The People's Budget

Dear Friends,

Over at Pronto Pup today (here), he raised the issue of the People's Budget.  The People's Budget has been introduced by the Congressional Progressive Caucus.  I should note that my Congressman, Keith Ellison, is the co-chair of that group. 

You can read the People's Budget (here).  You can also read the technical analysis of the budget (here).  Here is my summary based on the technical analysis.

1.  Investing in job creation and economic growth - The budget invests $1.7 trillion over ten years in a real stimulus plan ($0.2 trillion in surface transportation and $1.5 trillion in general public investment that is front loaded in the first five years).  This government spending on infrastructure will create jobs and get the economy going for everybody not just Wall Street.

2.  Strengthening Social Security - the plan raises the maximum taxable incomes for social security taxes and does not reduce benefits.  The current approach means that the lower income earners are paying a higher percentage of their incomes in payroll taxes than the high income earners.  This approach would begin to eliminate that unfairness.

3.  Building on health care reform - the plan adds a public option which President Obama threw away before and also requires negotiating drug costs which President Obama also threw away last time.

4.  Realigning Department of Defense priorities - the plan gets us out of Iraq and Afghanistan wars and reduces the size of the military.

5.  Tax reform and modernization - eliminates almost all of the Bush tax cuts, enacts a progressive estate tax, adds new upper income tax brackets, taxes capital gains and dividends as ordinary income, limits the deductions for upper income earners, and a few other changes that make a good start at reducing the unfairness of the tax code that favors the rich and places the tax burden much more on the middle class.

6.  Corporate tax reform - the plan makes a number of tax changes on corporations that address the huge costs to the public from the recklessness of the large financial institutions and reduces some of the unconscionable corporate welfare provisions of the current tax code.

Here is the summary from the technical analysis of the bill.

Based on the policy adjustments noted above, the People’s Budget would reduce primary
spending by $868.9 billion, increase general revenue by $2.8 trillion, and increase payroll tax receipts by $1.2 trillion over a decade relative to the adjusted CBO baseline. Responsibly ending the wars in Afghanistan and Iraq and recalibrating Department of Defense priorities would save $2.3 trillion. Roughly $1.7 trillion would simultaneously be invested for general public investment and a surface transportation reauthorization bill, including an I-Bank. Health care savings would decrease deficits by $308.1 billion from 2012 to 2021, more than offsetting the 10-year cost of maintaining the current rate of Medicare physician reimbursements, adjusted for inflation. Based on all of these policy adjustments, net interest payments are projected to fall by $856.3 billion over 2012-21. In total, the People’s Budget would reduce deficits by $5.6 trillion over 2012-21 relative to the adjusted CBO baseline (see Table S-2).
The People’s Budget is projected to turn from budget deficit to budget surplus in 2021,
with a surplus of $30.7 billion (0.1% of GDP) in that year (see Table S-1). That surplus
compares with a deficit of 3.1% of GDP under the CBO baseline and 4.0% of GDP under the adjusted CBO baseline (see Figure 1). The budget would hit primary surplus (revenues less noninterest outlays) in 2014. The budget is projected to run a primary surplus of 2.9% of GDP by 2021, compared with a primary surplus of 0.3% of GDP under the CBO baseline and a primary deficit of 0.4% of GDP under the adjusted CBO baseline (see Figure 2). After climbing to 73.9% of GDP in 2013, debt as a share of the economy would trend downward after reaching primary budget balance. By 2021, debt as a share of GDP would fall to 64.1%, down from 75.6% of GDP under the CBO baseline and 80.6% of GDP under the adjusted CBO baseline (see Figure 3).
The People’s Budget is projected to run lower deficits and place public debt on a more
sustainable trajectory than either the House Republican Budget or the president’s budgets. The projected surplus in 2021 (0.1% of GDP) compares with a deficit of 1.6% of GDP under the House Republican Budget and 4.9% of GDP under the president’s budget (see Figure 4). The People’s Budget is projected to bring debt as a share of GDP in 2021 to 64.1%, compared with debt at 67.5% of GDP under the House Republican Budget and 87.4% of GDP under the president’s budget (see Figure 5).

The People's Budget is the budget that President Obama should have proposed.  Please write your Senators and Representative telling them to support the People's Budget.

Thanks for reading and please comment,
The Unabashed Liberal