The Needed Fix For Our Broken Political-Economic System

by on February 24, 2016 · 0 comments

in Election, History, Politics

bernie-sanders-portrait-01By Frank Thomas / San Diego Free Press

I admire Bernie’s outspoken, honest portrayal of the breakdown of our egalitarian democracy – “a government of, for and by the people” – by a corrupt, immoral plutocratic political-economic ESTABLISHMENT threatening the very existence of our democracy.

I was appalled by David Brooks’ disingenuous critique of Bernie’s call for a ‘political revolution’- systemic reform for a systemically broken, money corrupted governance. Brooks beguilingly discredits Bernie’s bold ideas in the recent article, Livin’ Bernie Sanders’s Danish Dream.

Brooks conservative polemic is the standard ‘Bernie is neither realistic nor pragmatic’ brainwashing line that Hillary, Republican presidential candidates, Tea Party people, and media are all chanting in a no-holds-barred attempt to degrade Bernie’s candidacy for the presidency. Brooks parrots the Washington Post’s editorial theme, Bernie Sanders’s Fiction-Filled Campaign.

Here’s Brooks’ debasement of Bernie’s bold agenda:

Sanders’s program would expand government power and influence in our lives. Sanders’s program would give the ‘establishment’ (i.e., government) greater resources to control American life.” This deceptive statement deflects attention away from the fact that it’s the corporate and billionaire ‘establishment’ that has acquired massively inordinate financial power and influence over our government (thanks to Citizens United). Bernie wants to restore fair democratic governance in the interests of all – one vote, one person.

Sanders’s program would weaken the ability of the middle class to make choices about their own lives as his program will require a broad-base increase in taxation – thereby reducing middle class spending power and hence fewer resources to choose one’s own lifestyle.” This ignores the fact that 90% of American households have already seen their purchasing power stagnate at a wage growth of less than 1% (adjusted for inflation) over the 1970-2008 period and less than 4% since then. There are a lot of half-truths and falsehoods about the cost of Bernie’s tax plan. For example, Bernie’s universal single-payer health care plan would be paid with a 2.2% “income-based health care premium” from households.

Thus, marginal rates would go up, e.g., the 10% bottom rate to 12.2%, 15% to 17.2%, 25% to 27.2%, etc. It’s false to call this a ‘tax increase’ as it would save Americans thousands by not having to pay premiums, deductibles, and co-payments. A family household of four earning less than $28,000 (about 26% of households) would be exempt from the 2.2% tax. In addition, there would be a 6.2% “income-based health care premium” paid by employers. This tax would significantly lower costs for businesses compared to what they pay now to subsidize employee health insurance.

Sanders’s policy director, Warren Gunnels, told TIME that “the typical family of four making $50,000 a year would pay less than $46 a month under Bernie’s plan for three months of paid family and medical leave AND universal health care.” Contrary to what Brooks says, middle-class spending will be substantially increased under Bernie’s single-payer plan.

Social Security

social security loanTo bolster Social security funding, any income over $250,000 would also be subject to the 6.2% payroll tax which currently only applies to the first $118,500 in wages. Bernie’s plan would tax capital gains and dividends at same ordinary income tax rates (noted above) for anyone with taxable income above $250,000. I recall Warren Buffet’s statement that his ‘effective’ tax rate (as result of low capital gains taxes and other tax benefits) on personal income of millions in 2014 was less than his secretary’s tax rate.

A recent report by the Tax Foundation concludes that Bernie’s tax plan would significantly raise tax revenue by $13.6 trillion over next decade, dropping to $9.8 trillion including GDP effects. This is driven by broad-based taxes on investment income and payroll including high-income earners. After tax incomes of bottom 50% of taxpayers would drop by 4.9% and 8.6% for the top 50%( vs. 17.9% for top 1% of taxpayers). After tax income of all taxpayers would be 10.6% lower (or 12.8% lower including GDP effects) and 24.9% lower for the top 1%.

BUT, these figures exclude the substantially lower health care costs for households and businesses under a single-payer Medicare-for-All plan. They also exclude returns from job generating investments in infrastructure, education, renewable energy, etc. – also made possible with less debt growth from trillions of increased federal tax revenues. (see: Details and Analysis of Senator Bernie Sanders’s Tax Plan).

Sanders’s program would change the incentive structure for the country’s most successful people by raising the top tax rate.” This is another of Brooks’ distortive remarks. It’s a variation of same old baloney argument if top CEOs aren’t paid 300 times the average worker’s wage (U.S. norm vs. 50 times in Europe), talent will flee the country.

