the socialist proposals there will be a population explosion. Nobody will have to ask: "If we have a fourth child, can we afford to send him/her to college?" Because the answer will always be "yes"--on government money.
And then with a population explosion that will be more than we can even imagine, then where will the environment be? Where will free college be? Where will healthcosts be?
People like Krugman aren't psychologists--they don't anticipate what people might do when the rules change. They think in numbers, and make the assumption that the psychology of people will remain the same. It won't.
5
@Dan
I certainly agree that the population growth is a major, major problem (especially going forward) but whenever there is a crisis (and there is one of inequality) then people pinpoint only one or two things.
There needs to be an across the board solutions to the problems that society as a whole face, We need to tackle every issue (especially that people/corporations are not paying their fair share back into the infrastructure of society that nurtured them to become rich in the first place)
IF there is no money, then there cannot be any problem solving at all, and a status quo mentality takes over, while blaming the wrong people. (this a republican mantra that has worked for quite a few decades now)
Sure, we need to stop having so many babies, but to think that if we implement but a fraction of needed reforms, that suddenly everyone is going to have one, or two, or three more, because someone else is going to pay for them is being disingenuous in the extreme.
Regards.
13
@Dan Your population projection is contrary to fact. The developed countries are having trouble maintaining their populations in spite of tax supported health care and other benefits.
3
Free and easily accessible birth control and abortion on demand will mitigate the problem. More education will also help. Educated women don’t usually want a lot of children.
6
Re: Childcare as investment
check out the work of fellow Nobel Laureate James Heckman
https://heckmanequation.org/resource/early-childhood-education-has-a-high-rate-of-return/
2
The problem(s) for progressives are many and many of these problems, as Dr. K makes clear, are in economics. Aye, there's the rub.
1. Most people don't understand economics! Given the amount of extraordinary personal debt among the lower and middle classes of all ages shouts to this point.
2. What people do understand and feel is resentment. Resentment against immigrants whom they fear might take their low paying job, resentment against pointy headed academics like Dr., K and Warren who think they know it all, resentment against Yankees, resentment of the costal elites....
But to understand the USA today you have to understand Yesterdays America. The America of slavery, of the KKK, of discrimination against those who are not really US. You have to understand that Make America Great Again is a mythology sold by a huckster and his mignons . It just doesn't sell to to promote Make America like Sweden or Denmark, countries whose citizens have significantly longer life spans, less expensive and better public education, very good vocational training, less expensive health care....After all, the countries just mentioned aren't great and 150 years ago they were awful. Isn't it wonderful to dream you have had a great past when a bleak future is reflected in your bedroom mirror
5
@Pessoa
American elections are exercises in legalized bribery. To see how they'll turn out, take a look at the spending (here in 2016):
Kochs: $889 million
(pseudo-lefty) Soros: $27 million
See...?
@Demockracy The Kochs didn't spend $889 million of their own money. Most of it came from 300 other wealthy Republicans. The Kochs are known as bundlers.
The largest donors in the 2018 election cycle were Sheldon and Miriam Adelson (about $130 million according to a NY Times article earlier this year). They are heavy supporters of Republican candidates who support aid to Israel and tax cuts.
2
The baseline Democrat idea is that the private sector is a milch-cow that belongs to politicians and their unproductive constituents. They'll milk it and starve it until it drops dead then say, 'who knew that would happen'. They never talk about caring for the cow, or increasing the size of the herd--just milking techniques.
8
@Ronald B. Duke
Yes, and only the beatified Steve Jobs [genuflects] can save us! Why look at the smart phone (a device that collects a whole raft of federally-funded inventions, from transistors, to integrated circuits, to GPS, to touch screens, etc.)!
Yep, it's the sacred private sector that is the source of all things good...
Oh yes, and 75% of pharmaceutical innovation is government-funded.
See https://www.ted.com/talks/mariana_mazzucato_government_investor_risk_taker_innovator?language=en
35
How can you possibly say that when we all know that the richest private businesses pay no taxes.
5
I'd add that the patents and other IP protections that are a basis of limited competition in the big tech and big pharma spaces are also bestowed by government, as are things like airport slots for airlines and licenses for radio spectrum.
