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Tuesday, June 7, 2011

A Budget Solution You Won’t Hear Much About

There is a solution to the Budget mess floating around Congress right now that you will probably never hear much about. It’s called “The People’s Budget”, and it is a budget proposal for 2012, but also a roadmap for controlling the national debt, and investing in the future. Why won’t you hear about it? Because it comes from a group of about 80 congress persons that the Media love to ignore simply because it is not the Tea Party, not conservative, not well-known, not well-publicized, not much thought about even by the constituents of its members. On top of all that, it is composed of “progressives” (or “liberals” if you prefer) who are out-of-favor right now, and whose solutions are sometimes shunted aside by the electorate. Too bad, because here is a proposal that actually meets many of the tenets that the polls say are wanted by the public.

So let me quote the first few paragraphs of the Executive Summary of this budget, which should give you the flavor of its content.

“Budgets are more than collections of numbers; they are statements of our values. The Congressional Progressive Caucus Budget is a reflection of the values and priorities of working families in this country. The ‘People’s Budget’ charts a path that keeps America exceptional in the 21st century, while addressing the most pressing problems facing the nation today. Our Budget eliminates the deficit and stabilizes the debt, puts Americans back to work, and restores our economic competitiveness.

“The CPC Budget addresses these problems by listening to the American people. In poll after poll, they are telling us, their representatives in the American government, that they want to preserve Social Security, Medicare and Medicaid, to make higher education more affordable, to expand job-training programs, to cut taxes burdening the middle class, to subsidize affordable housing, and to provide financial assistance for those struggling to prevent foreclosures.” They find cuts in heating assistance to low-income families, student loans, unemployment insurance, and scientific and medical research as completely unacceptable to most Americans.

“Americans find a progressive tax policy very acceptable. The overwhelming majority of America supports additional taxes on millionaires and billionaires, eliminating unnecessary weapons systems, eliminating tax credits for the oil and gas industries, phasing out Bush tax cuts, and eliminating subsidies for new nuclear power plants.

“Our Budget, in response, listens to what the American people are telling us. It does all of the above in a fiscally responsible way that dramatically reduces our borrowing from banks and foreign governments, and ensures our long-term economic competitiveness. It does all of the above recognizing that in order to compete, we need every American to be productive, and in order to be productive, we need to raise the skill level of every American and meet the basic needs of every working family. It does all of the above while remaining rooted in fairness, recognizing that America works when everyone has an opportunity to make it in America.”

Let’s take a closer look at a few of the components of this “People’s Budget”. First, it targets the “true drivers of deficits”: the Bush Tax cuts, the unfair tax code and the wars overseas. By addressing these, it is indicated they will achieve a budget surplus of over $30 billion by 2021, ending up with a debt that is less than 65% of GDP.

Income Tax:

Allow Bush-era tax cuts to expire at end of 2012; extend marriage relief, credits and incentives for children, families and education.

Immediately rescind upper-income tax cuts in December’s tax deal

Establish Millionaire tax rates to include 45%, 46%, 47%, 48%, and 49% top rates

Tax all capital gains and qualified dividends as ordinary income

Institute a Progressive estate tax (progressive tax rates after a $3.5 million exemption)

Limit the rate at which itemized deductions can reduce tax liability (to 28% for high earners)

Corporate Tax Reform:

Tax U.S. corporate foreign income as it is earned (not when it is repatriated to the U.S.)

Eliminate corporate welfare for oil, gas and coal companies

Enact a financial crisis responsibility fee (.15% of covered liabilities on large banks with over $50 billion in assets)

Financial speculation tax (on derivatives, foreign exchange - levied against those who caused the financial crisis)

Social Security:

Raise the taxable maximum on the employee side to 90% of earnings and eliminate taxable maximum on employer side

Increase benefits based on higher contributions on the employee side

Defense Spending:

End overseas contingency operations emergency supplemental starting in FY 2013, saving more than $1.8 trillion from current law spending

Reduce baseline defense spending by reducing strategic capabilities, conventional forces, procurement and R&D programs

Comprehensive Jobs Program:

Invest $1.5 trillion in job creation, education, clean energy, broadband, infrastructure, housing and R&D

The latter category indicates that the People’s Budget not only reduces spending, but centers on investments that are not only necessary, but critical for restoring American competitiveness. More on that next time. For the moment, just one comment: too bad the Congress, the President, and the Media are all pretty much ignoring the importance of listening to what Americans want. This Budget puts forward real cuts, real reforms, real policies that could move us forward in a balanced and stable manner.