Economist, others defend Sanders ‘stimulus’ plans as realistic

Bernie Sanders

Bernie Sanders speaks about economic inequality and universal health care at an arena in Manchester, N.H., in early February. Photo by Jasper Craven/VTDigger

As Bernie Sanders absorbs attacks on the political and economic feasibility of some of his major policy proposals, a small but vocal cadre of economic allies is defending the senator’s ideas and projections as accurate and reasonable.

The sharpest criticism came Wednesday in a letter addressed to Sanders and Gerald Friedman, an economist at the University of Massachusetts at Amherst who has analyzed the impacts of Sanders’ platform.

The letter was penned by four former members of the presidential Council of Economic Advisers who served during the Clinton and Obama administrations, and came one day after a New York Times article headlined “Left-Leaning Economists Question Cost of Bernie Sanders’s Plans.”

The letter questioned Friedman’s credibility, asserting that his rosy economic projections “cannot be supported by the economic evidence.”

“As much as we wish it were so, no credible economic research supports economic impacts of these magnitudes,” the letter reads. “Making such promises runs against our party’s best traditions of evidence-based policy making and undermines our reputation as the party of responsible arithmetic.”

Friedman disputed the assertions, saying his critics were dropping a “nuclear bomb” on his work, adding they “are throwing the kitchen sink at me.”

“I have a question for my four very esteemed colleagues: Did you read the reports?” Friedman said sharply. “I suspect they didn’t.”

Friedman, an economist schooled at Harvard and Columbia, said he relied on standard economic analysis in his work and on methods used by the nonpartisan Congressional Budget Office. He said colleagues have supported his results and that he wasn’t sure why the backlash has been so harsh.

“My results are something people can debate, but I followed a conventional analysis,” Friedman said. “I used conventional methods in my reports.”

A report from the International Business Times pointed out that two other signers of the letter, Austan Goolsbee and Laura Tyson, have both done work with Wall Street entities, including Morgan Stanley.

“Basically what Sanders is proposing is a stimulus, like the Obama stimulus but applied for several years,” Friedman said, noting that one of the critics in the letter, Christina Romer, was an architect of the president’s $800 billion stimulus plan.

The disputed reports include a pro bono analysis Friedman did of Sanders’ Medicare-for-all plan back in January. He found that the $1.38 trillion-a-year cost would cover 98 percent of all medical expenses and eventually save the system money, specifically $6 trillion over the next 10 years.

A family earning $50,000 a year would save nearly $6,000 annually in health care costs, the analysis claims.

Friedman has also released two reports on Sanders’ economic platforms, projecting an idea of what the American economy would look like if Sanders pushed through higher wages, a progressive tax system, infrastructure projects and universal health care.

Friedman’s estimates put annual wage growth at 2.5 percent under a Sanders administration. He said poverty would shrink and that recovery from the lingering damage of the 2008 economic crash would accelerate.

“Sanders’ proposals for infrastructure, early-childhood education, higher education, youth employment, family leave, private pensions, and Social Security would total over $3.8 trillion over 10 years,” Friedman wrote. “While this is a large number, it would be barely 6 percent of federal spending for 2017-2026.”

Friedman said Sanders’ major social spending, including on Social Security and free public college tuition, would replace current safety net spending on programs like Pell Grants and food stamps.

A chart by economist Gerald Friedman estimates the cost of Bernie Sanders’ proposals.

A chart by economist Gerald Friedman estimates the cost of Bernie Sanders’ proposals.

The two Friedman reports can be viewed here and here.

In a Facebook post Wednesday, economist Robert Reich, a Sanders supporter who was labor secretary under President Bill Clinton, defended Sanders against the attacks.

“Do they really believe that our current system — based on private for-profit insurance companies, whose market power continues to rise as they merge, whose executive pay continues to soar, and whose advertising and marketing and billing expenses continue to go through the roof — is better than a single payer?” Reich wrote.

The Financial Times also engaged in a deep analysis of the Friedman reports, concluding “a prolonged period of rapid growth in the U.S. is plausible, with the right policy mix. The burden of proof should be on those who say otherwise.”

The back-and-forth between economists over universal health care and other boosts in federal spending has grown louder as Sanders has had some electoral success in Iowa and New Hampshire.

Economist Kenneth Thorpe, who advised Gov. Peter Shumlin on health care in Vermont, claimed Sanders’ universal health care plan was underfunded by $1 trillion a year, a number then disputed in a Huffington Post editorial by two health policy experts who lecture at Harvard Medical School.

And while Fortune magazine has come out against Sanders’ proposal for a phased-in $15-an-hour minimum wage, the New York Times editorial board endorsed the plan Wednesday.

A vast amount of brain power is lined up on both sides of the battle — with Ivy League diplomas and impressive careers — and voters are left to decide whom to believe.