4
"if you can raise funds cheaply and apply them to high-return projects, you should go ahead and borrow. " Whether investment on children nor investment in healthcare would probably turn out to have high returns in the short run. Tax or borrowing, both in this case would in the mid term depress the growth rate. Whether or not such process would lead to a crisis would depend on some issues : i) expected growth rate , ii) scope and volume of the additional fiscal operation , iii) quality of tax, iv) expected interest rates on borrowing. I would not expect a debt snowballing with having such in regard. Nor I would expect high returns concerning healthcare and childcare investments. The result would be most likely a tolerable slowdown on the growth rate, which naturally some may oppose. And of course, the GDP divergence with Europe would probably continue.
@m. Mehmet Cokyavas
The eurozone is plagued by a disconnected between fiscal and monetary policy (deflationary by design!). Imagine what would happen if Florida stopped receiving federal money for Social Security... That's what happened to Greece.
The problem is the euro, not their social programs.
5
@Demockracy Our debt is in our currency. Greece owed in Euros.
3
@Demockracy
Take just Germany and France...there's still a GDP divergence with the United States. On the other hand, it's true that the Euro may affect competition, but it's also a financial umbrella which means that it could be far worse for some countries outside. A more connect European fiscal policy would require to transfer more sovereignty to Brussels. This may not be OK for all countries. Currently, big countries of Europe still sustain their social security framework and still grow positively.
"Schultz wouldn't like it." It would be interesting to compare the billionaire platforms - Schultz vs. Bloomberg.
3
while all the spending proposals do not need to be covered by revenue dollar for dollar, a re-balancing of the tax burden should certainly be part of any proposal for further spending. the major social engineering being done by the current tax system is to make income and wealth inequality increasingly larger. large deficits contribute to income and wealth inequality as well because deficit spending does not flow into the economy evenly. deficit spending favors the wealthy. re-balancing the tax burden to reduce deficits and pay for at least some of the proposed social program and infrastructure costs is essential.
4
The richest country in the world (by far) has the greatest amount of inequality and waste that anyone could possibly image. (most of it is hidden and ignored)
The U.S. is a Socialist entity by default as it it picks winners and losers every single day, by its deciding how much to take in tax (or not) and by its expenditures. (almost all being interest groups)
There is the basic loophole of people/corporations not paying anywhere near what they should in base taxes and via tax deductions for others. (religious entities and the like)
There is the massive expenditures for defense and the military, but of that there seems to be very little oversight, as a vast amount of the military expenditures is for Socialist make work projects for military contractors and for illegal wars.
More and more of the expenditures (republican mantra) of the federal government is going out to private entities which are taking over what the federal government dominion has normally been. Put a separate private entity in between anything and there is a loss of efficiency and value.
That could be for the military, education, health care, or anything where administration costs are taking over instead of actual benefits.
The money is there, but just needs to redistributed more fairly and Progressively than what it is now.
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to funkyirishman from funky&GrumpyVietnamEraHippy, Spot on comment! Well expressed. Good hand. Thanks!
21
@FunkyIrishman You do realize that over half the defense budget is for salaries, health care, retirement and other benefits? That average compensation in the military is 70% of that in the non-military sector? That they represent about 3 million taxpayers? That the next big chunk is facilities maintenance so those three million people have a place to work and support the local economy? Asking for a friend.
3
@CR.
I am aware that the defense department is a massive Socialized make work project (where who knows what the percentage of employees are actually needed) and that the military budget is grossly inflated to prop up military contractors. (especially for illegal foreign incursions and wars)
Time to trim the fat friend.
63
"My main point now, however, is that when people ridicule progressive proposals as silly and unaffordable, they’re basically revealing their own biases and ignorance. "
Like any proposal put forth in any business meeting, the progressive proposals must stand or fall on their own merits. The obligation is on those who introduce the proposals to prove that the cost-benefit analysis is bulletproof and made broadly available for examonation.
This, is where progressive proposals always fail.
They never make economic sense. They are for the most part, subjective and ideologically driven policy initiatives based on the delicate senses of a radical leftist minority.
The reason they are ridiculed and defeated is not ecconomic.
It is because they cannot stand on their own merits, and voters disslike having progressives force their absurd ideas upon the rest of us.
7
Supply side economics - just revisited with the Trump/GOP tax law - has never lived up to even its minimal promises. Supply side is a belief system, not a demonstrably empirical "fact." Yes, progressive programs are, to predatory wealth mongers, "pie un the sky" naivete. However, so is supply side economics and its effects on fiscal priorities.
Deficit hawkishness, also, is not merely a false narrative, it's at its core hypocritical - GOP tax cuts promise job growth, wage growth, and business expansion, yet where is business investment, where is wage growth from job growth under the Trump/GOP tax cuts? After inflation there is virtually none.