Brooks artificially inflates the top class tax rate by quoting Jose Barro of the Times who comes to a 73% top tax rate by including state, local and other taxes that everyone pays. Bernie’s progressive federal tax rates begin at 39.2% on incomes above $250,000 (vs. $430,000 today) and gradually increase to 50.2% on individual ordinary income of $2 million to $10 million and to 54.2% on income over $10 million. That these changes, as Brooks claims, would discourage risk-taking by successful people and entrepreneurs is absolute nonsense. The Netherlands has a marginal tax rate of 52% on all income above $65,000 with no unusual disincentives whatsoever on dynamics or quality of executive management and entrepreneurial activity

Warren Buffet Found It Ridiculous

Warren Buffet found it ridiculous that his personal ‘effective income tax rate of 18% on millions of income was lower in 2014 than that of his secretary – thanks to his entitlement to low capital gains/dividends tax rates and other tax benefits on capital gains/dividend income that usually form a big part of top 1% class total income. Furthermore, U.S. startups and small firms have attractive tax incentives. Bernie is well aware how valuable small, innovative firms of less than 500 employees are to our economy; they generate 65% of U.S. jobs. The Big Lie is that Big companies – that pay low taxes and kill lots of small firms that pay reasonable taxes – create more jobs! No one understands this better than Bernie.

“Sanders’s program would Europeanize American public universities. It sounds great to make colleges free. In fact, it’s a hugely expensive program that would benefit the already affluent.” Bernie is advocating that public university tuition cost be publicly financed. The typical public U.S. university has a total average annual cost of around $19,000 for in-state fees (up to $33,000 for out-of-state fees). In-state tuition and other fees are about 50% of the total cost for a net student cost of ±$10,000. (This compares to total public university costs of $13,500 in UK and $12,600 in the Netherlands). Bernie’s plan will put student cost at U.S. public universities nearly on a par with EU universities. Of course, his tuition assistance program might incorporate a family income cap, so it will not be a boondoggle for wealthy families, as Brooks suggests. (see: How Much Does It Cost to Study in the U.S.?, Jan. 30, 2015)

It would create, as in Germany, a legion of eternal students who have little incentive to leave school because the costs are so low. In America, it would threaten hundreds of private colleges, which could no longer compete against the ‘completely subsidized’ state system.” Brooks is loose with the truth here. German schools and colleges at all levels, including a highly successful trade school system, are very well managed. Germany has abandoned college tuition fees so public universities cost students out-of-pocket no more than $10,000 annually for room and board. German taxpayers subsidize the tuition cost averaging $14,600/year per student. A college education in Germany is seen as an extension of high school where one expects it to be provided ” says Jeffrey Peck, Dean of the Weissman School of Arts & Sciences at Baruch College /Cuny. (see: How U.S. Students Get A University Degree For Free (Tuition) in Germany, by Franz Strasser, June 3, 2015 ; (see: How Much Does It Cost To Study in Europe?, Jan. 28, 2016)

student debt is a crimeBernie’s tuition-assistance program for students attending public universities is not a ‘completely subsidized state.’ It covers tuition or about half the costs. Top elite private colleges have their own unique market niche and many, like my alma mater, Bowdoin College, offer only grants depending on need – no loans. The grants cover up to 40%, in some cases more, of total college costs of around $60,000 per year. U.S. private colleges cost on the average $46,500 per year or TWO times the average total cost of U.S. public universities, or over TWO times the cost of EU universities.Brooks says, “slowly, U.S. (public) universities would look more like their European counterparts.” What’s wrong with that? A little more competition may occur against U.S. private colleges from Bernie’s public-financed tuition for public universities, but nothing so apocalyptical that ‘hundreds of colleges’ can’t compete, as Brooks suggests.

Sanders’s changes in the health care system would be along the same lines. Sanders would create a centralized and streamlined system.” The first sentence makes sense but leaves out the words, that will betransparent and significantly cost effective.’ Brooks in following sentence reverts back to some more telling of tall stories.

Bernie’s Approach

Bernie’s approach would also, as in Europe, reduce the rate of medical progress, increase the rationing of care, increase the wait time for patients, induce more doctors to retire, and centralize decision-making.” This statement is a cocktail of half-truths and falsehoods. First, Medicare is a very efficient, very low overhead cost, well-operated system. The Affordable Care Act has been a great step forward in providing health care coverage for all Americans regardless of prior medical history. However, ACA still does not cover 29 million people and has produced unaffordable health care insurance from high premiums and huge out-of-pocket costs (e.g., co-pays, deductibles etc.) and relatively poor coverage.

ACA has also not solved the problem of extremely high overhead and administrative costs of insurance companies and runaway pharmaceutical costs. Bernie’s federally administered universal single-payer (Medicare for ALL) plan does away with the private insurance industry – leading to overhead and administrative cost savings of at least $350 billion annually. Unlike ACA, single-payer also controls drug prices and ends for profit hospitals. It provides clear federal health care standards for universal coverage and treats health care as a human right – all directly opposite to what ACA’s tiered health care system does in which one gets what one pays for.

Brooks hasn’t the slightest idea what he’s talking about when comparing U.S. health care systems or quality of lifestyles with Europe. For three decades, our family has experienced the Netherlands’ universal basic health care system – a combination of market based insurance and government based oversight. I have never seen unacceptable practices that compromise quality care like rationing of care or long wait times or abnormal numbers of doctors leaving practice, as Brooks falsely suggests is the general European modus operandi.

