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The cost of Sanders' agenda -- possibly $60 trillion -- would set a peacetime US record

(CNN) While the new spending programs Sen. Bernie Sanders has proposed in his presidential campaign would at least double federal spending over the next decade, he has provided little detail about how he would implement or finance such a massive increase.

The Vermont independent's agenda represents an expansion of government's cost and size unprecedented since World War II, according to estimates from his own website and projections by a wide variety of fiscal experts.

Sanders' plan, though all of its costs cannot be precisely quantified, would increase government spending as a share of the economy far more than the New Deal under President Franklin Roosevelt, the Great Society under Lyndon Johnson or the agenda proposed by any recent Democratic presidential nominee, including liberal George McGovern in 1972, according to a historical analysis shared with CNN by Larry Summers, the former chief White House economic adviser for Barack Obama and treasury secretary for Bill Clinton.

Sanders' plan would also increase the size of government far more than any modern Republican president, including Ronald Reagan, has sought to cut it, Summers' analysis concluded.

"On the spending side, ... this is far more radical than all previous presidencies, on either the right or the left," Summers said in an interview. "The Sanders spending increase is roughly 2.5 times the size of the New Deal and the estimated fiscal impact of George McGovern's campaign proposals. This is six times as large of a growth of government than any of the Ronald Reagan dismemberments. We are in a kind of new era of radical proposal."

Maya MacGuineas, president of the bipartisan Committee for a Responsible Federal Budget, a nonprofit group that advocates reducing federal deficits, also says Sanders' agenda would at least double federal spending. "We are literally talking about increases in government spending that would double the size of government as a share of gross domestic product," says MacGuineas, whose group is completing a detailed analysis of the Democratic candidates' agendas.

She added: "It is remarkable how little attention such a huge change has gotten."

Exact cost projections on all of Sanders' proposals aren't available, in part because he hasn't fully fleshed out some of the ideas he's embraced (such as universal pre-K and child care). But a wide variety of estimates put the likely cost of the single-payer health care plan he has endorsed around $30 trillion or more over the next decade. Depending on the estimates used, including projections from his own campaign, the other elements of the Sanders agenda -- ranging from his "Green New Deal" to the cancellation of all student debt to a guaranteed federal jobs program that has received almost no scrutiny -- could cost about as much, or even more than, the single-payer plan. That would potentially bring his 10-year total for new spending to around $60 trillion, or more.

By comparison, the Congressional Budget Office projects that over the next decade the federal government will spend almost exactly $52 trillion on all existing programs, from the Defense Department to Social Security and Medicare. (Washington will spend nearly another $6 trillion on interest payments on the federal debt, bringing total projected federal expenditures to just under $58 trillion for the next 10 years.)

Grading on a curve?

"I think if the price tag for the Sanders agenda was [better] known ... voters would blanch -- even Democratic primary voters would blanch," said Jim Kessler, executive vice president for policy at Third Way, a centrist Democratic group. "The truth of the matter is in primary elections both in 2016 and so far in this one, he's allowed to skate. He gets graded on a curve. But if he were the nominee, the curve is over. The Republicans will spend a billion dollars picking apart every one of his plans."

CNN correspondent Abby Phillip asked Sanders about the estimates that his agenda would at least double spending at Tuesday's debate in Iowa, co-sponsored by CNN and The Des Moines Register. In response, he only made a case for his single-payer health care plan and did not address the larger question of financing such an increase in government spending beyond insisting, "Our plan wouldn't bankrupt the country. And, in fact, it would much improve the well-being of working-class families and the middle class."

Multiple officials at Sanders' campaign did not respond to requests for comments on the scope of his agenda or their own estimates of its cost. In an interview earlier this year, one top Sanders aide said the candidate's proposed cumulative increase in government's size "is not something we are discussing in the scope of the campaign."

The sheer size of Sanders' spending agenda dwarfs the proposed tax increases he has offered to pay for it, economists across the ideological spectrum agree. Brian Riedl, a former Senate Republican budget aide who's now a senior fellow at the conservative Manhattan Institute, has calculated that at most Sanders' existing proposals to raise taxes on the wealthy, Wall Street and corporations would raise about $23 trillion over the next decade.

