Elizabeth Warren seeks to “guarantee high-quality child care and early education for every child in America from birth to school age. It will be free for millions of American families, and affordable for everyone.”
Bernie Sanders introduced free Medicare for All legislation, co-sponsored by several of his competitors for the Democratic nomination, which makes it “unlawful” for insurance companies to sell or for employers to provide coverage duplicated by the government plan. The federal government would bear nearly the entire $3.5 trillion annual expense of healthcare under this proposal.
When Sanders unveiled free tuition at public colleges, Warren upped the ante by calling for free tuition at public colleges and student loan debt forgiveness, which Sanders seconded. Cory Booker wants Baby Bonds, which, depending upon the recipient’s economic status, could mean a free $46,000 upon turning 18. Andrew Yang runs for president on a guaranteed income, a $1,000 monthly check from the federal government, in exchange for the beneficiary… existing.
No candidate yet proposes root-beer-float Fridays, but the program seems delicious to many and the campaign remains young. A few Democrats grasp that promising rainbows and unicorns ultimately delivers disappointment. On Wednesday night at the debate in Miami, John Delaney, a congressman from Maryland, urged his fellow Democrats to offer “real solutions, not impossible promises.” Senator Amy Klobuchar from Minnesota, as one of the moderators noted, earlier this year characterized free tuition as a proposal befitting of a “magic genie.” But they speak against the current in their party.
Taxing the ultrarich seems a popular means of paying for the various programs. An electorally less significant population seems an even more popular group targeted to pay for the many imaginative schemes. Many of the people on the hook for our national debt, $22 trillion and counting, cannot yet vote. This formula seems, electorally speaking, a winning one — “free” goodies paid by some numerically insignificant portion of the electorate. In tasking the young rather than the rich, the candidates alienate the no percenters rather than the one percenters, who at least can vote. This surely acts as the safer political strategy.
But as policy, it rings alarm bells.
The Congressional Budget Office this week announced, “Large budget deficits over the next 30 years are projected to drive federal debt held by the public to unprecedented levels — from 78 percent of gross domestic product (GDP) in 2019 to 144 percent by 2049.” Already, the share of the budget consumed by interest on the debt increases. From 2017 to 2020, interest rises from $263 billion to an estimated $479 million. The CBO reasons that more borrowing means higher interest rates. “In CBO’s extended baseline projections,” the report explains, “net interest outlays grow from 1.8 percent of GDP in 2019 to 3.0 percent in 2029 and then continue to increase over the next two decades to 5.7 percent by 2049.”
The defense budget approaches $700 billion, up about $100 billion from just two years ago. The federal government spends about a third of its revenues on healthcare. Even more so than defense and healthcare, the Congress shows no interest in reforming Social Security.
How does the government manage to fund any of the new programs, let alone all of them, in light of the lack of political will to curtail spending in any of the big-ticket budget areas?
“Tax the rich” remains the stated means. But by refusing to control upwardly spiraling healthcare costs, or to rein in defense spending, politicians really look to tax people who cannot vote to pay for their grab-bag of ideas. Even more so than taxing the rich, saddling the young comes with little consequence at the ballot box — hence, the popularity of such funding among people dependent on votes.
This $22 trillion reality exposes so much of the Christmas list of Santa Claus politics a fantasy. Free college tuition, daycare, money, and so much else proposed in the silly season of primary season may seem a cheap way to accumulate votes. But someone eventually pays the exorbitant expense.
Whoever said there’s no such thing as a free lunch never said it to those 20 politicians on that stage in Miami.
Hunt Lawrence is a New York-based investor. Daniel Flynn is the author of six books.