Senator Warren Gives the Right Answer on Taxes and Medicare for All

October 28, 2019

Dean Baker
Truthout, October 28, 2019

See article on original site

Many reporters express frustration over Sen. Elizabeth Warren’s refusal to say that she will raise taxes to pay for her Medicare for All plan. Instead, she insists that total health care costs for middle-income families will go down. While this is not playing the reporters’ game, Senator Warren is answering the correct question, even if the reporters refuse to ask it.

The reporters’ game is to make taxes the issue, full stop. If they can get Warren to say she will raise people’s taxes, then they have the talking point they want.

That might be a fun game for star reporters who get six- and seven-figure salaries, but most people in the world are reasonably rational. They care about what they get for their taxes. If they can get the vast majority of their health care paid for by paying a few thousand dollars more a year in taxes, it is likely that most people will consider this a good deal.

As much as reporters try to distract from the bigger picture, Warren is right to insist upon answering the correct question. If that makes the reporters unhappy, that is their problem.

Unfortunately, bad reporting on taxes and budget issues is pretty much the norm in the media. The budget is usually reported as a scorecard, with the deficit being the bad news in the picture. Somehow, we are all supposed to be happier if we have a smaller budget deficit.

Budget reporting has almost completely ignored the fact that the recovery from the Great Recession has been much slower because budget deficits have been too small. If deficits had been larger, we would have had trillions of dollars of more output and millions of more workers could have been employed.

While the deficits and resulting debt are typically presented as a generational burden, the opposite is often the case. How have we made our children better off if we put their parents out of work? There is also the issue that larger deficits can be used to support investments, such as education and child care, infrastructure, and research and development into clean energy and other areas.

We hand down a whole economy and society, as well as the natural environment, to future generations. If we want to talk about generational equity, we have to look at that full picture, because the national debt tells us basically nothing.

Another amazing failure of budget reporting is that it never talks about the effective debt the government creates by issuing patent and copyright monopolies. These monopolies allow their holders to charge prices that are far above the free market price. In the case of prescription drugs alone, these monopolies cost us close to $400 billion a year (1.8 percent of GDP), nearly twice the size of the annual interest payments on the national debt.

There is zero justification for ignoring the burdens created by these monopolies. Patents and copyright monopolies are an alternative mechanism to direct spending that the government uses to pay for things. Perhaps reporters prefer these monopolies more than direct spending, but that is not an excuse for ignoring them in their reporting.

Budget reporting gets things wrong at even the most basic level of conveying information to readers. (Hint for reporters: that is your job.) News reports typically report budget numbers in billions or trillions of dollars, even though next to no one can assign any meaning to these numbers.

Sometimes this fact is even acknowledged by reporters — although it is apparently too much to ask that the reporters at The New York Times, The Washington Post, National Public Radio and other top outlets take the 20 seconds needed to put budget numbers in a context that is meaningful to their audience. This is a major reason that people hugely overestimate the portion of their taxes that go to Temporary Assistance for Needy Families (TANF), food stamps and other anti-poverty programs. They hear that we spend $20 billion a year on TANF (a really big number), but reporters don’t point out that this is 0.4 percent of the federal budget.

Elizabeth Warren is 100 percent right not to play this silly game of saying whether her health care plan will mean higher taxes. She has committed herself to developing a plan that will mean lower costs for low- and middle-class families. If the reporters want to yell about how this will mean higher taxes, then they have the option to do so, but Senator Warren is talking about matters to real people.

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