Tag: Bernie Sanders

The High Cost of Scandinavian “Socialism”

A lifelong socialist, Bernie Sanders decided to do some rebranding during his 2016 presidential campaign. No longer was he a socialist, he’s now a “democratic-socialist” (which I suppose sounds better).  “When I talk about democratic socialism, I’m not looking at Venezuela. I’m not looking at Cuba. I’m looking at countries like Denmark and Sweden.” Bernie declared during the presidential primaries.

I’ll ignore the fact that Bernie has consistently praised Cuba in the past, and in 2011 wrote that “These days, the American dream is more apt to be realized in South America, in places such as Ecuador, Venezuela and Argentina,” and turn my attention towards his new model for socialism: Scandinavia.

Scandinavian “Socialism”: The Offerings

It must first be clarified that Scandinavian countries (Sweden, Denmark, and Norway) are not socialist. They are capitalist countries that impose excessive levels of taxation on their citizens to fund a wide array of social programs. Those programs include:

  • “Free” government funded healthcare through single-payer healthcare systems
  • Generous government funded maternal and paternal leave
  • Heavily subsidized higher education, free of tuition to all students (and in Norway, to international students as well)
  • Generous paid sick leave

And all these programs are extremely popular when you poll American voters on them – but that’s meaningless. Anything that appears “free” polls extremely well – until the public realizes that they have to pony up for “free.”

Scandinavian “Socialism”: The Cost

The large welfare states of Scandinavia are not without their cost.  In 2017, all three countries had levels of taxation exceeding half of every dollar earned. Taxes as a percent of GDP are:

  • 50.7%  in Sweden
  • 53.5%  in Denmark
  • 54.7% in Norway

For reference, in the U.S. taxes at all levels of government averaged 26% of GDP in 2016 (and have since been cut).  

Listen to Bernie’s rhetoric and you’d get the impression that it’s “millionaires and billionaires” ponying up most of those funds – but they aren’t in Scandinavia. While the Tax Foundation found that in 2017 the top 10% of American households paid 70.6% of the taxes, there is no Robin Hood in Scandinavia.

In America, an earner isn’t subject to the top tax bracket of 37% until they earn over $500,000. While an American would need to earn eight times the average income to be subject to our top tax bracket, the figures are only 1.5 times average income in Sweden, 1.6 in Norway, and 1.3 in Denmark (source: pages 30-31).

So, how would America’s tax system look if it were more like Scandinavia’s?

  • If the U.S. tax code was as flat as Denmark’s, someone earning roughly $70,000 would face a top marginal tax rate of 46.3% (source: page 30). That’s simply the first layer of taxation, as all Scandinavian countries have a 25% value-added tax on purchases (the equivalent of a sales tax).
  • Even after accounting for the dollar value of transfer payments and other government benefits, a single-income couple earning the average wage with two children will pay an average personal income tax rate of 22% in the Nordic countries (counting government transfers as a negative tax), as compared to a rate of 14.2% in the United States. Across all family types, the average American family earning the average wage would pay $2,000-$5,000 more in taxes each year (net of the value of any transfer payments) than a Nordic family. Note that this comparison is of Nordic countries (Scandinavia plus Finland and Iceland). (Source: page 31).

And despite all the “freebies” in Scandinavia, Americans consume much more. According to an analysis of OECD consumption data by the White House (source: page 36), average consumption per person is:

  • 31% lower in Denmark than in the United States
  • 32% lower in Sweden than in the United States
  • 18% lower in Norway than in the United States

And on that note, it should come to little surprise that….

Scandinavians Perform Better in America Than in Scandinavia

The success of Scandinavian economies is despite their generous tax-and-spend policies, not because of them. You can thank the Scandinavian work ethic for their success – not the laws of economics being suspended.

There are over 10 million Americans with Scandinavian ancestry (most of which are the descendants of immigrants), and they far economically outperform their counterparts across the Atlantic.

There is, unfortunately, a lack of global household income data, and thus, the most recent information available is from a 2013 Gallup study of global household incomes. They found the median household incomes, purchasing power adjusted to be the following in 2012:

  • Norway: $51,489
  • Sweden: $50,514
  • Denmark: $44,360

The figures are the following median incomes for households of Americans with Scandinavian ancestry in 2012 are as follows:

  • Norwegian American $62,155 (21% higher)
  • Swedish American $62,295 (23% higher)
  • Danish American $63,630 (43% higher)

Additionally, the Census listed a group identifying themselves as “Scandinavian Americans,” who earned a median household income of $67,421 in 2012. The median household income of all Americans in 2012 was $51,371.

And the real kicker? These figures are not adjusted for differences in taxation. Not only do Scandinavian Americans far outperform Scandinavians economically, but they also get to keep a larger chunk of a larger pie.


Ep. 827: Trump’s Strategy is Working

In this episode I address the real reason Trump is delaying the declassification of the FISA documents. I also discuss the panicked response within the circle of people responsible for the Spygate scandal. Finally, I address the disastrous “Medicare for all” bill and the problems it’s causing for the Democrats.

