Bernie Sanders' Economic Plan: A Second Bill of Rights

Bernie Sanders has come a long way from the underdog position he held in 2016, eventually suspending his 2020 campaign for president on April 8, 2020. The Vermont senator was the frontrunner in the Democratic 2020 primary polls, but he eventually lost that lead and the delegate count to former Vice President Joe Biden in early 2020.

Sanders espoused many progressive economic policies in his candidacy, including Universal Healthcare and higher taxes on the wealthy and the financial sector. Modern Monetary Theory, the controversial economic theory espoused by his senior economic adviser Stephanie Kelton, has also gained supporters since the last time Sanders ran.

Sanders did not win the Democratic primaries this time either, but his name has become synonymous in the U.S. with a movement on the left that has energized scores of progressive young people. It's dramatically altered how many Americans see their lives and government policy interacting.

Sanders' economic agenda deserves attention. His platform has already made ideas like Medicare-for-All mainstream and will no doubt be used by future leaders hoping to take it forward.

21st Century Economic Bill of Rights

Sanders takes the position that every person in the U.S. is entitled to a decent job and a living wage, quality healthcare, a complete education, affordable housing, a clean environment, and a secure retirement. "This is the richest country on Earth and we have 40 million in poverty, 34 million with no health insurance, and half our people living paycheck to paycheck," he wrote on X (formerly Twitter). "I refuse to accept that as normal."

He called for a 21st Century Economic Bill of Rights, referencing the first ten amendments to the U.S. Constitution guaranteeing civil rights and liberties. Interestingly, President Franklin D. Roosevelt proposed a second Bill of Rights focused on economic security after his 1944 State of the Union speech. Sanders called it “one of the most important speeches ever made by a president" in 2015 and added that "it has not gotten the attention that it deserves.

Healthcare Is a Right, Not a Privilege

Sanders' proposal to give every American health insurance under a government single-payer system was at the center of his campaign. Sanders also wants to lower the price of prescription drugs with three bills that would allow the government to negotiate prices with Big Pharma, allow patients to import drugs from overseas, and peg prices to the median drug price in Canada, the U.K., France, Germany, and Japan.

Over 30 million Americans were uninsured at the time of Sanders' second presidential run. As he correctly points out, the U.S. spends a much higher amount each year on healthcare than most major countries, as demonstrated in this chart.

Sanders has not provided details on how much this would cost or how it would be paid for. His office had previously released a list of options that included introducing a 7.5% income-based premium paid by employers and a 4% income-based premium paid by employees.

Cancel Student and Medical Debt

Sanders wanted to cancel the $1.6 trillion in student debt held by 45 million people. Federal student debt has increased to $1.644 trillion in 2023, although borrowers have dropped to 43.6 million. He says indicated that canceling this debt would give graduates the freedom to pursue careers of their choice, narrow the racial wealth divide, and boost the economy by $1 trillion over the next ten years. The $1 trillion figure comes from a paper written by a group of academics, including Kelton.

Sanders also wants to cancel all medical debt. His proposal would eliminate an estimated $81 billion in past-due medical debt and reform debt collection practices. The Internal Revenue Service (IRS) would also be instructed to monitor non-profit hospitals that have special tax exempt status to make sure they're using the appropriate billing and collection practices.

Sanders isn't known for his subtlety and he also wants to guarantee higher education as a right for all and would pay for this and cancel student debt by taxing "Wall Street gambling."

Workers' Rights

Sanders wants to work work toward a full-employment economy, in addition to raising the federal minimum wage to at least $15 an hour and doubling union membership. A job guarantee is a proposal borrowed from Modern Monetary Theory.

Sanders said at the time of his running that he would be an "Organizer in Chief," so it's worth mentioning that his Workplace Democracy Plan to reform labor laws and strengthen unions is perhaps one of his most detailed and it includes multiple measures.

The National Labor Relations Board (NLRB) would certify unions that receive the consent of the majority of eligible workers if the bill were to pass. Employers would be required to begin negotiating a first union contract within ten days of the request. Those that refuse would face penalties.

Sanders also wants to ban mandatory arbitration, non-compete and unilateral modification clauses in employment contracts, and establish a sectoral collective bargaining system that's prevalent in Europe.

Giving workers ownership stakes in their companies and an equal say in company boards is also part of his agenda. Under his Corporate Accountability and Democracy Plan, private companies with at least $100 million in annual revenue or at least $100 million in balance sheet total and all publicly traded companies would have to be at least 20% owned by employees. 

