Skip to main content

Why I still support Sanders’ economic agenda

Robert Reich, professor of public policy | February 19, 2016

A few days ago, Neel Kashkari – now president of the Federal Reserve Bank in Minneapolis, who was the senior Treasury Department official in the George W. Bush and Obama administrations helping to save the big Wall Street banks – said “I believe the biggest banks are still too big to fail and continue to pose a significant, ongoing risk to our economy,” and called for them to be broken up. “The question is whether we as a country have the courage to actually take action now.”

That seems to me to be the question on a lot of fronts. Our health costs continue to rise and are about to soar as boomers need more health care. A single-payer system is necessary to restrain those costs and provide the care people need. Anyone who still harbors doubts should take a look at these studies.

It’s the same with widening inequality and structural discrimination.

Failure to take action on the biggest banks, a single-payer plan, widening inequality, and discrimination will almost certainly harm the economy. We can’t afford another near-meltdown of Wall Street. Health care costs continue to be a huge drain on the economy. Widening inequality is robbing the vast middle class of the purchasing power it needs to keep the economy growing. And structural discrimination is making it hard for many Americans to be successful and productive members of our society.

As Bernie Sanders has said, taking action on all these fronts would therefore spur growth, employment, and median incomes. (In this respect, I disagree with the views of four former chairs of the Council of Economic Advisors from the Clinton and Obama administrations.)

The question is whether we as a country have the courage to actually take action now.

Crossposted from Robert Reich’s blog.

Comments to “Why I still support Sanders’ economic agenda

  1. I like the name: Bernie Sandinista has a nice ring to it!

    Bernie is a great husband: Bernie and his wife spent their 1988 honeymoon in the USSR. The trip was an official delegation from Burlington to cement the two cities’ “sister-city relationship.” See this video about Bernie Sanders’ candidacy.

  2. While I generally respect Robert Reich, the above generalizations are just too general to make a good argument. For instance FinReg is an abomination. As Barney Frank said, “it would have been about 200 pages, if I had had my druthers.” It just added a bunch of bureaucracy, restrictions to trade, and costs to the banking business. I am not sure how big it ended up; but the initial product before all of the writing of the specific areas was about 1500 pages. I guesstimated that the total was probably 5000+ pages of new banking laws. It takes a whole lot of lawyers to understand all of this. This appears to me to be another politically motivated law that had to be enlarged to allow every politician to add his/her pet part. In other words it is a joke. The intent was good; but the product will inhibit banking and business in general for many years.

    As for your argument that the big banks have to be broken up, can the smaller banks afford all the lawyers necessary to understand and cope with the new laws? Can they provide all of the services the big banks do? Someone has to provide international banking services. You have to be big to be able to provide worldwide or near worldwide services. You have to be big to be able to sustain the risks that are inherent in being able to perform banking in emerging market and third world countries. Is your local savings and loan going to be able to do this? Are you instead just talking the US banks out of some of their business? There have been a lot of lost US banking jobs due to FinReg. It is now unprofitable, if not banned, for US banks to perform some of the services they used to perform. These services have not disappeared completely. They have in many cases gone to foreign banks. In other words, Obama, Pelosi, Reed, etc. have come up with a strategy that made palatable to the public shipping more “good US jobs” offshore. OUCH! Obama, et al are long on rhetoric and short on common sense.

    In Computer Science it has been proven that a MAINFRAME COMPUTER (a very large computer) can perform some tasks better (and more cheaply) than lesser computers, even though mainframe computers are much more expensive. This does not mean you want all of your computers to be mainframes. Still you want some mainframes, if you want to be most efficient. I am virtually sure the same can be said for big banks for some banking tasks/services.