Moreover, too few Americans understand that the GOP has employed the deficits THEY created over the years by (as you might say) "unfunded" tax cuts to promote their primary rationale only: redistribution of income and wealth upwards while sneakily (although in plain sight) asserting that social programs MUST be cut to help balance the budget and reduce the deficit, social programs whose revenue savings are de minimis. As for ending so-called entitlements, those require only easily accomplished progressivity in their revenue sources, payroll taxes, etc.
These GOP policies have robbed Americans while convincing them that they've saved them money. They've done this knowingly, greedily and inhumanely erasing all but small vestiges of what we once thought possible: the common welfare.
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@Objectivist
Exactly. 40 hour work weeks. No child labor. Work place safety. Why do these progressives always propose such ridiculous ideas?
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@Objectivist
Unlike spending for illegal wars and 1.5 Trillion in tax giveways to corporations (after all they're people, my friend) and ultra wealthy that were already not paying their fair share of taxes through offshoring and other schemes? Which have always proven their merits?
You have proven PS'a point beyond a shadow of a doubt.
BTW, I am not among the Bernie worshipers but a fiscal conservative who believes in cost benefit analysis. But the schemes of the conservatives from turning over public goods to private interests which then way overcharge the taxpayers to provide shoddy services like showers that electrocute soldiers and overpriced racist schools (or ones spouting religious propaganda) or the worst myth ever, tax giveaways to the so called "job creators" which create jobs for robots and third world sweatshops while dismantling our factories and sending the means of production overseas and forcing once solid corporations into bankruptcy after looting them of cash and borrowing ridiculously leaving their pension funds high and dry have been proven time and again to be profoundly economically unsound for the taxpayers, a group I belong to.
149
Excellent clap-back against 'tax spending' through unpaid for tax cuts !
And, Howard Schultz has the same problem as many other Multi-Billionaire$ (not people of means) - since Warren's proposed tax plan would cost him about $91 million/year or $900+ million/decade; whatever Schultz spends on a faux-campaign can be justified if he keeps his taxes lower.
After all, look at the $2 Trillion$ return GOP'er backers of Clear & Present Danger 45* got for their 2016 campaign bucks.
btw - Anyone yet seen prices lowered anywhere due to the $2 Trillion$ tax cut of 2017 ? Anyone anywhere ?
197
@R. Law - Schultz tax figures come from MSNBC's Rachel Maddow Show, replete with graphics :)
5
It's amazing that, logically, their position seems calculated to impoverish their businesses' customers! But, you and I have never suffered a tax burden that might reduce our after tax income from $500,000,000 to 490,000,000. Can we not feel their paper cuts...?
36
@R. Law
What we are seeing is price increases from the tariff wars as farmers and manufacturers try to add in those costs to calculate prices.
10
I'll grant you the obvious, that government programs need to be paid for. But why is it that only Democrats are obligated to discuss and enact the policies that raise the money? Republicans just said yes to the $5 billion dollar wall, actually making it immediately over $8 billion, and which might eventually cost $25 billion, all without a single conversation on the left or the right or in the middle of how to pay for it? And Bushes two unilateral, never-ending wars? Not a word. Not a dime. And the Bush Medicare drug program? Not a word. And the Trump $75 billion increase in military spending, and the space force, and god knows what else? Not a word, not a dime. In fact, Republicans have even given away more tax revenue instead. Make them have the conversation. Make them pay for their crap. Then we'll have plenty for cheap college, healthcare and social security.
449
@David BD
"the obvious, that government programs need to be paid for." ... cites facts not in evidence.
If federal programs rely on tax revenue, where do people paying those taxes get the dollars if the monopoly producer of non-counterfeit dollars doesn't spend them out into the economy *first*?
Seriously, read this: https://drive.google.com/file/d/0B6l7lWGIDTnkbWZVU3VXSTlEQW8/view
4
@Demockracy
Sorry, I'm not going to download anything that does not allow me a glimpse first.
5
@David BD Highway System don't forget the benefit to commerce, interstate trade, truckers, fruit growers, veggie growers, loggers, and we the people.
5
Taxes should not be confused with insurance premiums, be the latter mandated or not. If we set a "living wage" it could be sufficient to pay for health insurance and the rich would not have to pay for it. Lots of ways to go.
