The 75-member House Progressive Caucus has put out its own budget to counter Paul Ryan’s Medicare-gutting GOP plan.
This is more than a fantasy document. It’s sound policy. The conservative Economist magazine has called the budget “courageous.” As a conversation-starter, it shows that the path out of our debt and deficit quagmire is not as steep as most imagine, and that getting America’s fiscal house in order isn’t incompatible with making critical investments in jobs and infrastructure.
The budget has more of what Americans say they want — new taxes on the rich and cuts to defense — than either the GOP’s or the president’s budget. And it has none of what Americans say they hate: changes to the social compact that’s guided America from the days of the New Deal and the Great Society.
The Progressive budget would slash $5.6 trillion in deficits on the way to generating a small surplus in 2021—reaching a balanced budget two decades in advance of Paul Ryan’s plan:
Here, some highlights:
New Investments (Cost: $1.7 trillion)
• Job-creating public investments, largely infrastructure – highways, public transportation, high-speed rail; $1.5 trillion spent in the first five years to combat high unemployment
Defense Cuts (Savings: $2.3 trillion)
• Cuts off funding for the Iraq and Afghanistan wars.
• Downsizes the military: Cuts Army and Marine Corps active duty personnel cut by nearly 30 percent; reduces the Navy’s fleet size by 20 percent; grounds 15 percent of Air Force squadrons; cancels wasteful weapons systems, including the infamous Osprey and the Expeditionary Fighting Vehicle; and cuts funding for nukes, missile defense, and space weapons
Increased Taxes (New revenue: $2.8 trillion)
• Revokes the Bush tax cuts — for everybody — in 2012, with the exception of a few, targeted tax credits/fixes for married couples and families with children. Extension of Bush tax cuts for the wealthiest — a highlight of the lame-duck budget deal — is rescinded
• Taxes capital gains and dividends as normal income. Ends preferential tax treatment of investment income
• Creates new tax brackets for millionaires and billionaires. Brackets range from 45% for mere millionaires to 49% for those with incomes surpassing $1 billion
• Creates a progressive estate tax: Excludes 99.75% of estates, farms, and small businesses from inheritance taxes. Marginal rates for the top 0.25% of estates range from 45% for a $10 million estate, to 65% for those worth more than half a billion dollars
• Taxes U.S. corporations’ “foreign” profits as they’re earned. Prevents corporations from stockpiling income in foreign shelters by taxing profits abroad, not just when they’re repatriated
• Pays to index alternative minimum tax to inflation (The AMT is an alternative tax structure originally meant to ensure that rich tax evaders pay their fair share. But because it was never indexed to inflation, every year more and more middle class taxpayers are hit subject to the tax. Congress has yearly “patched” this flaw in the AMT on an ad hoc basis, adding unbudgeted billions to the deficit.)
• Imposes “leverage” taxes on megabanks with assets in excess of $50 billion and new taxes on derivatives investors and other Wall Street speculators
• Limits value of itemized deductions to 28%. Superrich no longer get a sweeter deal for charitable giving
• Reinstates superfund (toxic waste cleanup) taxes
• Revokes tax breaks to oil and gas drillers
• Adds 25-cents a gallon to the federal gas tax. Reinvests proceeds in highway infrastructure
Safety Net (New revenue: $1.2 trillion)
• Raises the maximum income subject to Social Security payroll taxes to $170,000
Health Reforms (Savings: $308 billion)
• Creates a ‘public option’ in health care exchanges.
• Empowers Uncle Sam to negotiate lower prescription drug costs for Medicare.
• Pays for the “doc fix.” (In 2002, Congress passed a pay cut for Medicare providers that everyone agrees is too draconian. By habit, Congress prefers to pass ad-hoc spending bills to forestall the cut, adding unbudgeted billions to the deficit.)
Interest Savings (savings: $856.3 billion)
Read more about the budget here.