Editor's note: This story was originally published in October. Given Bernie Sanders' continued fight against Hillary Clinton for the Democratic nomination, it's worth taking another look at what the U.S. economy may look like under a President Sanders. The introduction and sections on health care, Wall Street and Sanders' overall political leanings have been updated.
Would you want a socialist in the White House? If the polls are accurate, very few people would. But it's closer to happening than almost ever before, with self-avowed socialist Bernie Sanders running a close second to Hillary Clinton to win the Democratic nomination for President of the United States and floating the idea of a contested convention.
The Vermont senator has shaken up the Democratic presidential field, igniting crowds all over the country and giving front-runner Clinton a run for her money for the party nod. While Sanders as president remains an unlikely scenario, given Clinton's delegate and popular vote lead, it's worth pondering what the U.S. markets and economy would look like with the Democratic Socialist at the helm.
"The great thing about Bernie Sanders is that there's no guile about him. His authenticity is pretty much based on him saying what he believes," said Middlebury College political science professor and expert in presidential politics Matt Dickinson. In other words, Sanders might be a bit better off if he used the "s-word" less.
While the U.S. economy would certainly look different with Sanders in the White House, it might not be as crazy as you'd think.
Of course, a Sanders presidency would face a number of hurdles to enacting its proposals -- ahem, Congress, which is controlled by Republicans, who don't exactly love socialists. But taking legislative hurdles out of the equation, we can glean much of what a U.S. economy run by Sanders would look like.
Among Sanders's most significant proposals are implementing a single-payer health care system, breaking up big banks, raising the minimum wage to $15, and ending free trade agreements NAFTA, CAFTA, permanent normal trade relations (PNTR) with China and the recently-signed Trans-Pacific Partnership. He also says he will make college tuition-free by implementing a financial transaction tax on Wall Street.
Thus far, most of the senator's ideas -- economic and otherwise -- have been focused on spending, without a clear picture on how he would pay for his proposals. However, one can infer that paying for his programs would require one of two things (or a combination of both): an increase in the deficit, and higher taxes.
"He doesn't really detail the impact of taxes on the overall aggregate growth of the economy. He basically just says, 'Well, we'll just raise more money by raising taxes,' but he doesn't really discuss the impact on productivity," Dickinson said.
Well, let's take a closer look.
Single-Payer Health Care: Sanders' Fat-Wallet Proposal
Sanders has been promoting the implementation of a single-payer health care system for months on the campaign trail and released his full plan in January. As president, he would toss Obamacare and replace it with a "Medicare for all" system that he says would cost $1.38 trillion per year but save people and businesses more than $6 trillion over the next decade.
Senator Sanders defended his plan at the sixth presidential debate in Milwaukee, Wisconsin in February.
"There is one major country on Earth that does not guarantee health care to all people," he said. "There is one major country -- the United States -- which ends up spending almost three times per capita what they do in the U.K., guaranteeing health care to all people, 50% more than they do in France, guaranteeing health care to all people, far more than our Canadian neighbors, who guarantee health care to all people."
In October, Gerald Friedman, a professor of economics at the University of Massachusetts at Amherst estimated a single-payer health care system such as the one proposed by Sanders would cost the U.S. federal government $15 trillion, and seven of his other programs -- including increased spending on public infrastructure, expanding social security and making tuition free at public institutions -- would cost an additional $3.5 trillion.
The good news? Friedman also says the health care overhaul would enable up to $10 trillion in savings for the general public. And the other programs? Another $1.1 trillion in additional savings over 10 years. And excluding the issue of likely higher taxes, the programs could mean seven million more jobs and a nearly $4 trillion increase in economic activity in 2026.
The bad news? Regardless, the programs could spook the markets.