Does McD offer health benefits? I googled and got this
https://usinsuranceagents.com/answers/1455/does-mcdonalds-offer-health-insurance-to-its-employees
One thing about health insurance purchased through McDonald's that you should be aware of is that the company does not typically pay any portion of the costs, which could range anywhere from around $730 to $1700 a year. At the lower end, your maximum benefits may only be around $2000, and at the upper end you could be limited to between $10,000 and $12,000 annually.
2
Just once I would like to hear centrists (like Krugman) and conservatives offer some reality-based talk about the money we spend on "defense". It's insane, everyone who isn't benefiting from that corrupt cesspool will admit that it's insane but it keeps going up, with no rational rationale.
549
@Ed Watters The rationale for all this military spending is that it is one giant welfare program for the South and much of small-town American. They gain more from it (education, careers, a way up from poverty, respect) than the rest of the country. Perhaps we should be providing them better economic opportunities than this.
83
@Ed Watters Krugman has written about this. He has called the US (economically) as a giant insurance company with an Army. It is not that he favors defense spending but the solons in the Congress will only spend money freely for projects labeled as "defense." Eisenhower sold the Interstate Highway system that we love so much by justifying its military aspects. Of course we should spend more money feeding and healing but some of the so called Christians would rather break things and kill people with our dollars.
128
@shiboleth
Another example is the internet. Which, I believe, was started as a military program.
33
It seems we need a Krugman Ratio for the layman to compare social good to fiscal layout.
4
Some lay people get this and a lot more don’t. For those who don’t, the easy answer is: the GOP are always hypocrites on the deficit and are using it in bad faith to stop socially beneficial pubic spending. Moreover, any Democratic candidate who uses the deficit/debt to justify small-bore thinking should be shown the door.
3
If you are a master investor like the government and nearly all of your investments have massive losses instead of gains, you shouldn't ever borrow to invest, even at an interest rate of 0%. In fact, you should "invest" as little and as rarely as possible, and you should call your "investments" what they really are: spending.
2
@Troglotia DuBoeuf What were the "massive losses" of government investment in the Interstate Highway System. I think you are confusing return on investment and personal profit. The return on infrastructure investment is to the general public. The return on investing in child care is to the human beings who will pay your Social Security when you retire, etc.
249
@Philip Richman
And let's not forget all the inventions that are the result of federally-funded research. Google and Apple got start-up money from federal programs. Transistors, integrated circuits, internet, GPS, touch screens are all the fruits of such research.
One big problem remains: The MBA calculation of return on investment tends to discount obviously useful things like infrastructure and education as items with a payoff too distant to warrant profitable investment. (You see, profit excuses everything.)... and that leads us to our current crumbling infrastructure and discounting of education. Federal funding for higher education has declined 55% since 1972, with states cutting even more.
25
@Troglotia DuBoeuf It's ironic that the comments in this thread fail to credit the source. The Interstate Highway System was built to facilitate the rapid movement of troops after Eisenhower's experience with the autobahn in WW II. Almost all the baseline high technology advances (including the part of the Internet not invented by Al Gore) were ARPA/DARPA i.e. military funded research.
3
Dr. Krugman, I am happy to read this column and see that you are coming around from 3-4 years ago. Better late than never?
By which I mean the manner in which you utterly trashed Bernie Sanders for any and all of his progressive proposals based on the impossibility of paying for them, along with the impossibility of getting any such legislation passed. I encouraged him to run precisely because his economic message needed to be discussed - and you were so corporate establishment that you just dismissed his ideas out of hand, instead of a balanced examination.
176
@Kris,
Bernie never laid out any comprehensive economic plan and he probably won't again this time. Pointing that out isn't "trashing" him, it's stating fact. I also encouraged him to run so we could change the conversation. That worked. I'll be paying him no mind this time around because we have candidates more well equipped to move forward realistically.
24
@Kris. You’re so right. Here’s a refresher for anyone who’s a little fuzzy about Sander’s 2016 platform. Krugman wasn’t a fan as he was ardently pro-Clinton, but there were plenty of economists who said it would work.
https://www.thenation.com/article/bernie-sanders-will-make-the-economy-great-again/
20
@Kris
Unlike republicans, Dr. K sees government as a force for good. I am a Bernie supporter, but ultimately I don't care who delivers on the ideas Sanders espouses as long as they are delivered. I think what all Americans need to see is that this country is in real crisis and we have huge looming, potentially catastrophic issues. I appreciate Dr. Krugman's analysis of how to get there.