Jasper Craven

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28 Comments on "Economist, others defend Sanders ‘stimulus’ plans as realistic"

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Tom Sullivan
3 months 3 days ago

“We will raise taxes,” the Vermont Senator told a crowd at the CNN Democratic town hall this week. “Yes, we will.”

Starting with a 6.2% payroll tax on all employers, and a 2.2% income tax for everyone else.

If you “feel the Bern”, you will get Berned.

robert bristow-johnson
3 months 2 days ago
hey guys, try comparing apples to apples for a change. compare what you (*and* your employer’s contribution) pay *now* in FICA, Medicare, Fed taxes, *and* BCBS or MVP. add that up. *then* compare to Bernie-care with the Fed taxes increased (FICA and Medicare are unlikely to go up except for the portion of your income greater than $120K, for us normal slobs making 5 digits, it doesn’t go up under Bernie-care) and the BCBS and MVP payments GOING TO ZERO. for those of us making normal incomes, IT’S LESS. now think about waste. so right now we pay, per capita,… Read more »
Nancy Baer
3 months 2 days ago
It’s good to see that some of us have some common sense Robert~I totally agree with you! They can do the math..you don’t have to be a ‘rocket-scientist~it is more like they DON’T WANT TO. This group is part of the “establishment”..likely not hurting like the rest of us do.. while we keep watching our LIHEAP FUEL ASSISANCE KEEP GETTING CUT..NO COLAS AGAIN this year..WHILE MEDICARE WENT UP!!! Thr best thing we can do for #Bernie is VOTE DEMOCRAT FOR ANYONE RUNNING FOR A SEAT THIS YEAR..I HOPE SHEP decides to get back in the race for Governor! #YouGoBernie! #FeelTheBern!
John Fairbanks
3 months 3 days ago
A robust policy debate on these numbers – and any numbers any politician puts out to show how great her or his proposals will be – is just what we need. I would recommend looking at Paul Krugman’s commentaries on this matter, as well as Ezra Kelin (on the VOX blog) and Jim Tankersley’s conversation w/Dr. Friedman on the Washington Post’s Wonkblog. Some economists have come to Dr. Friedman’s defense; others remain unconvinced. As Tankersley’s blog post notes, he’s revising. I’ll want to ponder further Dr. Friedman’s papers. In the meantime, even though I am a Progressive and once even… Read more »
robert bristow-johnson
3 months 3 days ago
of course it’s not “free stuff” that Bernie proposes. health care is not free. education is not free. someone has to pay, because physicians and educators do not work for free. it’s a question of whether we place the principal burden individually on families or if we diffuse the burden more widely on all of society. and then it’s a question of how society as a whole pays its bills. how heavy do the people who have the money support the cost of having a peaceful and productive society? _______________ check out http://usuncut.com/politics/its-not-free-stuff-its-using-taxes-to-fund-what-we-actually-need/ It’s Not ‘Free Stuff’ — It’s Using… Read more »
Tom Sullivan
3 months 2 days ago

Hey Robert,

It’s free stuff.

robert bristow-johnson
3 months 2 days ago

hey Tom,

some of us can read stuff.

and read more stuff than just memes like “free stuff:”

Nancy Baer
3 months 2 days ago

Hey Tom,

Listen with your ears and not with your closed mind.

Tom Sullivan
3 months 2 days ago

Hey Nancy,

Don’t be a “Bern out”, vote republican this october.

robert bristow-johnson
3 months 2 days ago
hey Tom, so do you have anything other than empty slogans or memes to offer? why the hell should anyone who cares about their kids or their family finances or the health of the nation for GOP for anything? used to be that the GOP could claim that they were watching out for future generations by being responsible caretakers of the nations wealth and not “blowing it” on “free stuff”. the Reagan happened and really blew the deficit wide open. the only administration to get a lid on the deficit was the Clinton-Gore administration. then W happened and blew $8… Read more »
Tom Sullivan
3 months 2 days ago

Hey Robert,
“History shows that the Republicans are the BIGGEST SPENDERS OF THEM ALL!”

Well, when President George W. Bush took office on Jan. 20, 2001, the total federal debt was $5,727,776,738,304.64. During his eight years as president it increased $4,899,100,310,608.44 to $10,626,877,048,913.08

When Obama took office on Jan. 20, 2009, the deficit was $10,626,877,048,913.08. The national debt as of today is over $19 trillion dollars.

So your claim appears to be incorrect.

http://www.treasurydirect.gov/NP/debt/current

In closing, if you play with fuzzy math, your going to get “Berned”.

Tom Sullivan
3 months 2 days ago

Sorry, this November.