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The Cost of Cortez: Nearly $2 Trillion Per Year

Authored by: Matt Palumbo

Whilst appearing on The Daily Show with Trevor Noah, something amazing happened to the Democratic-socialist darling Alexandria Ocasio-Cortez. She was actually asked how she’d pay for the wide array of social program’s she’s campaigning on.

“This is an excellent, excellent question,” Cortez told Noah. “…if we reverse the [Trump] tax bill, raised our corporate tax rate to 28 percent … if we do those two things and also close some of those loopholes, that’s $2 trillion right there.” She also cited cuts to defense, which she estimates would save an extra trillion or two. All estimates are over a ten year period.

So, she’d be able to fund $3-4 trillion dollars worth of programs, or $300-400 billion a year, but her answer doesn’t give the full context needed. While most hear “two trillion” and think “a lot,” the cost of the programs she needs to pay for cost an order of magnitude more. I’ll focus on just three; Medicare for all, free college, and a Federal jobs guarantee.

Medicare For All – AT LEAST $540 Billion A Year 

There’s been much confusion from a new Mercatus Center Study on the costs of Bernie Sanders’ latest “Medicare for all” proposal, with both sides claiming the study supports them. The study concluded that a Medicare for all program (by Bernie’s specifications) would add $32.6 trillion to the federal budget over the next ten years. In response, Bernie Sanders thanked the Koch Brothers for the study (as they fund Mercatus), and pointed out that $32.6 trillion is $2 trillion less than what total healthcare spending (public and private) in the US is expected to be over the next ten years.

The $32.6 trillion estimate however was a massive understatement, as the study conceded that all the components of Bernie’s plan would be implemented without any problems. Among those assumptions included:

  • Doctors, hospitals, drug companies and the like would face an immediate cut of 40 percent in their payments. A separate report by Health Affairs estimates that doctors would have to earn half their current salaries to make socialized medicine work, which is in line with Bernie’s proposal.
  • Bernie’s plan assumes that healthcare spending would decrease 11% if implemented. Given that over 30 million people would be insured under his plan, you’d have to assume that the newly insured use ZERO healthcare, while the previously insured use 11% less.

The study itself notes how unrealistic these expectations are – so it’s unclear what Bernie was “thanking” them for. Without any provider cuts, the Mercatus study puts the cost at $40 trillion over ten years, which turns Bernie’s supposed $2 trillion surplus into a $5.4 trillion deficit over ten years, or $540 billion a year. Bear in mind, this is the absolute minimum such a proposal would cost.

Debt Forgiveness and Free College – $1.5 trillion + $120 Billion Minimum Per Year  

The Tax Policy Center estimates that a “free public college” program (based off of Bernie Sanders proposals) would cost $807 billion over ten years, or roughly $80 billion a year. That’s based on a number of assumptions; that the number of students attending college wouldn’t increase (spoiler alert: it would), that colleges and universities wouldn’t raise tuition in the face of a truckload of Federal money, and most important of all, we’re to assume there’s no substitution with private students leaving for public schools. On that last point; who paying $50,000 at a mid-to-low tier private school would take on the debt when they can go to a public school for free?

Furthermore, the Bernie plan assumes that the Federal government would cover 2/3rds of the cost of “free” college, with the States covering the remaining 1/3rd. So in other words, the $807 billion figure is only 67% of the real cost (about $1.2 trillion).

Ocasio has another freebie to top this all off – a one time cancellation of student debt, costing $1.5 trillion.

Federal Jobs Guarentee – $900 Billion Per Year

Forbes Magazine’s Jeffrey Dorfman ran the numbers back in May on what a Federal jobs guarantee could cost, assuming that it would employ the then six million unemployed, and five million “discouraged, marginally attached [to the workforce], or working part time but looking for full time work.” And to transition those people to their federally “guaranteed jobs” (which would pay enough to prevent them from qualifying for government benefits) would cost an astounding $450 billion. Dorfman estimates that due to the relatively high pay of these government jobs to many low skilled workers, it could attract up to another 10 million employees, which would bring the cost to nearly $900 billion a year.

Just a minor disclaimer; Dorfman is a conservative who supports a federal job guarantee – but only under the condition that one is implemented alongside the abolition of all other federal welfare programs. Not only would that be politically impossible to implement (and doesn’t answer the question of what happens to the disabled who receive welfare and can’t work) Cortez does not advocate for abolishing other welfare programs, but increasing them instead, so a cost of nearly $900 billion annually is appropriate.


Cortez was able to come up with $300-400 billion in revenue from taxing “the rich” – but has proposed $1.56 trillion in new recurring spending annually (or $1.7 trillion if you amortize the cost of student loan forgiveness over ten years). Remember: every single one of my estimates is a minimum estimate on what her programs would cost. Given that our current budget deficit is a trillion dollars as is, Cortez would have to raise taxes on much more than just the wealthy to pay for her socialist pipe dream.

But don’t expect her to admit that anytime soon.



Debunked: “The U.S. Ranks #1 in Child Poverty”

Authored by: Matt Palumbo

“We have the highest rate of childhood poverty of any major country on Earth” said socialist Senator Bernie Sanders back in 2015.

