An economically and fiscally responsible budget from the Congressional Progressive Caucus
Earlier today, the EPI Policy Center released The Budget for All: A technical report on the Congressional Progressive Caucus budget for fiscal year 2013, which details the composition and effect of this year’s budget alternative from the CPC. While the policies in the Budget for All reflect the decisions of CPC leadership and staff, the EPI Policy Center provided the CPC with technical assistance in developing, scoring, and modeling CPC policies and their cumulative budgetary impact.
First and foremost, the Budget for All would address our most pressing challenges by financing up-front job creation measures and sustained public investments. Overall, the Budget for All would allocate $2.9 trillion for front-loaded stimulus and investments in human and public capital over FY2012-22 relative to current law. This would include:
- $227 billion for a direct jobs program modeled off of Rep. Jan Schakowsky’s (D-Ill.) Emergency Jobs to Restore the American Dream Act;
- $247 billion in increased transportation outlays relative to current law, including $50 billion in immediate investments for 2012, $53 billion in rail investments, and $30 billion for an infrastructure bank;
- $135 billion over FY2012-2022 in tax credits to foster hiring, innovation, manufacturing, and insourcing jobs to the U.S.;
- $183 billion to reinstate the Making Work Pay tax credit from 2013-2015 (the payroll tax holiday would be allowed to expire on schedule Jan. 1, 2013);
- Undoing the Budget Control Act (both the discretionary spending caps and the automatic sequestration cuts), which would increase nondefense (NDD) discretionary outlays by $583 billion; and
- $1.6 trillion in additional NDD spending for domestic priorities in areas including education, scientific research, and health.
By the end of the budget window (FY2022), NDD spending would total 3.5 percent of GDP, compared with 2.5 percent under current law, 2.4 percent under Obama’s budget request, and 2.1 percent under Wisconsin Rep. Paul Ryan’s budget. By FY2022, NDD spending would be 38 percent higher than under current law, 46 percent higher than under Obama’s budget, and 65 percent higher than under the Ryan budget. On average, over the 10-year window, NDD spending in the Budget for All would total 4 percent of GDP, slightly above the 3.9 percent of GDP historical average over FY1962-2011.
The Budget for All is committed to protecting and strengthening Social Security, Medicare, Medicaid, and the Affordable Care Act, and in stark contrast to the Ryan budget, proposes no benefit cuts. The budget would build on health care reform by offering a public insurance option and negotiating lower Medicare pharmaceutical prices. Regarding national security, the Budget for All would responsibly end the war in Afghanistan and overseas contingency operations while realigning spending by the Department of Defense toward domestic priorities.
To adequately fund budget priorities while achieving a responsible fiscal path, the Budget for All proposes progressive tax code reforms that would ask more from the most fortunate in our society. These would include adding higher tax rates for millionaires and billionaires, eliminating the preferential treatment of capital income over earned income, taxing accumulated wealth, taxing financial speculation, and responsibly pricing carbon (rebating a quarter of revenue to low-income households). Regarding the Bush tax cuts, the Budget for All would let the top two rates expire on schedule (following Obama policy) and temporarily extend the 28 percent and 25 percent brackets, phasing them out as the economy strengthens. The Budget for All’s individual income tax rate reforms would save $1.7 trillion relative to full continuation of the Bush-era tax cuts and $1.3 trillion relative to Obama policy.
The Budget for All is economically responsible and fiscally sustainable throughout the budget window; it increases near-term deficits, reduces long-term deficits, and sustains greater public investments throughout the budget window. And equally as important, it does so without engaging in budgetary gimmicks; the Budget for All finances the likely continuation of the Alternative Minimum Tax patch and the Medicare physician payments “doc fix” over the next decade.
In short, this budget proves that there is a sensible, credible alternative to governing than the one put forth by Ryan, which would eviscerate the social safety net and other important programs. The Budget for All demonstrates that we can fulfill Americans’ top priorities—investing in a strong economic recovery and fostering shared prosperity—while meeting respectable fiscal targets and preserving the legacies of the New Deal and the Great Society.