But how shall we pay for it ?

In its first fours years, the 1981 Reagan tax cut removed revenues equivalent to about 233 billion in today's dollars, about $58 billion per year.  GWB's tax cuts of 2001 and 2003 which included changes to the estate and capital gains taxes resulted in a revenue loss on the order of $300 billion per year. Trump's 2017 tax cut , which included cuts in the corporate tax rate is projected to result in a loss of $230 billion per year.

These cuts totaling nearly $600 billion per year did not stimulate the economy. This is particularly true for the Bush and Trump cuts, which were enacted in a time of economic growth. 

Evidence suggests that the [Bush] tax cuts — particularly those for high-income households — did not improve economic growth or pay for themselves, but instead ballooned deficits and debt and contributed to a rise in income inequality.  In fact, the economic expansion that lasted from 2001 to 2007 was weaker than average.  A review of economic evidence on the tax cuts by the Brookings Institution ...found that “a cursory look at growth between 2001 and 2007 (before the onset of the Great Recession) suggests that overall growth rate was … mediocre” and that “there is, in short, no first-order evidence in the aggregate data that these tax cuts generated growth.” (Center on Budget and Policy Priorities)

According to a 2017 survey, many large corporations said they don’t need the money from the [Trump] tax cuts. They are sitting on a record $2.3 trillion in cash reserves, double the level in 2001. The CEOs of Cisco, Pfizer, and Coca-Cola would instead use the extra cash to pay dividends to shareholders. The CEO of Amgen will use the proceeds to buy back shares of stock. In effect, the corporate tax cuts would boost stock prices but wouldn't create jobs. (The Balance)

Another means of increasing government revenues and also reducing inequality is a wealth tax such as that proposed by Elizabeth Warren.  

With clever accounting and using various loopholes, today's Federal estate taxes - our current form of wealth tax, which affect less than 0.1 % of us, are easily circumvented*.   

Warren’s proposal would implement a tax of 2 cents on the dollar on assets over $50 million and an additional 1 cent tax on every dollar of assets over $1 billion. It would generate nearly $3 trillion in tax revenue over 10 years. 

Warren's proposal received an endorsement from economist Thomas Pinketty, who proposed a global wealth tax in his book "Capital in the Twenty-First Century".  Now a group of ultrarich Americans have come out in favor of higher taxes on themselves, saying the nation has a “moral, ethical and economic responsibility” to ensure that they do.  In an open letter addressed to the 2020 presidential candidates and published Monday on Medium, the 18 signatories urged political leaders to support a wealth tax on the richest one-tenth of the richest 1 percent of Americans. “On us,” they wrote.  

Former Clinton and Obama adviser, Larry Summers notes that closing corporate tax shelter loopholes would also generate significant revenues.  He writes, "Economist Kimberly Clausing estimates that profit-shifting to tax havens costs the United States more than $100 billion a year. Although the Trump tax plan sought to reduce the incentives for profit-shifting, various exemptions and design flaws mean that the new system does little to deter shifting revenues to tax havens. "

Summarizing, here is "how we shall pay for it":

• Cut the defense budget: $300 billion/yr

• Reverse the Bush and Trump tax cuts, return maximum tax bracket rate to 50%: $530 billion/yr

• Wealth tax: $300 billion/yr

• Close corporate profit-shifting loopholes: $100 billion/yr

Total revenue gain: $1.23 trillion/year

In addition, a higher minimum wage - suggested earlier - would lift some out of poverty, and reduce the demand for social services.

The last part in this series of posts will examine additional uses - the environment, health care, education, the impact of automation - to which we can apply these monies in the coming century.

*Two examples: 

By shuffling his company stock in and out of more than 30 trusts, [casino billionaire Sheldon Adelson] has given his heirs at least $7.9 billion while legally avoiding about $2.8 billion in U.S. gift taxes since 2010, according to calculations based on data in Adelson’s filings with the Securities and Exchange Commission. (Washington Post, 2013 article)

The Walton family — which owns half of Walmart — has exploited a loophole in the estate tax to avoid paying $3 billion in estate taxes. This could increase by tens of billions in the future. (Americans for Tax Fairness Estate Tax Fact Sheet)

Health care is a human right.  Recognizing this, high income industrialized nations - including our neighbor Canada - have some form of universal health care.  Contrast this to the US where  28 million people are uninsured and an additional 85 million are underinsured (i.e., out-of-pocket costs keep them from seeking necessary care).  Tim Bottingham at Jacobin magazine writes:

With universal coverage, people are more likely to receive regular primary care, helping to better manage chronic illnesses like heart disease. Doctors are also more likely to catch illnesses like cancer before they spiral out of control. Unsurprisingly, countries with single-payer systems surpass the US in nearly every health category, including life expectancy and mortality reduction, despite spending far less on health care than we do. Removing health care from the market and guaranteeing it instead as a right is the primary goal of single-payer health care. Doing so will eliminate countless early deaths and bankruptcies. 