25
Why shouldn't Government-run health insurance be financed by family-income-based insurance premiums rather than burrowed into the general fiscal stew? That is the way it's done in most countries; it has the advantage of making clear how much health care costs, so that it can be bettter controlled, and fine-tuned to take into account global family revenue, population ageing, cost of living, etc. It also makes a much better basis for allowing cost-effective complementary private insurance. People falling under the current Medicare red line would receive subsidies covering all or part of their insurance premiums; in this way, the global health expenditure could easily be measured for the whole population.
7
This is a good framework to corral discussion to the broad buckets we need to be focused upon over the next two years so that practical proposals can be at the ready in 2020. A major system overhaul I would like to see is a realignment of what truly should be a cabinet level department in the 21st century. Perhaps instead of a department of Education we should have a Department of Public Infrastructure. Large scale projects that have a national impact and national purpose like building schools, bridges, a renewed and secure electrical grid, overall of deep water ports etc.
For benefit enhancement, the Democrats must pledge to fix Social Security no later than 2022 to give millennials and seniors the reassurance that the social contract remains in place for all. There have been enough commissions and studies....we know what the choices are we just have to execute them.
Until we can get the national debt down to a reasonable level, we should repeal the Trump Tax cut and make it statutory that another tax cut cannot be done until the debt level is reduced down to that reasonable level OR that there is a specific manner of PAY FOR designated for tax cuts or tax benefits given. It is time to bite that bullet.
10
Military spending, like I heard that Missouri had $350,000,000 in the pipeline for 'to be built' military hardware, and that it is the same across the country, intentionally. This is military corporate welfare, and, unlike the 20k mother who is trying hard to get $20/month in food stamps, SNAP, they do not have to show how they spend any money. They failed their most recent audit, and you know that there are thousands of 'Jack Ryan' wannabes in the military hardware corporations. In fact, 70% of all federal employees are private. So, if you ever wonder why there's pushback on a $700,000,000,000 to $1,000,000,000,000 dollar defense budget EVERY YEAR, its because all 50 states are busy making money building weapons of destruction, and its entirely possible that some of it does not need to be spent. So, just look at the Twinkies in that young mother's cart, and shake your head in disgust at the expenditure we are supporting. School teachers, good ones I know, have to compete with privatized partially grant funded Charter schools. A 60 year old I knew, now dead, spent 11 months for food stamps, and when he finally got them, it was thirteen dollars per month. This was after about 20 hours tracking that down, while dying.
38
Why this debate about where will get all this money for the progressive agenda? Did we worry about how much TARP cost - around $700 billion - to bail out the banks after the economic meltdown during GWB’s administration. And later did we worry when Obama threw another $750 billion at the banks? Then how about all the trillions of dollars the Fed pumped into the economy during quantitative easing and when it lowered the interest rate to zero to get liquidity back into the system. And how about GWB fighting the wars in Afghanistan and Iraq essentially on a credit card co-signed by the American taxpayers which has added $5.9 trillion to the national debt? So, apparently, we have plenty of money for these unnecessary wars, but we suddenly expect neoliberal austerity and fiscal prudence when it comes to paying for universal health care for all Americans?
794
Your criticism would be useful if "this debate" were deliberate obfuscation by antagonistic parties, arguing in bad faith. But Krugman's writeup is a good-faith, well-reasoned description of how to *responsibly* account for these desired programs, and argues in favor of them by assuring us that there is a realistic way to fund them.
So why this kind of debate? Because reasonable people want to know whether these desirable goals can be accomplished within current economic realities; if not, it's not that we reject achieving them, it is that more work has to be done to figure out how to make them possible.
54
@LF The problem with the "how are we going to pay for it debate" is that most of us have no idea how government financing works. So the discussion begins and ends with "we can't afford it."
So, for the average person it is useful to remember we always have money for war and financial bailouts. The only time we "don't have money" is when the program directly helps the people.
On the other hand, it is nice to see Krugman supporting the progressive agenda.
132
@George Hoffman Spending money we don't have. Two wrongs don't make a right.
3
Krugman offers solid advice, but let's not accept that the GOP tax cut for the wealthy resulted in a good minimum level of deficit spending. Most of these cuts should be reversed before adding additional taxes for social programs and adding deficit-financed investment spending. In addition, Rep. John Larson's Social Security bill would address a known long-term problem with a good, progressive solution that doesn't add to deficits or debt.
18
"the revenue involved could be raised by . . . taxes that hit only high-income Americans."
Make that high-income and high-wealth Americans.
47
@Ian
Yes. A wealth tax is long overdue and essential. That's where the money is after decades of growing inequality.
