The Congressional Progressive Caucus today released a budget proposal titled the People’s Budget, which puts forth a credible, deficit-reducing alternative to the Republican plan proposed by Representative Paul Ryan. This proposal by the Progressive Caucus is a welcome addition to the budget debate.
The Economic Policy Institute has analyzed and scored the specific policy proposals in the People’s Budget and modeled their cumulative impact on the federal budget over the next decade. Our analysis finds that the People’s Budget would balance the federal budget within a decade and place debt held by the public on a sustainable trajectory. Specifically, the budget would move to a surplus of $30.7 billion (0.1% of gross domestic product) in 2021, and debt as a share of the economy would trend downward to 64.1% of GDP in that year. The budget would reduce deficits by $5.6 trillion over the next decade relative to the CBO baseline (adjusted for current policies regarding the “doc fix” and a patch to the Alternative Minimum Tax).
The People’s Budget would finance $1.7 trillion worth of public investment over the next decade, most of which is front-loaded over the next five years. The budget would strengthen Social Security by lifting the cap on taxable earnings. The budget also would accrue health savings of $308 billion over the next decade, primarily by creating a public option for health insurance and negotiating prescription drug prices for Medicare Part D.
The budget would reduce conventional and strategic military forces, for savings of $692 billion and end all emergency war supplemental appropriations for savings of $1.6 trillion. Finally, individual and corporate tax reform would ensure sufficient revenue to cover federal outlays by the end of the decade.
As emphasized in Investing in America’s Economy, a proposal by the Economic Policy Institute, Demos, and The Century Foundation, national budget policy should adequately fund up-front job creation, invest in long-term economic growth, reform the tax code, and put the debt on a sustainable path while protecting the economic security of low-income Americans and growing the middle class. The proposal by the Congressional Progressive caucus achieves all of these goals.