Do you say these things to make people laugh?
Have you ever read Bernie's platform?
The U.S. is home to some of the world's wealthiest families and corporations. It is a land of opportunity for many; however, among developed nations America has the highest rates of income inequality. Income inequality has been rapidly rising in America since the late 1970s. Income inequality has a host of social-economic consequences, and the topic has become a cornerstone issue for the socialist senator from Vermont, Bernie Sanders. His campaign is heavily focused on the economy, but more than that, his economic policies are heavily focused on reversing the upward trend in income and wealth inequality.
Focusing on the Wealth and Income Gap
Sanders has made it clear that tackling income inequality is a critical aspect of his presidential campaign:“Are we prepared to take on the enormous economic and political power of the billionaire class or do we continue to slide into economic and political oligarchy?” states Sanders on his campaign website.
Many of Sanders’ proposed policies aim directly at reducing the income inequality gap. From increasing the minimum wage to challenging Wall Street, here's a brief overview of Sanders' policies. (For related reading on income inequality, see: A Brief History of Income Inequality in the United States).
Empowering the 99 Percent
Sanders contends that the current federal minimum wage of $7.25 an hour is entirely inadequate, calling it “starvation pay.” Adamant that no one working over 40 hours a week should be living in poverty, he proposes a “living” minimum wage of $15 an hour that would be introduced over the next few years.
Throughout the past century, union membership rates having declined drastically; moreover, the current corporate environment discourages union participation. Sanders promises to “strengthen the labor movement” as a means of reducing income inequality. He also wants to increase workers’ influence and strength by promoting more worker-owned cooperatives.
Inequality between the rich and poor is not the only type of inequality Sanders wishes to focus on. He also aims to eliminate the pay gap between men and women performing similar work. As well, Sanders seeks to highlight issues of racial inequality.
Sanders' other reforms intended to help those at the bottom include providing Medicare for all, eliminating tuition at public colleges and universities and reducing interest rates on student loans.
Taking Away Free Lunch for the Super-Rich
A press release issued last June unleashed a proposal from the Vermont senator for a number of tax reform policies that would raise rates on the wealthy and eliminate loopholes. (To read more, see: Carried Interest: A Loophole in America’s Tax Code).
Included in the proposal were plans for lowering the estate tax exemption level, increasing the estate marginal tax rates, creating a billionaire surtax, and ending loopholes that allow billionaires to avoid taxes by setting up dynasty trusts or avoid estate taxes. Further, he plans to raise the cap on taxable income that goes towards Social Security. Sanders is also proposing a financial transaction tax aimed at reducing different forms of risky and unproductive speculative trading.
A central prong of Sanders' plan seeks to ensure the wealthy do not have an unfair economic advantage. In short, he hopes to challenge Wall Street’s current status of being “too big to fail”. His proposals to reform Wall Street include: breaking up big banks, limiting huge financial institutions from being able to make risky speculations with insured deposits, capping credit card rates at 15%, and limiting bankers’ abilities to get rich from taxpayer bailouts.
How Sanders' Proposals Would Impact the Economy
While Sanders’ policy proposals will help to reduce economic inequality, there are some that would argue, that these reforms could have negative implications for the overall economy. They argue that increasing tax burdens on the super rich punishing the nation's most productive class and could lead to lower investments and overall production. In short, they argue that extending benefits to the poorest means rewarding the most unproductive class, creating disincentives for hard work.
However, Sanders’ proposals are fairly modest and are not looking to eliminate all economic incentives. Proponents of Sanders' work argue that tilting the balance of economic rewards in favour of the poor is likely to benefit the overall economy rather than hurt it. They argue that the rich tend to have much lower marginal propensities to consume than the poor. Thus, for every extra dollar of income the rich earn they spend less of it than the poor. In an economy that seems to be struggling with a lack of aggregate demand, redistributing incomes from the wealthy to the poor is likely to spur economic growth to the benefit of all.
The Bottom Line
As a self-proclaimed socialist, Bernie Sanders is campaigning on a platform that promises to empower the bottom 99% through minimum wage reforms and strengthening the labor movement while increasing taxes and eliminating tax loopholes for the super rich. With income inequality reaching highs not seen since before the Great Depression Sanders aims to champion the 99%.
Read more: A Review of Bernie Sanders' Economic Policies | Investopedia
A Review of Bernie Sanders' Economic Policies | Investopedia
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