Trump’s Tariffs Open the Door for Medicare for All

Although it surely was not intended, Trump’s tariff plan may have opened the door for the Democrats to push for and win Medicare for All(M4A), a longstanding goal for progressives. It does this in two ways. First Trump was able slip by this massive tax scheme with almost no attention from the media. Democrats should demand Trump treatment when they push M4A.

The second reason is that Trump’s tariffs show that it is politically acceptable to tax the middle-class. Trump’s tariff scheme is a tax increase for middle-income households of several thousand dollars annually. If that is politically acceptable, then surely much smaller tax increases that may be needed to cover M4A would surely be politically feasible.

On the first point, Trump did talk about tariffs in his campaign, but there was very little written about how big his tariffs would likely be and how large a hit they would be to middle and moderate-income households. For this reason, most people, including those who follow the news closely, were shocked by the size of Trump’s tariffs. This is why the stock market crashed immediately after Trump’s tariff speech. If investors had expected anything like the tariffs Trump is putting in place, the market would have already priced in the impact of the tariffs.

To be clear, the media did note Trump’s call for tariffs, but they never demanded or received any specificity from Trump. By contrast, any time Vice-President Harris put forward a proposal, like her plan for covering assisted living for senior citizens, the media demanded to know exactly how she would pay for it.

Democrats have to learn to be Trumpian in dealing with the media. They can say we will have M4A, in fact improved M4A that covers dental, vision, and hearing, and we will find ways to pay for it because we’re a rich country: end of story. The days where we just accept that the media demand higher standards from Democrats than Republicans must be over. Trump gets to say f**k you when he doesn’t feel like answering a question. The Democrats need to do this also.

The second takeaway is that it is apparently not politically deadly to talk about tax increases on the middle-class. Trump and every Republican in Congress are just fine with a huge tax increase on the middle-class in the form of his massive tariffs.

In principle, most of the cost of M4A should be covered by lower payments for drugs and medical equipment, by bringing the pay of our doctors and dentists in line with their pay in other wealthy countries. We also will save hundreds of billions of dollars annually by getting rid of private insurers and replacing them with the far more efficient Medicare system.

But we are still likely to need additional revenue. Most of this money should come from the rich, who have been the big winners in the economy over the last half century. But it is likely that we won’t be able to get as much as we need exclusively from taxing the rich.

As our Modern Monetary Theory friends remind us, the purpose of taxation is to reduce demand in the economy and thereby prevent inflation. If we raise another $10 billion a year from increasing the taxes paid by Elon Musk, it’s not clear how much we will reduce demand. Musk will probably continue to consume at pretty much the same level as he did before the tax hike, although he may reduce his campaign contributions to right-wing candidates by some amount.

By contrast, if we raise an additional $10 billion in tax revenue from the middle-class, we can be pretty sure that we will be reducing demand by close to $10 billion, because middle-class people spend the bulk of their income. In the last two decades, Democrats have treated it as sacred first principle that they could never increase taxes on people earning less $400,000 a year.

Since Trump’s tariffs have shown that a large tax increase on the middle-class is just fine politically, they need not fear putting forward a modest one to two percentage point tax increase in order to give people near-free health care. Whatever they do put forward they can put in terms of the Trump tariffs. For example, they could put a ceiling on any middle-class tax hike, saying it will be no more than one-quarter of the tax hit from Trump’s tariffs.

In addition to being good policy, M4A should be great politics. People have come to like Obamacare over the fifteen years since it was made into law. It is now so popular even Trump doesn’t openly talk about ending it. The idea of extending Medicare to cover the whole population is likely to be extremely popular and it is a simple proposal that can be easily understood. M4A is a perfect bumper sticker slogan for cars and pickup trucks all across the country. It tells everyone what Democrats will do for them if they are put in office.

While it certainly was not Trump’s intention, his looney tariff scheme may have opened the door for M4A in a way that normal presidency never would. If democracy survives, we may get some real gains as a result of the Trump presidency.

This first appeared on Dean Baker’s Beat the Press blog.