I don’t read or cite the Daily Beast very frequently but this piece there from Brian Riedl is well worth reading. His message is that we cannot pay for a single-payer system, a federal jobs guarantee, student loan forgiveness, free public college, and a big infrastructure spending plan just by taxing the rich:
In reality, spending like Europe requires taxing like Europe. This means, in addition to federal and state income taxes, a value-added tax (VAT)—essentially a national sales tax—that affects all families. CBO data estimates that raising 15 percent of GDP would require imposing an 86 percent VAT rate, or hiking the payroll tax from 15.3 percent to 56.5 percent. No wonder many spenders prefer the “just tax the rich” fairy tale.
Read the whole thing. To his analysis I would add the following observations.
- We cannot pay for all of the things we may want just by issuing ourselves credit, either. Most of these proposals are for operating expenses and they are operating expenses that are rising in cost fast—much faster than incomes, generally. Paying operating expenses by issuing credit is a very bad practice. There is no perpetual motion.
- Most educational spending and health care spending is consumption not investment.
- Taxing like Europe would not be enough. We’d need to pay like Europe, too. On average physicians in Germany earn a third of what American physicians do. The highest wage that can be earned by a primary school teacher in Germany is about $62,000 per year. In Chicago elementary school teachers start at $50,000 and most earn $80,000 or more.
- We’d need to live like Europeans as well. A lot less personal consumption.
IMO we need to set our sights differently. We should trim health care spending to something much more like public health—a limited palette of services much more equitably divided among the population, much greater emphasis on palliative care for terminal patients than at present. Education should be targeted more narrowly at producing good workers and citizens. We need an educational system for the population we have not the population we’d like to have.