    The ObamaCare law was more of the same. It was a CON JOB perpetrated by the democrats on the US public. It was never going to save the US money on healthcare. It added bureaucracy. That is always more expensive. It resulted in coverage for those previously unable to get insurance due to the prohibitively high cost such insurance would entail. These are mostly life long smokers. They are those who didn’t exercise. They are those with junk food diets. Hence they are far overweight; and they suffer from the many maladies that come along with that. They are the cancer sufferers (a good portion of these are smokers or second hand smoke inhalers). I could go on; but the reality is that the majority of the people who fell into this category of “too ill to insure at less than a large multiple of normal costs” are people who largely brought such problems on themselves. A much smaller minority may fall into this category due to pure happenstance. If Obama et al had asked the average Joe if he wanted to help pay for the health insurance of these people, the average Joe would likely have said no. Instead the average Joe was promised the moon; but the average Joe was delivered crap at a much higher price.

    I could add that a lot of the poor are now more able to get healthcare through ACA. However, this is again an added cost. It is an added service that the average Joe is paying for. It is a huge add to the medical care bureaucracy. Plus there are sure to be a lot of scammers that find new ways to cheat this now more complex system.

    On top of all of the above, I was appalled that no attempt was made to reform malpractice. Texas has malpractice reform. It is working well with few negative effects on the quality of healthcare. It is saving Texas and Texans a lot of money on healthcare. This is helping the Texas economy. Lawyers made sure that no law to bring about healthcare reform for the entire US was seriously considered. They have to get their malpractice award checks.

    I am further discouraged that so many people are trying to say that the above problems are necessarily republican or democrat only problems. They are really US economic problems that will be increasingly key to how well the US economy performs as the Baby Boom Generation retires and ages further after retirement. It is unhelpful to refer to them as Democrat or Republican problems. We as a nation will need to face these problems soon. Clouding the situation with Republican and/or Democratic rhetoric will do little to help solve the long term problems. We can do without it this partisan rhetoric that just seems to cloud the real issues.

    Your only point that I somewhat agree with is that a socialized medicine run by the federal and state governments in a manner similar to the UK or the Canadian system would probably be cheaper in the long run. Getting there from where we are now is a huge problem. I don’t think Obamacare has been much of a step in the right direction in that sense. Instead it has just increased costs and bureaucracy. To say this is anathema to me is putting it too mildly. I think it should be to you too. I generally respect your economic views. However, clouding them with perverse political balderdash is not helpful with regard to solving them longer term. That is something you should be aware that we have to accomplish as quickly as possible.

    • Some people are choosing to interpret my comments as meaning no one should be able to get healthcare if they are unemployed. That was not the intent. It was really not the intent to bar the poor, although the process is cumbersome; and it will engender more crime associated with such benefits.

      The intent was to mention the uninsurable who are uninsurable because their insurance would be prohibitively expensive. These are people with cancer. They are people with bad livers who need dialysis and kidney transplants. They are heavy smokers that have emphysema, lung cancer, etc. They are the seriously obese whose hearts are already in bad shape partly due to lack of exercise and partly due to their often junk food diets. Often such people get diabetes as a result. They are the heavy drinkers who can have a wide range of bad diseases.

      These people are not just out of work. Even if they were working, they might not be able to get coverage. It might cost a cancer patient with leukemia a million dollars or more per year in medical costs. This could be a huge underestimate. If there is not a likely cure, is one or possibly two more years of a very strained life worth the possibly millions it will cost the healthcare system? If you said insurance for someone of a comparable age might cost $5,000 per year. Then $1,000,000 per year is 200 times as much.

      Perhaps the system has a $1,000,000 lifetime limit. If you reach it, then what? Would it be that much more a hardship to die a year earlier? I am sorry if these are tough things to consider. However, if say 25,000,000 of these uninsurables get medical care through Obamacare, their average cost to the ACA system might be 20 times the norm. That means they might cost the system the same as 500,000,000 more in population. In other words, the actual cost to each non-uninsurable person would be roughly treble their insurance costs without these people being insured by the ACA system.