6
Most American's lead fulfilling lives. Why would they risk losing it all for some progressive politician's ego?
9
Most citizens lead fulfilling lives except for the inordinate number of those citizens who file for bankruptcy due to crippling medical debt.
66
Well are people fulfilled through- sky-high health-care costs which are saddling many Americans — nearly 20 percent of them — with debt they cannot pay.
As well as 33 percent of Americans hold debt that is currently in collection. The median amount of debt in collections is $1,450. As well as the many uninsured for health care are they fulfilled? Student and family debt in sending young ones to college now means for nearly half the population only one child goes to college. Are the siblings fulfilled? The middle class shrinks whilst vested interests watch the $18 trillion grow beyond fair management.
40
@Johnny - Let me fix that for ya' - "Johnny, who, unlike the 40 million Americans who live in poverty, leads a fulfilling life. Why would he risk losing it all so that some disabled child has access to affordable healthcare?"
4
We already have a blueprint of sorts from Senator Sanders campaign in the 2016 primary.
Funding for sorely needed investment, not only in America's infrastructure, environment, its young and its workforce, the elderly, will also give America its self-respect, if we take that money back from those who've been stealing it all along.
A corporation's first duty is to the nation whence it hails. American corporations, thanks to Milton Friedman's misguided screeds, have under the impression that they answer first and only to their shareholders, regardless of circumstance, responsibility to community, or anything else. We all know the famous lake poisoning example. The premise underlying that view is a false one, conveniently promulgated to serve the interests of those who are now in power. Americans have been so brainwashed with that notion, they recite it routinely, as a knee-jerk reaction in any discussion of corporate responsibility. This has done the most damage and must be countered, in our laws, once and for all.
The consequences of this corporate ethics philosophy are what we are living today, with corporations like Amazon paying $0 in taxes.
Where to fund programs from? The equitable taxation of corporations that are earning trillions of dollars at our expense. How much longer will Americans hand over their patrimony to corporate America hoping for a crumb or two in return?
---
Things Trump Did While You Weren’t Looking [2019] https://wp.me/p2KJ3H-3h2
289
@Rima Regas Spot on!
11
Rima--Bernie Sanders is no longer the Flavor of the Month candidate. The novelty factor has worn off and the potential Democratic presidential field keeps getting more crowded. Sanders would be facing an incumbent President Trump in the general election if he gets that far. Did you notice that Bernie Sanders sounded bored when he declared he was running for president?
8
@sharon5101 The comment was related to how to pay for these beneficial programs and that Bernie Sanders ideas and plans from his previous campaign is a plan that is viable. It wasn't about the 2020 debacle to come.
7
Why not let the private sector fund the high return investment projects, and then keep an appropriate portion of the resulting returns? Then, if the returns don't materialize, the taxpayers don't suffer?
@David Anderson
The high return government investments don't pay out for 10-20 years. The private sector doesn't fund them because of the time line. For example, government in computers began in the 1940's but the big payout came in the mid-70's and continues today. NanoEngineering started around 2000 and is just now paying the dividends.
105
@David Anderson
The same reason private companies were not part of building the Interstate Highway System -- if they can't see a profit, they won't do it.
Infrastructure is too important to leave in the hands of for-profit companies.
3
A major system overhaul, such as universal healthcare or significant expansion of Medicare and Social Security, can be achieved incrementally over time. Yes, funds paying for private health insurance are more than sufficient to pay for universal healthcare. Offering a public option under the Affordable Care Act can be a big start in this direction.
76
@James Ward
Indeed, universal healthcare is the future for America. Let's say there is a very small Medicare for All tax on every purchase of goods and services — for everything. I don't know that that little tax would be. PK can figure that out.
But companies large and small will be popping champaign corks when those health insurance premiums are gone. Americans will celebrate the evaporation of their premiums as well.
Universal/single payer insurance is not only doable, it is the future; not for the private insurance carriers, of course.
Finally a useful framework for intelligent analysis of various spending proposals. Note the reference to a Value Added Tax. That should be part of any significant spending expansion - along with some low-income credits of course.
23
@Dave S
Dear Dave S,
I lived in Italy 2007 to 2016 and they have a significant VAT tax. What it has created is a black market for goods and services.
The plumber shows up and quotes you a price with or without VAT. It is illegal of course, but many, many, tradesmen and shopkeepers engage in this activity.
It is getting a little harder with so many transactions conducted electronically, but it is still a net drain on their economy.
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