Sen. Elizabeth Warren, like most of the Democrats running for the party’s 2020 presidential nomination, is all-in on Medicare for All (M4A). In fact, Warren has released an extremely detailed plan outlining her M4A vision.
Of course, Warren’s plan says absolutely nothing about how she would actually pay for M4A. On several occasions, Warren has been asked whether she would raise taxes on the middle class to fund M4A, and on every single occasion, Warren has refused to answer this simple question.
Fortunately, a new report from the Committee for a Responsible Federal Budget addresses the very question Warren has repeatedly refused to answer. According to the report, M4A “needs to be financed through higher taxes, lower spending, more borrowing, or some combination of the three.” It sure seems like the middle class will be paying for this one way or another.
When pressed to answer the fundamental question of how she plans to pay for her M4A plan, Warren constantly cites that even if taxes may increase for hardworking Americans, their total costs will go down. Is Warren telling another tall tale? Apparently so.
According to the report, “By most estimates, Medicare for All would cost the federal government about $30 trillion over the next decade. How this cost is financed would have considerable distributional, economic, and policy implications.”
The first question is: How much will middle class Americans pay in taxes to fund M4A? Here is a brief rundown of the possible scenarios, as outlined in the recent report. “We estimate the cost could be covered with a 32 percent payroll tax, a 25 percent income surtax, a 42 percent value-added tax, or a public premium averaging $7,500 per capita,” the report stated. In other words, M4A would require gigantic tax increases, which will be borne by all Americans, especially the middle class.
Even more alarming, the report finds “Medicare for All could also be paid for by more than doubling individual and corporate income tax rates, reducing federal spending by 80 percent, or increasing the national debt by 108 percent of GDP. Tax increases on high earners, corporations, and the financial sector by themselves could not cover much more than one-third of the cost of Medicare for All.” Guess who will cover the remaining two-thirds?
The second big question is whether costs would go down for middle and lower-class Americans. Warren has constantly cited that under M4A, total costs would decrease for the middle and lower classes—liar, liar, pants on fire! “From a distributional standpoint, most of the options we put forward above would be more progressive on average than current law, though the impact would vary person to person and many of the options would represent a cost increase for lower-income individuals and families who currently benefit from Medicaid and exchange subsidies,” the report states.
Translation: Elizabeth Warren is telling a big fat lie when she says total costs will go down for hard-working Americans.
As if this weren’t bad enough, the report notes, “financing Medicare for All with a payroll tax would shrink the size of the economy by about 3.5 percent by 2030—though the actual effect may differ. This economic impact would be the equivalent of a $3,200 reduction in per-person income and would result in a 6.5 percent reduction in hours worked—a 9 million person reduction in full-time equivalent (FTE) workers in 2030.” This would literally destroy the middle class.
Last but not least, what if the U.S. government resorted to borrowing to pay for M4A? Well, consider this: “Deficit-financing Medicare for All would be far more damaging to the economy. Assuming that such a massive increase in the debt would not roil financial markets or lead to high inflation, we estimate that a 108 percent of GDP increase in the federal debt would shrink the size of the economy by roughly 5 percent in 2030—the equivalent of a $4,500 reduction in per-person income—and far more in the following years.” No doubt, this would be catastrophic to the very Americans Warren claims she is trying to help with her misguided M4A plan.
Warren, like most politicians, is fond of showcasing grandiose plans that she promises will magically solve huge problems. However, what Warren doesn’t like to showcase is the actual cost of her plans, which would completely destroy the middle and lower classes.