(See sidebar for Bloomberg Global Health Index.)

A study published in November by the PERI (Political Economy Research Institute) of the University of Massachusetts, Amherst provides a detailed analysis of Bernie Sanders' "Medicare for All" proposal. Most significantly, it answers the most common question single-payer advocates face: “How will we pay for it?” 

Bottingham summarizes the PERI study:

• Total annual health care spending in the US with "Medicare for All" will be $2.93 trillion, with increased coverage being more than offset by savings in administrative, pharma, and provider payments.

• Current government spending on all health care programs is $1.884 trillion annually.  Subtracting this from the Medicare for All spending, we need to fund $1.05 trillion/year.

• The taxes proposed by PERI are: business premiums (8.2% payroll tax), 3.75% sales tax on nonessential goods , a recurring tax of 0.36 percent on all wealth over $1 million, and taxing long-term capital gains as regular income.  These taxes would generate  $1.08 trillion/yr - $30 billion/yr more than the estimated additional costs.

The PERI authors point out that there are many workable approaches to raising the needed $1.05 trillion in tax revenue, and that their proposed methods, which differ from those proposed by Sanders, are not definitive.  

A key feature of Bernie Sanders’ Medicare for All Act is the transition it promises to the more than 800,000 private insurance industry workers who will be displaced. The PERI report provides three concrete proposals to accomplish this: pension fund guarantees for all impacted workers; support for near-retirement workers; and support for displaced workers, including job training and relocation support and total wage replacement for one year.

Bottingham concludes his article: "Medicare for All is a lofty goal, and lofty goals need workable policy. This study gives us that. While certain approaches in the study might not be perfectly ideal — particularly its financing methods — it nonetheless offers a broadly progressive approach that, as the authors admit, could easily be tweaked." 

So it can be done.  High income countries with a more equitable distribution of wealth are more likely to have single payer systems. (See sidebar for GINI coefficient.)  It comes down to having the political will to implement programs for economic justice.

By the end of this century, if we continue on our current "business-as-usual" path, our nation will be racking up economic losses of $440 billion/year due to climate change.  That figure comes from the "buried" report climate change assessment, released on Black Friday of last year.

A report authored by hundreds of U.S. climate scientists from 13 federal agencies presents a stark picture of the country’s fate due to climate change. The Fourth National Climate Assessment, released November 23, predicts the U.S. economy will shrink by as much as 10 percent by the end of the century if global warming continues apace. (Science News, Nov 28, 2018)

NOAA, the National Oceanographic and Atmospheric Administration reported that in 2018, there were 14 separate billion-dollar weather and climate disaster events across the United States, with a total cost of $91 billion.

Federal agencies are not the only ones concerned.  Wired summarizes a report published in April by CDP North America, a nonprofit that encourages companies to report how climate change might affect them.  In the short run- over the next 5 years, the world's largest companies expect to sustain losses of $1 trillion.

A growing number of companies are recognizing that fact and are now publicly reporting the effects of climate change on their businesses. A new report published Tuesday by CDP shows that 215 of the world’s biggest companies, including giants like Apple, JPMorgan Chase, Nestlé, and 3M, see climate change as a threat likely to affect their business within the next five years, with a cumulative cost of a trillion dollars. (Wired, April 6)

The Union of Concerned Scientists' 2017 report on sea level rise maps the rate of sea-level rise for hundreds of coastal communities,  creates a timeline when sea-level rise is projected to inundate various percentages of coastal communities, and then delves into the politically and economically sensitive arena of what to do about it.  

Most of the 90 communities that experience [chronic disruptive] flooding* already are in Louisiana and Maryland, where land subsidence has intensified the effects of sea-level rise...But over time, disruptive flooding will spread, engulfing the Jersey shore, the mainland side of North Carolina’s Pamlico Sound, and throughout South Carolina’s Low Country.  There is time enough to prevent some of the flooding..but for hundreds of other communities, including the small towns that dot Maryland’s Eastern Shore, as well as Savannah, Georgia, New Orleans and Miami, it may already be too late. Chronic flooding can be avoided only by adaptation measures—seawalls, levees, and other barriers—or by moving away.   (National Geographic, July 12, 2017)

The question has become not so much if we can afford to address climate change but if we can afford not to.  

