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The Budget Nobody Noticed
May 3, 2011 - by Donny Shaw
As Congress resumes working on the 2012 budget, almost all of the discussion will be on striking a deal between the President’s proposal and the House Republicans’ proposal. But there is another budget proposal in Congress that would do far more than either of those for eliminating deficits, reducing the debt and ensuring solvency of our entitlement programs. The Progressive Caucus’ “People’s Budget” would produce budget surpluses by 2021 — the GOP budget would still be producing annual deficits of more than $400 billion at that point — and would add more than $2 trillion less to the debt than the GOP plan over the ten year period. How would it work? By doing things most members of Congress are afraid to go anywhere near, like raising tax rates for the rich and making major cuts to the military budget.
The folks at Main Street Insider have put together a 90-second summary video of the People’s Budget ::
…as well as the text summary below:
1) Raises $3.9 trillion in new revenue over ten years by:
• Immediately rescinding the upper-income tax cuts from December’s tax cut deal and letting the upper-income Bush tax cuts expire at the end of 2012;
• Enacting new income tax brackets that range from 45% starting at $1 million to 49% on $1 billion and over;
• Taxing all capital gains and dividend income as ordinary income;
• Capping deductibility of itemized deductions at 28% (as proposed by President Obama in 2009);
• Enacting a financial speculation tax on derivatives and foreign exchange transactions, and a special fee on large banks to cover the cost of future bailouts;
• Making the estate tax more progressive by adopting a $3.5 million exemption, 45% rate up to $50M, 55% up to $500M, and 65% for the portion of estates valued over $500 million;
• Closing tax loopholes for multinational corporations by taxing their income as it is earned.2) Cuts $1.7 trillion in spending over ten years by:
• Eliminating tax subsidies for fossil fuel companies;
• Enacting a public health insurance option and negotiating prescription drug costs with pharmaceutical companies;
• Ending the wars in Afghanistan and Iraq and decreasing baseline defense spending;
• Saving $856 billion in interest payments on the debt over the next decade as a result of the lower deficit levels.3) Makes targeted investments to spur economic recovery:
• $1.45 trillion over 10 years, primarily for education and job training, renewable energy, health, housing and veterans benefits;
• An infrastructure bank designed to leverage private sector investment in transportation, water and energy projects;
• A large increase ($213 billion overall) in the funding provided by a surface transportation reauthorization bill.4) Ensures Social Security solvency for the next 75 years through increased revenues:
• For the half of the payroll tax paid by employees, adjusting the taxable maximum to equal 90% of total payroll;
• For the half of the payroll tax paid by employers, eliminating the maximum income level subject to taxation entirely.
This has been voted on too. It was introduced as a substitute to the House Republican budget, but failed by a vote of 77-347. Democrats were split 77 in favor and 108 against. No Republicans voted for it.
Progressive Caucus Chairman, and sponsor of the People’s Budget, Rep. Raul Grijalva [D, AZ-7] is pictured above.
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Displaying 1-30 of 31 total comments.
It’s just so damn sad that this hasn’t been covered at all. Aside from this blog all I’ve seen on this budget was brief mention of it by Krugman, who endorsed the budget.
How could only 77 Democrats vote for this? and not a single Republican?
It couldn’t be clearer that the issue is not the fiscal deficit itself… its about a much broader project based on an ideology they know will not be widely support and thus it is cloaked in the guise of ‘fiscal responsibility’
The reason only 77 representatives voted for this is it has train wreck written all over it.
The first part is the typical “tax the rich” diatribe. All this will do is shrink the GDP as more capital moves out of the country. As the GDP shrinks, so does tax revenue. AEI and others have shown that Fed revenue averages 18% +/- 1% regardless of upper marginal tax rate.
The second part of this misses the mark as well. End fuel subsidies period; all energy sources should be able to pass muster on their own. Public health insurance adds to the deficit rapidly, “negotiating” with big pharma reduces availability and works in favor of the biggest companies.
As for government “investment”, you mean like Dept. of Ed? The budget doubles every two years and our kids get stupider as the schools spend more complying with regulations handed down from on high than teaching kids. No thanks.
The only way out is to grow the GDP and shrink the government.
To eth111 – Capital is already moving out of the country and the country is shrinking and has been for years. These corporate giants are already receiving enough tax breaks that they end up paying no taxes at all and they still do their business overseas. They’re getting the best of both worlds. It’s like we’re paying them to stay based in the US while they contribute to the economies of foreign countries, like China. Sitting on the fence and doing nothing is costing us. They’ve proven they won’t bring business back to the USA even with enough tax breaks to pay little or no taxes at all. I think it’s time to end the free ride and force them to decide if they want to be a foreign corporation or a USA corporation. It’s that simple.
Nice logic there Deborah. Cut off your nose to spite your face. There are thousands of small & medium sized businesses in the US that pay huge tax bills, but it is ok with you to raise all their taxes because there are a few huge multinational companies that skirt the law. The huge companies will just fully move off-shore while all the small/medium companies shut their doors and send more people to the unemployment line.
The biggest problem with the bill, is that like so many bills, it assumes higher taxes and fees will not cause a corresponding change in behavior to hide from the new taxes. Higher taxes will drive GDP down and the increased revenue they expect will never materialize, all we will get is unemployment. History has shown this to be the case over and over.
“few huge multinational companies that skirt the law.”