      I haven’t seen the actual figures recently; but a lot of people’s insurance costs have already doubled. They stand to go up further as these formerly uninsurable people need heart bypass surgeries, etc. in the future.

      This was clearly not what the politicians promised. They promised “at worst no extra costs.” That is why I say their rhetorical pleas for this system were a “Con Job.” That is why this law has saddled every citizen and Congress in the future with some very hard choices. It is nice to approve everything; but can we really afford it. Do people instead need to have some responsibility for their own health? Yes, there are exceptions; and Obama et al trotted some of those out to make everyone feel sorry. However, the biggest group of the uninsurables are those largely responsible for their own health conditions.

      Congress put off solving the healthcare affordability crisis with this law. They instead saddled the US with still much more expensive entitlements. We still have to solve this crisis going forward. No amount of positive rhetoric or “good thoughts” is going to make it disappear.

      • In response to the above two comments some Democrats are now saying that uninsured people should be grateful for Obamacare. Grateful for what? Some unemployed or self-employed people previously saved so they could cover their immediate healthcare costs in a pinch. In effect they were self-insured. Perhaps they had some hospitalization insurance. What are their options now?

        1. They can pay for Obamacare, which would be a big expense for them. Then they can almost never use it because they likely bought the cheapest one. The deductibles are higher than their previous costs for healthcare, when they went to see the doctor using their savings or using credit. In other words they have to pay thousands more to be in roughly the same situation they were in before.

        2. They can opt not to pay for Obamacare. Then they have to pay new taxes for not being a part of Obamacare. The democrats have taken away their free choice. They have cost them this year roughly $700 in new taxes. Next year the amount will be higher. On top of that their healthcare costs for seeing a doctor, etc. have essentially doubled, so Obamacare medicine is roughly double the cost to their savings or their credit cards that medical costs were before. This isn’t a good situation for low wage earners or even for higher wage independent contractors. It has made such people poorer.

        3. They can pay for a more expensive form of Obamacare. Then a bigger chunk of their money if they have much is going to healthcare automatically.

        4. People can get on the hardship plan for Obamacare. This gets them used to being on the public dole. It tends to discourage marginal workers from making more money. If they do make more, most of it will go to paying their healthcare costs until they get to over $50,000, so why try? In other words this is a path that leads to more people being dependent on the government. This is a bad result because it leads to a less motivated workforce. It leads to a less productive economy. It puts a further strain on the middle and upper classes. Under this system if people work hard to get to the middle and upper classes, the government is just going to tax them more.

        On top of all of the above, a lot of small businesses (and even large businesses) will have a hard time affording the Obamacare healthcare costs. This will likely lead to a loss of jobs down the road as Obamacare costs are still set to increase dramatically. This may lead to a more sweatshop mentality for those still working in the businesses hard put to afford healthcare costs. In other words, not only will jobs disappear; but the quality/enjoyability of many jobs will go downhill.

        I could go on; but I do not think US citizens should be at all “grateful” for Obamacare; and I have not even mentioned the longer term huge negative impact of Obamacare on the federal budget in this comment.

  3. It is the corporate-owned republicans and Ms. Clinton who push for the status quo and call what every other advanced country in the world already has a childish dream. A nightmare for the insurance industry of course. Time to drop the “for-profit-medical-industry.”

  4. “Puppies and rainbows” … after further study, “they’ve evolved into magic flying puppies with winning Lotto tickets tied to their collars.”

    This is from a New York Times report on analysis done by actual economists who lean left and who have actually crunched Sanders numbers and generally find Sanders economic platform to be wishful thinking.

  5. Prof. Reich, current political campaigns prove daily that we are descending into superstition, prejudice and greed, totally ignoring the realities of global warming, violence and inequalities that are threatening us beyond our control.

    We must think and act at much higher level than even you are recommending, we must lead ourselves to a new renaissance, a new enlightenment, a profound global shift in the worldview for the better. And we had better start today.

Comments are closed.