The Wall Street Journal is Telling Awful Lies about Bernie Sanders
by Benjamin Studebaker
Over the last few days, I’ve seen a deeply misleading claim circulating around the internet–that Bernie Sanders is supposedly going to increase government spending by $18 trillion over 10 years. This claim originates in a Wall Street Journal article by Laura Meckler. The article is so deeply misleading that Gerald Friedman, the economist cited by the WSJ, has felt compelled to come forward and explain that his research does not at all support the WSJ’s conclusion. Indeed, Friedman claims that Sanders’ plan will actually save money. To understand how, we need to know just a little bit about healthcare economics.
Of the $18 trillion, $15 trillion comes from healthcare spending. Sanders wants to create a single payer healthcare system by expanding Medicare and making it universal. This would dramatically increase government spending by $15 trillion, but what the WSJ won’t tell you is that this $15 trillion replaces an even larger amount of money we are currently spending on private insurance. In his rebuke of the WSJ, Friedman explains it this way:
the additional $14.7 trillion in federal spending brings savings to the private sector (and state and local governments) of over $19.7 trillion.
This means that Medicare for all actually saves Americans $5 trillion. It’s just that instead of paying insurance companies for our healthcare, we’ll be paying into Medicare. Government healthcare spending will increase, but total healthcare spending will be sharply reduced. Here’s Friedman’s full breakdown of the savings (the numbers are in billions, so $5,081 is $5.081 trillion):
I want to draw attention to the fact that this is what the WSJ’s handpicked economist and handpicked research says. The numbers might be even better than what Friedman suggests. We have known for a very long time that Medicare outperforms the private system on cost control by a very large margin:
This has been the case even though Medicare has been limited to seniors. Seniors have the highest per capita medical expenses and cost more than any other patient pool. By allowing young and healthy Americans into Medicare, the potential savings could be significantly higher than even these numbers have suggested. We know that other countries with systems more similar to Medicare for all spend far, far less per capita than we do:
Medicare for all can make these massive savings because the universal pool gives the government monopoly power over healthcare costs, allowing it to use its leverage to dictate prices far better than any insurance company. It also eliminates the need to sustain all these duplicate bureaucracies–each insurance company has its own management and administration, and there is a lot of redundancy.
If the WSJ’s handpicked economist is correct and Sanders’ healthcare plan will save $5 trillion over 10 years, this means that Sanders’ healthcare policy will save enough money to pay for the remaining $3 trillion over 10 years that Sanders plans to spend, with an extra $2 billion left over. Alternatively, most of the $5 trillion can be used to cover the people who remain uninsured under Obamacare, with about $500 billion left over:
But wait, there’s more. Many of the other programs Sanders wants to spend money on are analogous to healthcare in the sense that they have the government pay for things that we currently pay for out of pocket, with potential net savings for us. Take education, for instance. Sanders wants to make university tuition free for all to make it much easier for poor and middle class people to afford to go to the best universities they can get into. This means a significant increase in government university spending, but this spending will replace the extant tuition we pay. Again, as the single payer of tuition, the government acquires quite a bit of leverage which it can use to reduce college costs and prevent them from rising in the future. Again, this eliminates a lot of unnecessary, redundant administrative bureaucracy. This means that there is likely even more savings in Sanders’ plan outside of healthcare.
So if the WSJ had an interest in telling the real story, the headline would have read something like “Sanders’ Plan Will Save $5 Trillion in Healthcare Costs” or “Sanders’ Plan Will Cover the Uninsured At No Additional Cost” or “Sanders’ Plan Will Cover the Uninsured and Save $500 Billion”. Each of these statements is a true reflection of the research the WSJ referred to.
Instead, the WSJ chose to publish a wildly misleading story that takes headline government costs out of context, without making any reference whatsoever to the private sector spending that is replaced or eliminated. Why would the WSJ do something like this? Either it is run by truly feckless, ignorant people or it is deliberately seeking to undermine Sanders by any means necessary because Sanders’ plans will distribute our healthcare and education costs differently. Instead of making each individual pay the cost of college tuition or the cost of health insurance premiums, Sanders intends to enact progressive taxes that will shift the burden of these costs away from the poor and middle class and onto the rich. The WSJ has “Wall Street” in the title for a reason–its primary audience is rich people and those who would like to become rich people. These people have a strong short-term class interest in maintaining the status quo even if it is far more costly to our society as a whole to do so in the long-term. Sanders’ overarching goal is the reduction of economic inequality. This sounds like anathema to the rich, but only if they fail to consider the long-term benefits. By helping poor and middle class people self-actualize, Sanders’ policies will ensure that each person is more able to make the maximum contribution to society. In the long-term, this means higher skill workers, lower crime rates, and lower welfare costs. By giving people the tools they need to succeed in life, we build a society with more success stories and fewer failures. In the big picture, this means faster economic growth and technological development. It means higher living standards. A rising tide lifts all boats. At comparatively little cost to their present lifestyles and living standards, our rich people can help build a much better society and future for all Americans, including themselves and their children.
Even Donald Trump sort of gets it: