The Independent

Would Bernie Sanders really wreck the US economy if he became President?

The Independent

This week Bernie Sanders, fresh from his victory in the Democratic primary in New Hampshire, was attacked by a vampire squid.

Or rather he was attacked by the former boss of that Wall Street banking vampire squid (that’s how it was described by Rolling Stone magazine) known as Goldman Sachs.

Lloyd Blankfein, a registered Democrat supporter, tweeted that: “Sanders is just as polarizing as Trump AND he’ll ruin our economy.”

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Sanders was unphased. “Let me see, a billionaire executive on Wall Street doesn’t like me,” he told CNN. “Hmm, I am shocked by that.”

But is Blankfein right? Would the Vermont senator ruin the US economy if he won the White House?

Shape Created with Sketch. The Democrat challengers to Trump in 2020

Show all 25

left Created with Sketch. right Created with Sketch.

Shape Created with Sketch. The Democrat challengers to Trump in 2020

1/25 Bernie Sanders

The Vermont senator has launched a second bid for president after losing out to Hilary Clinton in the 2016 Democratic primaries. He is running on a similar platform of democratic socialist reform

Getty

2/25 Joe Biden

The former vice president recently faced scrutiny for inappropriate touching of women, but was thought to deal with the criticism well and has since maintained a front runner status in national polling

EPA

3/25 Elizabeth Warren

The Massachusetts senator is a progressive Democrat, and a major supporter of regulating Wall Street

Reuters

4/25 DROPPED OUT: Bill De Blasio

The New York mayor announced his bid on 16 May 2019. He emerged in 2013 as a leading voice in the left wing of his party but struggled to build a national profile and has suffered a number of political setbacks in his time as mayor

AFP/Getty

5/25 Pete Buttigieg

The centrist Indiana mayor and war veteran would be the first openly LGBT+ president in American history

Getty

6/25 Michael Bloomberg

Michael Bloomberg, a late addition to the 2020 race, announced his candidacy after months of speculation in November. He has launched a massive ad-buying campaign and issued an apology for the controversial “stop and frisk” programme that adversely impacted minority communities in New York City when he was mayor

Getty Images

7/25 DROPPED OUT: Beto O’Rourke

The former Texas congressman formally launched his bid for the presidency in March. He ran on a progressive platform, stating that the US is driven by “gross differences in opportunity and outcome”

AP

8/25 DROPPED OUT: Steve Bullock

The Montana governor announced his bid on 14 May. He stated “We need to defeat Donald Trump in 2020 and defeat the corrupt system that lets campaign money drown out the people’s voice, so we can finally make good on the promise of a fair shot for everyone.” He also highlighted the fact that he won the governor’s seat in a red [Republican] state

Reuters

9/25 DROPPED OUT: Cory Booker

The New Jersey Senator has focused on restoring kindness and civility in American politics throughout his campaign, though he has failed to secure the same level of support and fundraising as several other senators running for the White House in 2020

Getty

10/25 DROPPED OUT: Wayne Messam

Mayor of the city of Miramar in the Miami metropolitan area, Wayne Messam said he intended to run on a progressive platform against the “broken” federal government. He favours gun regulations and was a signatory to a letter from some 400 mayors condemning President Trump’s withdrawal from the Paris Climate Accord

Vice News

11/25 DROPPED OUT: Kirsten Gillibrand

The New York Senator formally announced her presidential bid in January, saying that “healthcare should be a right, not a privilege”

Getty

12/25 DROPPED OUT: Kamala Harris

The former California attorney general was introduced to the national stage during Jeff Sessions’ testimony. She has endorsed Medicare-for-all and proposed a major tax-credit for the middle class

AFP/Getty

13/25 DROPPED OUT: John Delaney

The Maryland congressman was the first to launch his bid for presidency, making the announcement in 2017

AP

14/25 Tulsi Gabbard

The Hawaii congresswoman announced her candidacy in January, but has faced tough questions on her past comments on LGBT+ rights and her stance on Syrian President Bashar al-Assad

Getty

15/25 DROPPED OUT: Andrew Yang

The entrepreneur announced his presidential candidacy by pledging that he would introduce a universal basic income of $1,000 a month to every American over the age of 18

Getty

16/25 DROPPED OUT: Julian Castro

The former San Antonio mayor announced his candidacy in January and said that his running has a “special meaning” for the Latino community in the US

Getty

17/25 DROPPED OUT: Marianne Williamson

The author and spiritual adviser has announced her intention to run for president. She had previously run for congress as an independent in 2014 but was unsuccessful

Getty

18/25 DROPPED OUT: Eric Swalwell

One of the younger candidates, Swalwell has served on multiple committees in the House of Representatives. He intended to make gun control central to his campaign but dropped out after his team said it was clear there was no path to victory

Getty

19/25 DROPPED OUT: Seth Moulton

A Massachusetts congressman, Moulton is a former US soldier who is best known for trying to stop Nancy Pelosi from becoming speaker of the house. He dropped out of the race after not polling well in key states

Getty

20/25 Amy Klobuchar

Klobuchar is a Minnesota senator who earned praise for her contribution to the Brett Kavanaugh hearings

Getty

21/25 DROPPED OUT: Jay Inslee

Inslee has been governor of Washington since 2013. His bid was centred around climate change

AFP/Getty

22/25 DROPPED OUT: John Hickenlooper

The former governor of Colorado aimed to sell himself as an effective leader who was open to compromise, but failed to make a splash on the national stage

Getty

23/25 DROPPED OUT: Tim Ryan

Ohio representative Tim Ryan ran on a campaign that hinged on his working class roots, though his messaging did not appear to resonate with voters

Getty

24/25 Deval Patrick

The former Massachusetts governor launched a late 2020 candidacy and received very little reception. With just a few short months until the first voters flock to the polls, the former governor is running as a centrist and believes he can unite the party’s various voting blocs

AFP/Getty

25/25 Tom Steyer

Democratic presidential hopeful billionaire and philanthropist Tom Steyer is a longtime Democratic donor

AFP/Getty

1/25 Bernie Sanders

The Vermont senator has launched a second bid for president after losing out to Hilary Clinton in the 2016 Democratic primaries. He is running on a similar platform of democratic socialist reform

Getty

2/25 Joe Biden

The former vice president recently faced scrutiny for inappropriate touching of women, but was thought to deal with the criticism well and has since maintained a front runner status in national polling

EPA

3/25 Elizabeth Warren

The Massachusetts senator is a progressive Democrat, and a major supporter of regulating Wall Street

Reuters

4/25 DROPPED OUT: Bill De Blasio

The New York mayor announced his bid on 16 May 2019. He emerged in 2013 as a leading voice in the left wing of his party but struggled to build a national profile and has suffered a number of political setbacks in his time as mayor

AFP/Getty

5/25 Pete Buttigieg

The centrist Indiana mayor and war veteran would be the first openly LGBT+ president in American history

Getty

6/25 Michael Bloomberg

Michael Bloomberg, a late addition to the 2020 race, announced his candidacy after months of speculation in November. He has launched a massive ad-buying campaign and issued an apology for the controversial “stop and frisk” programme that adversely impacted minority communities in New York City when he was mayor

Getty Images

7/25 DROPPED OUT: Beto O’Rourke

The former Texas congressman formally launched his bid for the presidency in March. He ran on a progressive platform, stating that the US is driven by “gross differences in opportunity and outcome”

AP

8/25 DROPPED OUT: Steve Bullock

The Montana governor announced his bid on 14 May. He stated “We need to defeat Donald Trump in 2020 and defeat the corrupt system that lets campaign money drown out the people’s voice, so we can finally make good on the promise of a fair shot for everyone.” He also highlighted the fact that he won the governor’s seat in a red [Republican] state

Reuters

9/25 DROPPED OUT: Cory Booker

The New Jersey Senator has focused on restoring kindness and civility in American politics throughout his campaign, though he has failed to secure the same level of support and fundraising as several other senators running for the White House in 2020

Getty

10/25 DROPPED OUT: Wayne Messam

Mayor of the city of Miramar in the Miami metropolitan area, Wayne Messam said he intended to run on a progressive platform against the “broken” federal government. He favours gun regulations and was a signatory to a letter from some 400 mayors condemning President Trump’s withdrawal from the Paris Climate Accord

Vice News

11/25 DROPPED OUT: Kirsten Gillibrand

The New York Senator formally announced her presidential bid in January, saying that “healthcare should be a right, not a privilege”

Getty

12/25 DROPPED OUT: Kamala Harris

The former California attorney general was introduced to the national stage during Jeff Sessions’ testimony. She has endorsed Medicare-for-all and proposed a major tax-credit for the middle class

AFP/Getty

13/25 DROPPED OUT: John Delaney

The Maryland congressman was the first to launch his bid for presidency, making the announcement in 2017

AP

14/25 Tulsi Gabbard

The Hawaii congresswoman announced her candidacy in January, but has faced tough questions on her past comments on LGBT+ rights and her stance on Syrian President Bashar al-Assad

