Does Sanders's Plan Contrast With Nordics?

Max Ehrenfreund has a piece at the Washington Post about Bernie Sanders' tax and transfer plan that is mistaken on a number of points. Some of the points are mere factual errors worth noting but not worth dwelling on. Others are broader conceptual mistakes worth spending some time on.

Factual Mistake

The majority of Ehrenfreund's piece is based on the following factual mistake:

Clinton had supported the 1996 welfare reform effort during her husband’s presidency. Sanders said the legislation had doubled extreme poverty, creating hardship for millions of Americans.  “What welfare reform did, in my view, was to go after some of the weakest and most vulnerable people in this country,” he said in South Carolina in February.

Sanders did not continue to press the issue, however, and while he has campaigned as a champion of the downtrodden and a nemesis of inequality, Sanders has not proposed many policies that would directly address the law’s negative consequences, such as an expansion of the food-stamp program or a tax credit that can be converted to cash.

Ehrenfreund is right that Sanders first broached the issue in South Carolina where he actually ran on the ground on welfare. But he is wrong to say he did not continue to press the issue. Indeed, Sanders was still messaging on repealing welfare reform as late as last month.

Broader Confusion

The rest of the piece after the factually mistaken bit is a chartfest based on the Tax Policy Center's score of Sanders tax-and-transfer plan. About that score, Ehrenfreund has this to say:

When it comes to poverty, Sanders’s vision for the United States contrasts with the northern European democracies he often points to as exemplars.

This conclusion stuck out to me because when I saw the TPC scores initially, I was struck by how similar they were to some data I had produced a while ago based on Finland's tax-and-transfer system.

Here is the TPC score of some of Sanders' tax and transfer proposals:

Note that this graph reflects changes in taxes and transfers relative to the status quo, not the overall tax and transfer system. But, nevertheless, it shows a particular fiscal pattern that Ehrenfreud seems to regard as non-Nordic and objectionable.

Compare the above pattern to Finland's overall income tax-and-transfer system:

There are differences here. Bernie top loads the income taxes more and the particular transfer levels vary a bit. But overall, the patterns are fundamentally the same: high across-the-board transfers balanced by tax levels that increase as income goes up. If anything, Bernie's pattern is more "progressive" (I hate that word) than the Finnish pattern because it top loads the taxes to a greater degree. If you believe the TPC cost estimates, Bernie will need to raise taxes more to make everything balance, and if he did so by drawing some more from each of the bottom four quintiles, his pattern would then look almost identical to the Finnish one.

To repeat, these graphs are not apples-to-apples comparisons by any stretch. TPC is scoring a change while the Finnish one is a representation of the overall structure. TPC is counting benefits as transfers that most countries including Finland don't count towards income at all (namely healthcare and tuition subsidies). But the pattern is the pattern and there is no arguing that Sanders hasn't put together a fairly familiar Nordic pattern of high across-the-board transfers that are turned into net transfers to the poor via taxes.

Healthcare Is Critical to Everything Else

Finally, I don't think Ehrenfreund really appreciates how critical healthcare reform is to everything else we need to do the welfare state. Most of his article can be summed up as him complaining that a switch to a full-blown single-payer system necessarily entails that those who currently receive some subsidy will receive less (on net) from the change than those who currently do not receive some subsidy. This is initially a confusing thing to complain about because you can easily balance that distributive quirk out on the tax side of the ledger, as Bernie does. But more importantly, this is a confusing thing to complain about because you will not be able to ever get a top of the line welfare state until you can achieve universal health insurance that is separated from employment.

Employer-based healthcare causes problems for all the populations capitalism always causes problems for: children, elderly, disabled, students, carers, and the unemployed. Our current system desperately tries to patch together all these holes. Children can get some CHIP and Medicaid, though some remain uninsured. Elderly people can get Medicare or if ineligible get Medicaid after they've spent themselves into asset poverty. Disabled people can also get Medicare, but only after a couple of years (they also can get Medicaid once they've spent themselves into asset poverty). Students can get on with their parents up to age 25, unless of course their parents don't have insurance, at which point they have to cobble it together somehow. Carers get nothing. Unemployed people get COBRA they can't afford.

This system is a joke as it is, but more importantly, it poses an extraordinary impediment to getting Nordic style leave and unemployment benefits. Do you want Sweden's 480 days paid leave when you have a kid? Not going to happen until you find a way to get paid leavers health care outside of employment. Do you want Finland's 500 days of unemployment benefits? Not going to happen until you find a way to get unemployed people healthcare outside of employment. Indeed, even getting smooth healthcare for people when they become disabled (rather than making them wait a couple of years) requires healthcare outside of employment.

Thus, if you truly want to move in the Nordic direction, as Ehrenfreund says, you absolutely must overhaul the healthcare system. Not doing so will be a permanent bar to getting to their level of out-of-work benefit generosity.

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