These are same boring, phony cliché ridden critiques that are made about Canada’s single-payer health care system that is far less expensive than our almost ‘100%-for-insurance-firm-profit’ system. Intermountain Healthcare, one impressive non-profit health care system operating a quality and cost effective plan in Salt Lake City, says it will produce $5 billion in health care saving over the next five years; $500 million in savings are expected in 2016. The firm has decided to give this sum back to the community in lower premium rates.

Dutch basic health care for all has a standard family annual premium for two (plus children up to 18) of $2,900 (euro 2,640) based on a standard deductible of $415 (euro 375) per insured with a maximum deductible of $560 (euro 500) – and no co-pays or other charges. This premium is ONE-HALF the average U.S. family premium shown in TABLE 1. This covers excellent basic care needs with upgrades at reasonable premium increases. Market insurance premiums, health service quality, coverage, costs and standards for same are closely government controlled.

European health care systems are among the finest in the world just as the U.S. medical research and medical knowhow excels in the world. But the U.S. has the most expensive personal health care system in the western world. A recent Kaiser Family Foundation study shows how out-of-control U.S. average health insurance premiums for family coverage are – rising 61% in the last decade from $10,900 in 2005 to $17,550 in 2015. The 61% increase in premiums compares to a 20% increase in the overall inflation rate the last decade! Bear in mind also that annual family health insurance premiums (in the Netherlands and other EU countries) are 50% to 80% less than U.S. levels.

Following shows huge rise in U.S. average family health insurance premiums:



Bernie’s federally administered single payer program – combining Medicare, Medicaid, the Veterans Administration, ACA – would provide comprehensive benefits, save households and businesses money, allow free choice of doctors, hospitals and health care services. It would eventually bring total health care spending down from current very level high of±17% of GDP to ±13% range, eventually generating annual savings of well over $250 billion.


bernie for presidentDavid Brooks thinks everything is going fine in America. Token change is the only system that works in society as polarized and dysfunctional as ours has become. Sanders’s approach is that Real change will not come without BOLD change. Systemic corruption and malfunction require systemic reforms.

Brooks’ suggestions that the freedom, inventiveness, quality of lifestyle of Europeans with their high taxes is less than that of Americans are too preposterous for words. This mirage of America’s superiority or ‘exceptionalism’ also comes at a huge price of ‘exceptional’ income/wealth inequality, poverty and homelessness levels – far above those in Europe. That is not to say America should replicate the unique social-economic-political values built up in European countries over centuries, after horrendous continental wars. The one common value, moral principle binding Europeans is that “We are all in this life together,” with a certain degree of shared community that surmounts narrower self-interests, especially at critical times. America might do well to replicate Europe’s “we-ness.”

Our nation has gone fanatically way out-of-balance with an “anti-everything government and pro-everything market/individual far right culture.” But the Free Market ethic is a chimera. In fact the market has been rigged by the billionaire class which uses its money to effect political changes which favor itself. A political culture where money buys votes and legislative benefits while the lower/middle classes get poorer – a society split between exploiters and the exploited. No wonder our pro-rich, pro-corporate, pro-war paradigm is compelling more and more people, especially the younger generations, to stand up to the profound inequities and corruption of our founding values of fair play, an equitable playing field, and sharing in society’s progress.

Our nation has reached the point where people below 30 cannot get a decent job. Same applies for millions of workers who lost their jobs 2007-2012 and have been subsequently forced to accept downgraded positions or low paying, flexible, part-time work. This race-to-the-bottom has been taking place for 35 years. As Piketty’s study showed, 90% of the workforce or 137 million Americans had an average income (inflation adjusted) of $31,000 and a negative 1% growth in income 1970-2008 … a trend not changing much.

Bernie is correctly saying ‘enough is enough.’ And here is our nation “dreaming” it can afford being the world’s protector, policeman, regime changer, arms supplier at the gigantic cost of over $800 billion annually (50% of discretionary spending) at a time of desperately needed investments of hundreds of billions to vastly improve decayed infrastructure, educational systems and to implement an 80% green energy environment by 2050.

Tinkering with things deeply internally broken is regressive. A compromising approach to severe structural problems in a “winner-take-all” political system – plagued by divisive mean-spirited dialogue and disrespect, inane policy decisions (e.g., soaring health care costs, off-budget-wars mostly killing innocents) are bringing us nowhere. Unless REAL change happens, our economic and political systems will become ever more controlled and sucked dry by corporate and billionaire plundering. Economic inequality and exploitation of the bottom 99% will worsen, if that’s still possible.

The Hillarys, Brookes, Krugmans choice of evolutionary, incremental, tidbit change ultimately reinforces the rich ESTABLISHMENT’s insatiable greed and power thrust undermining our democracy. A passionately passionless status-quo plutocratic power base has already been born that’s vacuuming up at others expense all that remains of our nation’s wealth it can get its hands on.

This is what Bernie’s honest, refreshing message is all about. We deserve leaders who appeal to our saner, better instincts of balanced civil discourse, reasoned argumentation, governance not poisoned by purest self-interest ideology, not driven by the wealth and power accumulation of the few – but governance where people cohere around common purposes and the common good.

Frank Thomas,
The Netherlands,
February 21, 2016

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