Tuesday, June 21, 2011

More on the People's Budget

Expanding on the previous post about Reich's video on the economy, recall The People's Budget created by the Progressive Caucus in Congress. It garnered 77 votes, all Democrat. What is amazing is that 108 Democrats voted against it! So let's take a closer look at what the Bill proposed and some economic projections of how it stacks up against the Obama and conservative budgets. We have to ask, what do the latter two really want if not this humane agenda that outdoes what they purport to want, reduce the deficit?

This article notes the following about the People's Budget:

"The People’s Budget from the Congressional Progressive Caucus...brings the budget into balance by 2021, with primary balance by 2014, without any cuts to social programs and even a modest but sustained stimulus package to create US jobs. It does so through progressive taxation, an end to two unnecessary wars in Iraq and Afghanistan and further cuts to the defense budget. More specifically, it ends most of the Bush tax cuts and adds millionaire’s brackets. It taxes capital gains and dividends as ordinary income. It adds additional brackets to the estate tax to progressively tax the largest estates. It limits itemized deductions for high earners. It eliminates corporate welfare and adds a financial speculation tax on derivatives and foreign currency swaps. It includes the financial crisis responsibility fee proposed by the Obama Administration in early 2010. It adds a public option and institutes negotiation of prescription drug prices in Medicare and Medicaid. It increases the payroll tax cap to collect 90% of earnings on the employee side and eliminates it on the employer side. It ends the wars, producing a savings of $1.8 trillion in the process. It makes deeper cuts in defense by reducing procurement and conventional forces. This provides all the money needed to institute a 10-year doc fix, patch the Alternative Minimum Tax so it doesn’t dip into the middle class, increase Social Security benefits, and invest $1.45 trillion in job creation through education, infrastructure and R&D."

Also see the Economic Policy Institute's analysis of the People's Budget. Some excerpts:

"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 2012-21.55 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 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)."

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