William Geller
3 months 3 days ago
Very important article . Sanders concepts are very complex and cannot really be explained in debates and quick interviews. As I have said before Americans are afraid of the word FREE and the opposition is quick to use this catch phrase as a negative. What is needed are infomercials and podcasts with in depth explanation of how these concepts are less expensive and provide better results for all citizens. Sanders has a hard job teaching economics and making it simpler and understandable. After everyone hearing for a lifetime to be very fearful of anyone offering you anything for FREE.
3 months 3 days ago

It seems to me …

The anti-Sanders crowd led by Hillary Clinton has adopted the slogan “No We Can’t”.

Bernie Sanders is stating loudly and clearly and often that nothing is coming for free, and that we will all have to participate in the path forward.

The pro-Sanders crowd led by Bernie Sanders has adopted the slogan “Yes We Can”.

Go Bernie!

John Fairbanks
3 months 3 days ago

I want the same things as other Progressives – affordable basics (health care, education, housing) and a fairer tax system that does not reward speculation over actual work. And the Senator has been up-front about tax increases. (Echoes of Bobby Kennedy in 1968) It is not Clinton/anti-Sanders to want to make sure the numbers are credible.

robert bristow-johnson
3 months 3 days ago

hey Rama! you’re only down to -15. i’m down to -20. you need five more thumbs down to catch up with me.

Nancy Baer
3 months 2 days ago

LOL! I agree with both of you. Just keep spreading the word!

John Fairbanks
3 months 3 days ago
Peter Galbraith
3 months 3 days ago

The economist James K. Galbraith (who is also my brother) has written a letter to the four former CEA members discussing the rigor (or lack thereof) of their analysis of Dr. Friedman’s paper. The following is the link.

http://big.assets.huffingtonpost.com/ResponsetoCEA.pdf

John Fairbanks
3 months 3 days ago
Steve Beck
3 months 2 days ago
Gerald Friedman, is an economist and like the TV weatherman has no idea what is going to happen. I obviously should have studied Economics in college, because they are the only group of educated people that seem to keep their jobs. All I know is that the crazed neo-liberal cabal that has been in power for the last generation and has destroyed a lot and is hell-bent on destroying it all, need to be dumped on the ash heap of history. More and more evidence points to the fact the it does not work, and yet it becomes more and… Read more »
robert bristow-johnson
3 months 2 days ago
gee, the “neo-liberal cabal” has been in power for the post-Reagan generation? is that why Bill Clinton announced in 1996 that “the era of big government is over?” is that why, pre-Reagan, i graduated from college with only $3000 debt to 3% and nowadays kids graduate $100,000 in debt to 6% or 7% or 8%? is that why the costs, to normal working people, of health care has risen in the U.S. at a rate 2.5 times that of the CPI? “More and more evidence…” let’s see that evidence. (are you going to find it in Canada? or the U.K?… Read more »
Nancy Baer
3 months 2 days ago

My heart and spirit are in the same place as yours Robert but you are able to express yourself far better than I. Thank you for choosing to do so! #Bernie Sanders for President!

Steve Beck
3 months 2 days ago
Suggest you read “A Brief History of Neoliberalism” by David Henry. Neo-liberalism is practiced basically the same way in every country, save, except for China, and we all know where they are going. It is four simple things: ‎Financialization ∙ ‎Deregulation ∙ ‎Privatization ∙ ‎Economic liberalization. There you have it. It really does not matter where it is practiced, Robert, it does the same thing in the US as it does in the EU, Israel wherever. It’s very simple and it has been hugely successful in most countries. But who truly benefits? Obviously not you.
Kathy Callaghan
3 months 2 days ago

Interesting. I thought that the Republicans had held power in Congress during the Obama Administration as they vowed to make him a “one-term president” and that the R’s had the presidency for the prior 8 years. I must have missed the “neo-liberal cabal” somewhere along the line….

John Fairbanks
3 months 2 days ago

Let’s just take Congress here as an example. Since 1995, Republicans have controlled the House for 17 years and had majorities in the Senate for 12, with the parties split 50/50 for two years. So which cabal are we talking about?

Dave Bellini
3 months 2 days ago
When Bill Clinton left office we had a good economy and a surplus. We were not wrapped up in endless, expensive wars. Enter GW Bush. He PROMISED not to nation build. He PROMISED to fix the southern boarder. He was going to take the economy soaring to new highs. He did everything he said he would not do. He didn’t do anything he said he would do. I used to think Jimmy Carter was the worst a President ever could be. Nope. GWB screwed up the economy for a decade after his departure.
John Fairbanks
3 months 1 day ago

Economist Mark Thoma writes that we won’t really know if the Sanderista economic plan would work unless we try: http://www.thefiscaltimes.com/Columns/2016/02/23/Here-s-Why-Bernie-Sanders-5-Growth-Plan-Isn-t-Crazy-After-All

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