The effort will require measures both to mitigate the effects of global warming and to modify the infrastructure of coastal areas and cities, where much of the country's population lives and works.  

The Trump presidency has been a disaster for the environment.  In the name of deregulation, one Federal policy after another has been reversed in an almost constant stream of climate change denial.  National Geographic has been keeping a running list which you can access by the link in the sidebar.  Until the man who pulled our country out of the Paris Climate Accords is voted or impeached out of office, action will have to be taken at the local and state level.  The Global Climate Action Summit hosted last year by California governor Jerry Brown is one such example. We Are Still In, a coalition of government and business leaders formed in response to President Trump’s announced plan to withdraw from the Paris Agreement, delivered 300 new commitments for increased climate action at the summit.

If Trump is defeated in 2020 and if Democrats can hold the House and take the Senate** then we can start talking about real action at the national level - as in the Green New Deal. FDR's New Deal helped pull America out of the Great Depression. The Green New Deal is even more ambitious. It aims to save the planet while creating millions of US jobs in the "green" energy sector. As Vox ("The Green New Deal Explained", Jan 7) noted :

The broad thrust is fairly simple. It refers, in the loosest sense, to a massive program of investments in clean-energy jobs and infrastructure, meant to transform not just the energy sector, but the entire economy. It is meant both to decarbonize the economy and to make it fairer and more just. 

In February, Sen. Ed Markey (D-MA) and Rep. Alexandria Ocasio-Cortez (D-NY) introduced a Green New Deal resolution that lays out the goals, aspirations, and specifics of the program.  The resolution features two key progressive priorities - justice and infrastructure investment.  

David Roberts writing at Vox explains that while costs, technologies and policies matter

They all matter secondarily, via their effects on ordinary people. The role of progressive politics, if it amounts to anything, is to center the safety, health, and dignity of ordinary people.  That means that justice — or as it’s often called, “environmental justice,” — must be at the heart of any plan to address climate change.  The simple fact is that climate change will hit what the resolution calls “frontline and vulnerable communities” hardest.  

As for public investment, Roberts notes:

Neoliberalism has also made old-fashioned public investment something of a taboo. The GND goes directly at it — public investment aimed at creating jobs is central to the project.  The preamble notes that “the Federal Government-led mobilizations during World War II and the New Deal era created the greatest middle class that the US has ever seen” and frames the GND as “a historic opportunity to create millions of good, high-wage jobs in the United States.”

The resolution lists a dozen or so focus areas for projects to achieve the goals of the Paris Climate Accord.  See sidebar.  

Once specific projects are defined and the costs established, the question of how to pay for the projects can be addressed.  The resolution itself is silent on this matter, but keep in mind these factors:

• The $440 billion/year cost to the country of doing nothing - from heat-related deaths, coastal property losses, lost wages in outdoor industries, and deaths from bad air quality. (See table below left.)

• The $200 billion/year revenue losses projected by large corporations.

• The $1.23 trillion/year freed up by changes in tax structure and reallocation of defense spending.

Progressive economists are also challenging the House's PAYGO rules, which stipulate a balanced budget over a 10-year time frame.  One such challenge is Modern Monetary Theory, whose advocates argue that the government should use fiscal policy to achieve full employment, creating new money to fund government purchases.  The primary risk once the economy reaches full employment is inflation, which can be addressed by raising taxes and issuing bonds to remove excess money from the system 

Kevin Baker, writing at Harper's, compares the Green New Deal with FDR's New Deal programs - particularly the TVA and its rural electrification programs - that helped pull America out of the Great Depression.  Excerpts from the article are given below right.  Baker quotes another Dave Roberts Vox article and I'll conclude with that quote:

"[The Green New Deal] says to Americans: we are going to do something really big, fast, disruptive, and ambitious, but during the transitions you will not be left behind or forgotten.  You will be able to find a job and a role to play; you will not be threatened with homelessness or lack of health care.  We are going to do this big thing together, all of us, and through it we will lift each other up."

*Defined as 10 percent or more of a community’s usable land flooding 26 times a year, or every other week.

**The U.S. Senate has 53 Republicans and 47 Democrats (including two independents). There are 34 seats up in 2020 - including a special election in Arizona - of which 22 are held by the GOP. Democrats will need to gain 3 (if Dem wins Presidency) or 4 seats to take control.  (270-to-win website)