"There is nowhere near enough resources that you can credibly collect to pay for spending of this size [from the rich]," agrees MacGuineas. "When you are talking about a doubling in the size of the government, you are talking about significant tax increases on the middle class."

To give a sense of the magnitude of the revenue challenge the Sanders plan would create, the CBO projects the total amount the federal government will collect over the next decade from the personal income tax is $23.2 trillion. That means Sanders is already proposing to raise additional taxes equal to the total expected receipts from the personal income tax -- and yet would still be tens of trillions of dollars short of covering the price tag for his agenda.

"We are in uncharted territory going back to and beyond McGovern in terms of soak-the-rich approaches to taxation," says Summers.

Cost to the economy

At various points, Sanders and his supporters have responded to concerns about the cost of his plans by arguing that single-payer health care will save on total health care costs for average families by eliminating copayments, deductibles and premiums; that Sanders will save money by cutting defense spending; that spending in areas such as universal early childhood education or free public higher education will generate more benefits than costs for society by improving the productivity of the workforce; and that the overall agenda will accelerate economic growth to a point that makes the cost easier for the economy to absorb.

Jeff Weaver, Sanders' senior campaign adviser, said in an earlier interview that the senator's proposed spending replicates the kinds of government investments that earlier generations supported to grow the economy more quickly.

"If you look at the investment in the interstate highway system and the economic efficiencies it created, it was incredible," Weaver said. "It was a huge investment up front but the economic benefits are incalculable."

Yet Summers is one of many economists, even in Democratic ranks, who say that increasing government spending as far and as fast as Sanders is proposing -- while imposing tax increases that are unprecedented in peacetime even as they fall short of covering his programs' cost -- carries enormous risk and uncertainty for the economy.

Mark Zandi, the chief economist at Moody's Analytics, also says that while Sanders' goals are admirable, such a large package of new spending and taxes would carry a substantial economic cost. Like the other analysts, Zandi calculates that Sanders' plan would roughly double federal spending, while his taxes would cover only about 40-45% of his new costs, producing a significant long-term increase in federal debt.

"The economy's long-term growth would likely be somewhat diminished by these policies," said Zandi, who has provided economic analysis for presidential candidates in both parties, including Hillary Clinton, Barack Obama and John McCain. "Most significantly, they would raise businesses' cost of capital, reduce investment and thus weigh on productivity and overall economic growth."

Zandi said that while Sanders deserved credit for "stretching the political debate" and focusing attention on the holes in the social safety net, the overall impact of the Vermont senator's plan could be to reduce annual economic growth by about a quarter of a percentage point.

"That's a big deal over time," Zandi said. "That is going from 2% growth to 1 ¾% growth. Over a period of a generation, that would make it harder to provide for a lot of the things he wants to provide."

Costing out the plan

The Congressional Budget Office, the most respected source of estimates on the impact of spending and taxing proposals, does not score the proposals of presidential candidates, so there is inevitably divergence on the potential costs of Sanders' ideas. But a broad framework of the potential price tag is available from an assortment of outside estimates and his campaign's projections. And it points to roughly a doubling in government's size.

Among the most expensive elements of the Sanders plan are:

  • His single-payer health care plan, which would replace all private health insurance with a government-run program. The center-left Urban Institute estimated last year that such a plan would increase federal spending on health care by about $34 trillion over the next decade, an estimate in line with projections by the Rand Corp. and other analysts.

  • Sanders' "Green New Deal" proposal to end the nation's reliance on fossil fuels will cost $16.3 trillion over the next decade, according to the campaign's calculations.

  • Sanders says on his website that he will spend $2.5 trillion over the next decade to build 10 million more units of affordable housing.

  • Sanders has endorsed proposals to spend $1 trillion over the next decade on improving the nation's infrastructure.