By “major” by meant among the 35 nations within the OECD, and there is a study to back up the claim. According to a 2012 UNICEF report, the United States ranks almost dead last when it comes to child poverty, 34th place out of 35 countries. The study also claimed that childhood poverty in the U.S. is 23.1 percent, which is 8.1 percentage points above the overall poverty rate in the U.S. in 2012 (that discrepancy will make sense later).

The fatal flaw in the study can be summarized in a single sentence: it doesn’t measure poverty, it measures inequality. Or put differently, it measures relative poverty, not absolute poverty. In context of the study’s methodology, poverty is defined as a (a child living in a) household earning below 50% of the median income in a country. That fact alone greatly exacerbates the number of “poor” in a sample, especially in countries with greater amounts of income inequality (like the U.S.).

In the U.S., real median personal income for an individual was $31,099 in 2016. The poverty threshold for an individual that year was set at $11,770. If the U.S. defined poverty by Oxfam’s criteria, the poverty line would be increased to $15,549, which would obviously increase the number of people in poverty (on paper), without changing anyone’s income. While America’s childhood poverty rate in the Census statistics (15.6 percent in 2016) is slightly higher than the overall poverty rate (12.7 percent in 2016), it’s drastically lower than the 23+ percent rate UNICEF arrived at.  Forty-eight percent lower, to be more specific.

Just take a look at some of the nations on the list that are ranked as having less child poverty than the U.S. in UNICEF’s report: Bulgaria (18.8% child poverty),  Lithuania (15.4%),  and Slovakia (11.2%).  The average monthly income in Bulgaria is $416, $655 in Lithuania, and $853 in Slovakia. Given that the U.S. poverty line for an individual is $11,770, and the average incomes for citizens in those three countries would put one below the U.S. poverty line, it’s impossible to believe they could somehow have less child poverty than the U.S.

UNICEF did issue an updated report in 2014 – this time changing the definition of poverty further, to anyone in a household earning below 60 percent of the median national income. America is a country where a full-time minimum wage worker earns more than 91.3% of the world, so it’s no surprise that UNICEF literally has to redefine poverty to portray America in a negative light.



PROOF Raising the Minimum Wage Can’t Reduce Poverty

Authored by: Matt Palumbo

Socialist Senator Bernie Sanders repeated a quip a number of times in defense of a $15 an hour minimum wage on the campaign trail back in 2015 and 2016; that “nobody who works 40 hours a week should be living in poverty.”

It’s not even a particularly left-wing statement, and people of all ideological stripes can probably resonate with it a bit. After all, we’re against moochers, but someone that’s poor despite working 40 hours a week can hardly be considered a moocher.

So here’s the problem with turning Bernie’s statement into an argument for hiking the minimum wage; poverty is not a wage problem, it’s a work problem. After all, the poverty threshold is low enough where someone working 40 hours a week, 50 weeks a year to be above it (as they’d earn $14,500).

So how would one find themselves in poverty? Having a child, and thus an extra person in the household (who obviously isn’t generating income, but consuming it) is one obvious answer. But there’s an even bigger reason why – not actually working full time.

In 2015, only 11 percent of (working age) people in poverty worked full time. By contrast, 63 percent of those in poverty don’t work at all. Of full time workers in America, only 2 percent live in poverty (compared to 32 percent of the unemployed). If we look at those with families, the numbers become even more stark. For instance, in 2011 only 0.3 percent of families in poverty worked an hourly job earning the minimum wage.

The minimum wage can’t help people who don’t work – and every conservative and their mother is aware that hikes in the minimum wage increase unemployment among the most vulnerable, but those aren’t the only consequences. Minimum wage hikes also reduce hours worked, and decrease the labor force participation rate.

A study published in 2001 at North Carolina State University by Dr. Walter J. Wessels looked at past minimum wage hikes, finding that hikes from 1978-1981, finding that they reduced teen labor force participation by 3.62 percentage points, 1990-91 hikes by 2.07 percentage points, and 1996-97 hikes by 1.31 percentage points. I’m using the youth as a proxy for the low-skilled, and you can see the effects for yourself graphically:

And in the case of reduced hours, that can offset the benefits of a minimum wage hike entirely. Take Seattle as an example, which was one of the first cities to pass a $15 an hour minimum wage ordinance in 2014 (that took full effect on January 1, 2018).

That’s the exact wage Bernie would like to see to lift all our full time workers out of poverty, but a study conducted by the University of Washington found that the law reduced hours by 9 percent, which caused wages to fall on net by 6 percent. And the kicker? That study was conducted when Seattle’s minimum wage had “only” risen from $10.50 to $13 an hour, as the $15 wage was phased in gradually. And despite that $2.5 an hour raise at the time of the study, workers were still $125 a month worse off.

And that’s for the people who kept their jobs. Things were much worse off for the 5,000 workers who lost their jobs entirely.

In response, Seattle’s legislature, which commissioned the study, promptly fired all the University of Washington researchers for making the mistake of stumbling upon the truth.

Liberals treat poverty as a wage problem, when it’s a work problem. And the best way to get people working is to ensure that they’re not priced out of a job.