Getty

15/25 DROPPED OUT: Andrew Yang

The entrepreneur announced his presidential candidacy by pledging that he would introduce a universal basic income of $1,000 a month to every American over the age of 18

Getty

16/25 DROPPED OUT: Julian Castro

The former San Antonio mayor announced his candidacy in January and said that his running has a “special meaning” for the Latino community in the US

Getty

17/25 DROPPED OUT: Marianne Williamson

The author and spiritual adviser has announced her intention to run for president. She had previously run for congress as an independent in 2014 but was unsuccessful

Getty

18/25 DROPPED OUT: Eric Swalwell

One of the younger candidates, Swalwell has served on multiple committees in the House of Representatives. He intended to make gun control central to his campaign but dropped out after his team said it was clear there was no path to victory

Getty

19/25 DROPPED OUT: Seth Moulton

A Massachusetts congressman, Moulton is a former US soldier who is best known for trying to stop Nancy Pelosi from becoming speaker of the house. He dropped out of the race after not polling well in key states

Getty

20/25 Amy Klobuchar

Klobuchar is a Minnesota senator who earned praise for her contribution to the Brett Kavanaugh hearings

Getty

21/25 DROPPED OUT: Jay Inslee

Inslee has been governor of Washington since 2013. His bid was centred around climate change

AFP/Getty

22/25 DROPPED OUT: John Hickenlooper

The former governor of Colorado aimed to sell himself as an effective leader who was open to compromise, but failed to make a splash on the national stage

Getty

23/25 DROPPED OUT: Tim Ryan

Ohio representative Tim Ryan ran on a campaign that hinged on his working class roots, though his messaging did not appear to resonate with voters

Getty

24/25 Deval Patrick

The former Massachusetts governor launched a late 2020 candidacy and received very little reception. With just a few short months until the first voters flock to the polls, the former governor is running as a centrist and believes he can unite the party’s various voting blocs

AFP/Getty

25/25 Tom Steyer

Democratic presidential hopeful billionaire and philanthropist Tom Steyer is a longtime Democratic donor

AFP/Getty

What are Sanders’ economic policies?
His website lists a host of objectives such as free-at-the-point-of-use healthcare for all, a jobs guarantee, a cancellation of student debts, a wealth tax on the richest 0.1 per cent and a major investment in public housing and green energy.

Wealth taxes? Free health care? A jobs guarantee? Isn’t that socialism?
Well, Sanders is perfectly happy to describe himself as a socialist.

But while policies such as free universal healthcare are seen as extreme in the US they are perfectly ordinary in Europe.

The higher tax and spending proposed by Sanders would also not be out of place on the other side of the Atlantic.

The economist Paul Krugman says Sanders is better described as a European-style social democrat rather than a socialist, not least because Sanders isn’t proposing to nationalise private industries.

OK, but would this ruin the American economy?
Given similar policies have not ruined European economies it’s hard to see why, prima facie, why they would prove so destructive in the US.

The French economist Thomas Piketty even argues Sanders’ policies could be beneficial to the US economy by raising the country’s growth rate, and says that his wealth distribution policies tap into an older tradition of American policymaking.

“Remember that the US is actually the country that invented progressive taxation of income and wealth in the 20th century,” Piketty points out.

Others have described Sanders as a “New Dealer”, referring to the progressive economic policies put in place by former Democratic President Franklin Roosevelt in the wake of the Great Depression of the 1930s.

So why are people describing Sanders as dangerous?
A cynic would say it’s because they don’t personally want to pay more tax.

But it may also be that the genuinely fear Sanders’ policies, even if they are in the mainstream of the European tradition, will do damage in the US context.

Or they may be assuming that Sanders, if he won power, would pursue policies that go much further than those he has proposed, with the 78-year-old proving more radical in office, perhaps like Hugo Chavez in Venezuela.

Against this, though, is the institutional fact that US presidents are constrained by Congress in what policies they can enact. Sanders might be in favour of relatively radical redistribution, but that’s not true of the wider Democratic party.

Even some of Sanders’ rivals for the Democratic nomination, such as Pete Buttigieg, are critical of his policies such as the $15 federal minimum wage.

That’s why many analysts – even those who support the principle of “medicare-for-all” – think there is little chance he could actually deliver it, even if he won power.

And while some financiers are sounding the alarm, others are more sanguine.

Another Wall Street Bank, JPMorgan, recently told its clients that, even if Sanders were elected, “we put the probability of major changes like medicare-for-all or a wealth tax at less than 5 percent.”

All of which raises a question: is the risk less that Sanders ruins the US economy than that he disappoints his supporters?

Ben Chu The Independent

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