  • Sanders has proposed to eliminate tuition and fees at all public colleges and universities and to pay off all $1.6 trillion in student debt. Sanders puts the 10-year cost of tuition-free public college at $480 billion (though other estimates are somewhat higher). That would bring the cost of his higher education agenda to slightly above $2 trillion.

  • Sanders has proposed an array of increases in federal spending on K-12, including a guaranteed $60,000 minimum salary for all teachers, that would likely cost slightly more than $1 trillion over a decade.

*Sanders' website also says he supports universal preschool for 3- and 4-year-olds, as well as universal child care support. In a 2016 analysis of Sanders' program, MacGuineas' group put the 10-year cost of that proposal at $350 billion.

*Sanders' plan to raise Social Security benefits would cost about $275 billion over a decade, MacGuineas' group has calculated. (Riedl puts the cost much higher in his estimates.)

The biggest uncertainties

There is also substantial variance in the estimates of the cost of two other big components of the Sanders agenda.

Sanders has endorsed a new program of paid medical and family leave for private-sector workers funded by an expansion of the payroll tax. Estimates on the cost of this plan have varied from about $300 billion over 10 years to as much as $2 trillion, largely because of widely varying projections about how many workers would use it.

But the biggest uncertainty in the overall Sanders plan concerns a proposal that could be its most expensive component apart from the single-payer plan -- but that, paradoxically, has received almost no attention in the 2020 presidential campaign. On his campaign website, Sanders pledges to "enact a federal jobs guarantee, to ensure that everyone is guaranteed a stable job that pays a living wage."

That is an extraordinarily expansive -- and expensive -- promise. A 2018 paper commissioned for the Full Employment Project at the liberal Center on Budget and Policy Priorities calculated that it would cost Washington $56,000 (including benefits and administrative costs) for each full-time, year-round job it creates under such a plan. Using that figure, and assuming a 4% annual increase in costs, Riedl calculated that providing federal jobs to the roughly 11 million Americans who are either unemployed or out of the workforce but still desiring to work would cost around $7.5 trillion over 10 years.(One prominent liberal budget analyst, who asked not to be identified, considers that figure broadly accurate, though the total price tag might be reduced somewhat by jobs created under other Sanders initiatives, such as his clean energy plan.)

The uncertainty enters because such a plan could prove attractive to millions more Americans in low-wage jobs, especially if it offers good benefits and pay of $15 an hour -- the figure Sanders wants to establish as a federal minimum wage. If millions of them seek to join such a plan, its cost would expand enormously.

It's by assuming very broad participation in a guaranteed jobs program, as well as by adopting higher end estimates for several of Sanders' other proposals, that Riedl puts the total price for the senator's agenda at $97.5 trillion over the next decade. Other experts, such as MacGuineas, says that figure is likely way too high, and Riedl acknowledges it may represent an extreme case scenario.

On the other hand, the listing above doesn't include all of Sanders' spending plans; he's proposed, for instance, canceling all $81 billion in overdue medical debt. Riedl says that even the most conservative estimates of the Sanders agenda represent a kind of "fantasy land" approach to budgeting. "When you are discussing whether it is 70 or 80 or $90 trillion, it's like trying to discuss the details of where I would go on my honeymoon with Kate Upton," he said.

A new peacetime high

At the least, such an increase in federal spending has only a single precedent in modern American history: the height of World War II. Measured as a share of the gross domestic product, federal spending grew from 9.6% in 1940 to its peak of 42.7% in 1944, according to federal statistics.

During the New Deal, the biggest 20th-century peacetime increase, federal spending grew by almost 8 percentage points as a share of GDP, according to Summers' calculations.

It is not possible to calculate candidates' spending proposals with nearly as much precision as actual government expenditures, but Summers has formulated general estimates of the magnitude for earlier Democratic nominees and the party's current field of contenders. Of the past three Democratic presidential nominees, John Kerry in 2004 and Hillary Clinton in 2016 proposed spending increases equal to around half a percentage point of the economy, while Obama in 2008 proposed spending an amount something over 1 percentage point, Summers calculated.