Forty-five percent of the board of directors at these large corporations would also be elected by the workers. Sanders promised that workers would have the right of first refusal if their company goes on sale or plans to move overseas. They'll be provided with financial and technical assistance from the U.S. Employee Ownership Bank he would have created.

Companies are increasingly opting for outsourcing or automation, but their owners would have to donate shares to U.S. workers laid off due to such transitions if Sanders' plan were to go through. Sanders also wants to stop corporations from sending jobs overseas by eliminating tax deductions, including labor, environmental, and human rights standards, rules against currency cheating in every U.S. trade agreement, and expanding “Buy American” government policies.

Taxes

Wealth Tax

Sanders has proposed a federal "tax on extreme wealth." The progressive wealth tax would apply to net worth of over $32 million and was expected to raise an estimated $4.35 trillion over ten years and cut the wealth of billionaires in half over 15 years.

The tax brackets for married couples under Sanders' tax are as follows and rates are halved for singles:

• Net worth of $32 million and above: 1%
• Net worth of $50 million to $250 million: 2%
• Net worth of $250 million to $500 million: 3%
• Net worth of $500 million to $1 billion: 4%
• Net worth of $1 billion to $2.5 billion: 5%
• Net worth of $2.5 billion to $5 billion: 6%
• Net worth of $5 to $10 billion: 7%
• Net worth of Above $10 billion: 8%

"One of the biggest sources of wealth for middle-income families is owner-occupied homes, which are taxed in most states at rates that can be as high as, or even higher than, 1%," according to the Sanders campaign website. "Meanwhile, the vast majority of the wealth owned by the top 0.1% of Americans is not in housing or real property and is not subject to any sort of property tax. This proposal would ensure that assets owned by the top 0.1% are taxed in the same way as much of the wealth owned by the middle class is already taxed."

While he was still in the running for president, Sanders said that he would also pass legislation to establish a progressive estate tax on the wealth of the top 0.2% and scrap the income limit on Social Security payroll taxes. His administration would also "end special tax breaks on capital gains and dividends for the top 1% and substantially increase the top marginal tax rate on income above $10 million."

Corporate Tax

Sanders successfully pressured Amazon.com Inc. (AMZN) to raise its minimum wage to $15 and he has proposed progressively higher corporate tax rates for private and public companies whose top executives take home "exorbitantly" higher amounts each year than their typical workers. The Income Inequality Tax Plan would penalize companies whose highest-paid executives make over 50 times their median worker pay.

The increase in corporate tax rates based on compensation ratios would be as follows:

• Between 50 and 100: +0.5%
• Between 100 and 200: +1%
• Between 200 and 300: +2%
• Between 300 and 400: +3%
• Between 400 and 500: +4%
• More than 500: +5%

Sanders' campaign website said the plan would raise around $150 billion over ten years if corporations continue to maintain the current level of pay gaps at that time, and if the revenue would be used to eliminate medical debt.

Sanders has also said that up to $3 trillion in revenue can be collected in ten years by raising the corporate tax rate back to 35% from 21%, closing corporate tax loopholes, taxing the money that corporations earn overseas at the full corporate tax rate, forcing companies with over $25 million to disclose country by country financial information, and removing the 20% tax break for pass-through business income that went into effect in 2018.

Large pass-through businesses would also be subject to corporate taxes under his plan. The campaign noted that some companies that paid no U.S. federal income taxes, such as Amazon, Delta Air Lines Inc. (DAL), Chevron Corp. (CVX), and General Motors Co. (GM), would owe taxes under the plan.

Wall Street Tax

The financial transaction tax (FTT) that Sanders proposed is a 0.5% tax on stock trades, a 0.1% fee on bond trades, and a 0.005% fee on derivatives trades. This was expected to raise $2.4 trillion over ten years, according to research by left economist Robert Pollin cited by Sanders.

Forty other countries have FTTs and the concept goes as far back as the Great Depression. British economist John Maynard Keynes was one of its earliest proponents and suggested in "The General Theory of Employment, Interest, and Money" that the U.S. should introduce "a substantial government transfer tax on all transactions" on Wall Street to curb "the predominance of speculation over enterprise."

Wall Street Reforms

Sanders' campaign didn't have a plan as detailed as Sen. Elizabeth Warren's for reforming Wall Street, but he has indicated that he wants to reinstate the Glass-Steagall Act, cap credit card and consumer loans interest rates at 15%, expand basic and affordable banking services offered by post offices, audit the Federal Reserve, reform credit rating agencies, and curb speculation with the tax mentioned earlier.

