Democratic presidential frontrunner Hillary Clinton has survived her e-mail scandal, which sapped her support during the summer. She received a double boost in October by performing well in the first Democratic debate and by locking down the support of conservative Democrats after vice president Joe Biden announced that he would not be entering the primaries. However, challenger Bernie Sanders has seen a resurgence in popularity after the second Democratic debate on November 14, when Clinton fumbled her justification of her Wall Street donors and went a little too neocon on foreign policy.
With Bernie Sanders gaining ground again, a new wedge issue has emerged that could propel the U.S. Senator (I-VT) to victory in the primaries against the former Secretary of State. The issue deals with taxation and the necessity of a “critical mass” of reform. Clinton, flip-flopping on her criticism of quarterly capitalism, has promised tax credits for health care expenditures instead of attempting to reform the profiteering health insurance conglomerates. She is promising middle class families a cash payout now, in the form of tax cuts and tax credits, but will not attempt to fix the profit-seeking system that is bleeding these families dry. Under her administration, college tuition and health insurance premiums will continue to rise.
Unfortunately, the immediate tax cuts and tax credits are a great way to lure in voters: Many will not realize that these tax cuts and credits will be entirely eaten up by profit-seeking firms within a few years. If Clinton is able to pass these health care tax credits, the health insurance corporations will undoubtedly increase their premiums, knowing that consumers now have more cash with which to pay. Basically, Clinton has just offered health insurance corporations a subsidy. I wonder to which political candidate they will start to donate?
Clinton has made her pledge to cut taxes and provide tax credits a campaign cudgel, criticizing Bernie Sanders for wanting to raise taxes on the middle class. Indeed, Sanders’ proposed reforms would likely involve an incremental tax increase on most earners, not just the top one percent. However, Sanders’ proposals are comprehensive and would dismantle two profiteering false markets: Health insurance and public higher education. These two markets would become public goods, free of charge for all who qualify. All citizens would receive universal health care, and all qualified students could attend a public college or university for free.
Under Sanders, everyone pays a little to receive a lot. The middle class, in exchange for a small increase in taxes, will see a vast reduction in their out-of-pocket costs, especially if they have kids attending college. I, for one, would happily pay up to 10 percent more in taxes in order to have my health care completely covered. Why? I spend more than 10 percent of my income on health insurance premiums, copays, and prescriptions for myself and my family.
Sanders’ proposals represent a tremendous net gain for almost all American families. Clinton’s proposals, however, represent a net loss over the long term. Though the tax credits may feel good in the short term, they will be eaten up before long by the health insurance companies. And then what? Will these profit-seeking companies stop raising their premiums once the average tax credit has been consumed? Of course not!
For reforms to work over the long run, they must be comprehensive and achieve a “critical mass” of funding and resources. Otherwise, they wither and die, having not achieved the minimum efficient scale necessary to reduce average costs and maximize returns. Clinton’s proposals, which are contingent on never raising taxes on all but the top three percent or so of earners, will never achieve this scale. As a result, her reforms will be inefficient and doomed to failure. Sanders’ proposals, by contrast, will be properly funded and will flourish, achieving efficiency and lowering long-run average costs. Over time, citizens will be taxed less as the systems achieve economies of scale, delivering services more efficiently than in the first few years.
Bernie Sanders will get you your reforms and your tax cuts, giving you a double bonus. Not only will your out-of-pocket costs be cut by more than your tax increases on day one, but your taxes will also decrease in the long run as universal health care and tuition-free public higher education achieve greater efficiency. In the long run, Bernie Sanders’ reforms allow everyone to win…and win far bigger than Hillary Clinton’s token tax credits.