This year, he broadly estimates, former Vice President Joe Biden is proposing spending increases probably equivalent to roughly 1.5% of the economy, Pete Buttigieg roughly 2% and Sen. Elizabeth Warren an amount equal to about 12%.

Sanders laps all of them, as well as the New Deal precedent: Even a very conservative $50 trillion 10-year cost for Sanders' plan would translate into a roughly 20 percentage point increase in federal spending relative to the economy, according to the calculations by Summers, who also once served as chief economist at the World Bank. (As Zandi notes, the Sanders spending increase, measured as a percentage of the economy, would likely be even greater if his proposals slow economic growth.)

Measured as a share of the economy, then, Sanders is proposing spending increases about 15 times larger than Obama ran on in 2008, and roughly 30 times as large as Clinton's in 2016.

Sanders' plans to pay for agenda

Moreover, Summers has calculated, the largest tax increase approved during World War II, the 1942 Revenue Act, increased federal tax collections by an amount equal to just about 5% of the total economy. That was the biggest one-time tax increase in modern times; the tax surcharges approved for the Korean and Vietnam wars each collected revenue equal to about 1.5% of GDP and the deficit-reduction tax plans approved under George H.W. Bush and Bill Clinton in the early 1990s each raised about one-third that amount.

Summers hasn't calculated the total price tag for Sanders' tax proposals, but he has broadly projected that the tax proposals put forward by Warren would raise taxes by an amount likely exceeding 10% of the total economy, far more than any of these earlier examples. Sanders' tax plans are at least as aggressive as hers. For instance, his proposed "wealth tax" on large fortunes is designed to raise more than $4 trillion over the next decade, about twice as much as Warren expects her comparable plan to collect.

Yet even if that proposal raises the $4.3 trillion that Sanders' advisers project, it pales beside the cost of his spending plans under any projections. Likewise, while Sanders proposes raising the top marginal income tax rate to 52% for the highest earners and increasing income taxes on the affluent in other ways, by his own forecast that would raise slightly less than $2 trillion over the next decade. Other Sanders proposals, such as applying the Social Security payroll tax to annual incomes over $250,000, rescinding the Trump tax cuts and imposing an array of other new taxes on corporations, might collect another $4 trillion over 10 years. He would raise about $4 trillion more by imposing an "income-based premium" on businesses for his health care plan (which would essentially offset their savings from no longer providing insurance to their workers). All of this combined still leaves him way short of the estimated cost of his proposals.

The limits on government's capacity to raise money from the wealthy and business, even under proposals as aggressive as Sanders', is why experts such as MacGuineas say it is not possible to come close to funding the senator's spending agenda without either massively increasing the federal debt or raising middle-class taxes. "There is no question that any of these big universal programs will need middle-class taxes to be fully paid for," she says.

Like Hillary Clinton in 2016, the other Democratic presidential candidates to this point have chosen not to press Sanders on the cumulative cost of his agenda or how he could pay for it without substantially taxing the middle class. Kessler says that decision is somewhat understandable for each candidate, given that in crowded primaries, both of the candidates in any dispute often lose support.

But Kessler is one of many centrist Democrats who fear the collective implications for the party could be catastrophic if Sanders wins the nomination without being forced to develop a convincing case for increasing federal spending so much -- or explaining how he would pay for it. That, he believes, could expose Democrats to the risk of replicating the landslide defeats suffered by McGovern in 1972 or Walter Mondale in 1984.

"There is no history that shows Americans are willing to vote for an agenda like the Sanders agenda," Kessler said. "Republicans will make an estimate of how much taxes will need to go up in order to pay for it. And he will not have an answer, because most of his proposals are paper thin and he has not figured out a way to do it, and we will have a repeat of 1972 or 1984."

If Kessler is right, for Democrats that would be the most costly implication of all for Sanders' historically ambitious -- and expensive -- spending agenda.

This story, which originally published Tuesday, has been updated to include Sanders' response when he was asked at Tuesday night's debate about the cost of his agenda.

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