Wall Street asset managers would have to follow investors' instructions or lose their right to vote on shareholder money. Sanders also mentioned plans to organize sectoral pension plans that would wield more bargaining power and "ditch Wall Street asset managers by taking voting in-house."

Corporate Reforms

Determined to curb corporate greed and corruption, Sanders wanted to establish a Bureau of Corporate Governance at the Department of Commerce if he had been elected. Large corporations would have to obtain a federal charter forcing their boards to consider the interests of all of the stakeholders, not just shareholders. He called the August 2019 Business Roundtable commitment to this "empty words."

He would also ban large scale stock buybacks by repealing the SEC's Rule 10B-18, force corporate boards to include individuals from historically underrepresented groups, protect the rights of farmers and consumers to repair the equipment and technology they purchase, develop guidelines for anti-competitive exclusivity agreements, develop stricter antitrust rules, and allow the Federal Trade Commission to approve, deny, or undo Trump era mergers.

Free Childcare and Pre-K for All

Sanders wants to spend $1.5 trillion over a decade to guarantee free full-day, full-week, high-quality childcare for every child in America younger than age three, and free universal pre-kindergarten for children older than three years old. 

Sanders also promised to double the funding for The Maternal, Infant, and Early Childhood Home Visiting Program, give childcare workers a living wage, pass a bill to ensure free meals to every child in childcare and pre-k, construct, renovate, or rehabilitate childcare facilities and pre-schools, and make more investments in the public education system.

This is the biggest proposal yet for an issue that most of the Democratic candidates considered important during the primaries, not just for individual families but for the U.S. economy as a whole. Sanders said he would pay for it with the taxes on extreme wealth.

Green New Deal

Sanders has his own version of a Green New Deal. The goal of the plan is to reach 100% renewable energy for electricity and transportation by 2030 and to complete decarbonization by 2050 at the latest.

It involves a $16.3 trillion public investment and the creation of 20 million "good-paying, union jobs with strong benefits and safety standards" in steel and auto manufacturing, construction, energy efficiency retrofitting, coding and server farms, renewable power plants, and sustainable agriculture.

Sanders also promised to ban fracking and mountaintop removal coal mining. He said he would promote electric vehicles with $2.09 trillion in grants for families and $85.6 billion on a national electric vehicle charging infrastructure.

Of the $3 trillion raised from corporate taxes in ten years, $2 trillion would be devoted to the Green New Deal. The campaign website also added the plan would basically pay for itself. Sanders would target the fossil fuel industry with litigation, fees, taxes, and eliminating federal fossil fuel subsidies.

He also says there would be cuts in military spending because the U.S. would not be fighting expensive wars to protect its access to oil abroad, and an increase in tax revenue and decrease in safety net spending due to the new jobs created.

Marijuana Reform

Senator Bernie Sanders introduced the first standalone bill to remove marijuana from the Controlled Substances Act and make it legal in 2015. Sanders believes that existing law disproportionately targets African Americans, and he was the first high profile 2016 presidential candidate to call for marijuana legalization on the federal level.

He promised to issue an executive order to declassify marijuana as a controlled substance and introduce legislation to make it permanent if he had been elected. His plan had two parts:

• Undo the damage of the war on marijuana and
• Regulate the legal marijuana industry with strict laws to prevent it from becoming like Big Tobacco.

His administration would have reviewed and expunged all marijuana-related convictions and devoted funding and manpower to make sure no one slipped through the cracks. Tax revenue collected from the marijuana industry would go toward helping communities impacted by marijuana convictions.

Market share and franchise caps would be introduced to "prevent consolidation and profiteering" in the industry according to his plan. Businesses would be incentivized to structure themselves like cooperatives and collective nonprofits. Tobacco companies would be prevented from participating in the industry. This would spell trouble for giants hoping to diversify their businesses, like Marlboro-maker Altria Group Inc. (MO), which bought almost half of Canada-based Cronos Group Inc. (CRON) in 2018.

Safety measures proposed included a ban on marketing products to young people and barring companies that run misleading advertisements.

The Bottom Line

Bernie Sanders is a progressive independent senator from Vermont and one of the most popular politicians in Congress. He is most famous for his two runs for president, and he has advocated for progressive legislation that would help redistribute wealth and reduce economic inequality.