It is more then a few, And its about making them pay their fair share. When the big multinationals have to pay taxes, then all of the small businesses won’t be at such a disadvantage to them any more.
“fully move off-shore”
Nonsense, they will still be selling their goods and services in the united states no matter the particular rate of taxes. If higher taxes where to “force” walmart to close all of their American stores and move their sales to China I say let um, I don’t know a single small business that would be upset by that anywhere.
Really the entire problem can be solved with more taxes, and tariffs. Put a 30% tariff on incoming goods into the US and watch the return of manufacturing to the US.
Job loses are entirely a trade issue and not a tax issue, handing rich people more money isn’t going to stimulate demand because its the wages of the middle class that buys things and that is what creates jobs.
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I do agree with you somewhat though Luminous, a VERY large tariff will make some businesses change the current way of doing things. It might be good, it might be bad. For manufacturing, I can see where it would probably bring jobs back. For coffee and other imports as such, it would probably make the product more expensive and hurt consumers instead of the businesses.
“That graph shows 40 years of data. Average FED revenue = 17.65% GDP whereas average FED spending = 20.39% GDP.”
Overlay those graphs with the GDP as a dollar amount and year to year GDP growth, notice how that site does not(as far as i can see correct me if i am wrong) provide those items for comparison on the graph.
Higher taxes funding programs that create upwards mobility within the middle class, improve wages, and improve family stability lead to such economic growth as that more taxes are paid by the middle class at the lower rate and government revenue averages out.
Remember is many cases(not all) correlation is not causation.
“a VERY large tariff will make some businesses change the current way of doing things.”
I picked 30% because that is what China charges us on our goods imported their. Remember our ignorance allows them to define what “free market” means.
And we don’t have to tariff things that we simply don’t have enough supply of(coffee beans).
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Your first link only shows total revenue and spending, I want gross domestic product on the graph next to those items.
I like that second link tho, it shows the correlation between republican tax cuts and deregulation which causes short term gains but leads to asset bubbles and crashes.
“This is capitalism, it’s not supposed to be fair. Dog eat dog. Kick ‘em when they’re down. Make a BETTER product CHEAPER. Business isn’t built on a “fair” social conscience”
No, taxes should have some resemblance of fairness weighted against practicality. If one can exploit the tax system to gain advantage through either political means, or criminal means then all we have is a rigged game that has little todo with the law of the jungle you describe.
“Fascism should more properly be called corporatism because it is the merger of state and corporate power.” — Benito Mussolini
“The Fascist State lays claim to rule in the economic field no less than in others; it makes its action felt throughout the length and breadth of the country by means of its corporate, social, and educational institutions, and all the political, economic, and spiritual forces of the nation, organised in their respective associations, circulate within the State.” (p. 41). — Benito Mussolini, 1935, The Doctrine of Fascism, Firenze: Vallecchi Editore.
Be careful what you wish for…..
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“Unfortunately, there’s no way to compare both “monetary value” and “% of GDP” on the same graph the way they have it setup”
Don’t you ever find it funny how these sites you keep linking leave out important bits of information, little things that show the context of the situation, ignoring important events in history, and/or depend on a set of “because I said so” style facts?
The reason that GDP and wealth distribution are not on that chart is because it would damage his argument(btw checkout the about page and his blog if you want to know how “non-partisan” he is).
“Show me a tax where I get back 100% of what I pay in without taking from anyone else and I’ll show you a fair tax.”
Ridiculous, Everyone benefits well more then 100% from their input in taxes from the output and growth brought about by the works of society. Taxes should be collected based on your benefit from those works of society, those who benefit disproportionately should pay disproportionately.
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People should be punished for being good at what they do? (dunno why it wouldn’t let me type all that in 1 comment, it was under 1k characters, or so the counter said)
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This People’s Budget should be called “The Take Budget” because that’s all it does. Then after taking peoples money, it says it will double the GDP to $30.7 trillion by 2021. This growth outpaces both Obama’s and Ryan’s plan and also grows the size of Govt more than Obama’s plan by having the Federal Budget at $6.815 trillion in 2021. Then the funniest thing is with all this extra revenue it says it will create and supposedly balancing the Fed Budget by 2014 and then supposedly creating a $30.7 billion surplus by 2021..all that and it still raises the debt by $5 trillion by 2021. I guess they didn’t think anyone would notice.
Then why don’t you make the graph that has all the elements you want and show us the graph & the raw numbers for us to compare to make sure they’re the ones the above graphs I gave are using? Just because a website has graphs that doesn’t incorporate all elements you want doesn’t mean they’re doing something nefarious. Have you even done investigation to find out if his numbers are correct? If not, then maybe you should. And like I said before: Maybe I can help you out if you tell me what you’ve done so far.
As far as your other examples of industries taking “freebies”, please remember that you are saying broad government taking from 1 and giving to another is a bad thing. For example, government takes property through eminent domain to build those roads and airports, banks were bailed out even w/ our money even when they didn’t want it, …
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That made me smile SO much after reading the entire article. Well said jasonbobo!
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Here is my comment.
“or all the tech industries that are provided a steady stream of educated workers from our tax payer provided education system.”
Really I don’t see how you can misinterpret that!
So, are you trying to say advances in tech are being made by idiots? I would think the only way advances in tech could happen is they’re made by some very creative and intelligent people. Since your comment was about “educated” workers, I would think people, even low level employees at high tech areas, who contribute to advances in tech would be considered educated.
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