SummaryProvides for a major jobs program to put people to work, greater investments in education, innovation and other areas vital to economy, while reducing long-term federal debt and deficits through progressive tax reform and new priorities.
Details & Argument
The "Budget for All" was proposed as a substitute amendment to the House Republican-backed budget resolution by House Budget Committee member Mike Honda, D-Calif., on behalf of the Congressional Progressive Caucus. The budget would authorize nearly $4 trillion in spending in fiscal 2013. A large share of that would be a $2 trillion "domestic investment package" that would include $1.4 trillion for rebuilding roads and bridges, dams and waterways; funds for training teachers, restoring schools, helping students graduate and supporting community colleges, and full funding for Medicare and Medicaid services.
The Budget for All would allow the Bush-era 2001 and 2003 tax cuts to expire at the end of 2012 for those at the top 2 percent of the income scale, while extending those tax rates for low- and middle-income taxpayers. It would also create new tax brackets ranging from 45 percent to 49 percent for taxpayers earning more than $1 million. It would also tax capital gains and dividends, now usually taxed at a 15 percent rate, at the same rate as ordinary income.
Other policies that would be enacted by the Budget for All include the creation of a "public option" of government-backed health insurance to compete with private insurance, the ending of restrictions on the ability of Medicare to negotiate bulk prices with pharmaceutical companies, a plan to strengthen Social Security finances by eliminating limits on earnings subject to the Social Security payroll tax, and reductions in defense spending by eliminating outdated Cold War commitments and focusing resources on "a leaner, more agile force."
"The Progressive Caucus developed the solution by listening to what the American people want. They want shared responsibility and prosperity. They want us to protect the social safety network. They want basic fairness. They want fiscal sanity. That is exactly what this plan provides," Honda said during floor debate of the amendment.
"First and foremost, we focused our attention where it is needed the most: job creation. This proposal is estimated to create 3.3 million jobs over the next 2 years because it uses every single tool in the Federal Government's arsenal: One, direct and local hire programs; two, targeted tax incentives; and, three, widespread domestic investments. Instead, the Republican budget relies on trickle-down voodoo economics that haven't worked before and won't work now. Projections show that the GOP plan would kill 4.1 million jobs in the next 2 years alone."
Given sluggish economic growth, high unemployment and high gasoline costs, said Rep. Todd Young, R-Ind., "I wonder which of the following choices would Americans choose if they had to pick one. Would it be A, an across-the-board income tax increase? Would it be B, a new tax increase on gas, electricity, and natural gas? Would it be C, a cut in funding for our soldiers to levels that the Pentagon warns is dangerous to our national security? Now, I suspect, Mr. Chairman, that the American people, if given the choice, would prefer to have an option D, none of the above. But, unfortunately, they're not given this choice in the Progressive Caucus budget. It forces, instead, all three unpalatable options on the American public that is already struggling. It raises taxes in every income tax bracket to the tune of $4.4 trillion, it raises the price at the pump and on utility bills ever higher by creating a new tax on all fossil fuel-based energy sources, and it makes no attempt to offset the defense spending sequester. And while I do commend my colleagues for making the effort to develop solutions to the Nation's problems and getting specific on those solutions, I think the American people can do better."
The Budget for All amendment was defeated, 78-346, with no Republicans and 78 Democrats voting in favor and 239 Republicans and 107 Democrats voting in opposition. Two Republicans and five Democrats did not vote.
The Middle-Class Position
The middle-class position is to support this amendment. The Congressional Progressive Caucus's "Budget for All" offers a comprehensive approach that both creates jobs in the short term, and does a better job of reducing deficits than either the administration or the Republican budgets.
The Budget for All contains a long list of initiatives, more than $2 trillion worth, designed to put people to work doing jobs that need to be done, such as repairing schools, upgrading and expanding our transportation network, protecting our communities, providing health care and other services to those in need. The Republican budget would slash discretionary spending by $38 billion below the president's request in 2013, and by $352 billion over 10 years, costing jobs, while reducing the money available for a broad range of job-creating initiatives.
In the short term, the Budget for All would increase the deficit more than either President Obama's proposed budget, and certainly more than the Republican budget. But it makes eminent sense to run a larger deficit now, when the economy is slack, borrowing costs are near zero, and unemployment is running well above 8 percent.
The Emergency Jobs to Restore the American Dream program in the Budget for All alone would put 2 million Americans back to work. That is on top of the millions of jobs created or maintained by a $556 billion surface transportation program, plus investments in clean energy. The Republican budget would cost the economy "roughly 1.3 million jobs lost in 2013 and 2.8 million jobs lost in 2014, or 4.1 million jobs through 2014," economist Ethan Pollock of the Economic Policy Institute estimates.
The Budget for All would bring the annual federal deficit down to less than 1 percent of gross domestic product in 10 years, compared to 1.2 percent projected by the Ryan Republican budget and the 5.3 percent of GDP the deficit would be if we maintained the status quo for the next 10 years. The cumulative debt would be reduced to 62.3 percent of GDP in 10 years.
The Budget for All offers deficit reduction of $6.8 trillion in 10 years. Some of that deficit reduction comes through cuts in defense spending, with a goal of "a leaner, more agile force" to combat 21st-century threats, rather than basing defense budgets on a long-over cold war.
But what is particularly important in how this budget deals with deficit reduction is its progressive tax reforms. The Budget for All proposes to maintain today's tax rates, including the Bush 2001 and 2003 tax cuts, for the bottom 98 percent of taxpayers. But for people earning more than $1 million a year, the Budget for All would create new, higher tax brackets, up to 49 percent for those earning more than $1 billion. It would also enshrine into law the "Buffett rule" by taxing capital gains and other unearned income at the same rate as earned income. No longer would billionaires pay lower tax rates than the police that patrol their streets.
The budget also cracks down on corporate tax loopholes, including "proposals to end manipulation of interest expenses of foreign subsidiaries, determine foreign tax credits on a pooling basis, crack down on transfers of intangible assets to tax havens, level the playing field between domestic and foreign insurers, and modify tax rules of dual capacity taxpayers, among others."
The Budget for All would still keep tax rates for the wealthiest Americans below what they were during much of the Reagan administration. But the budget priorities that would be funded by the tax reforms would support a growing economy with a broadening middle class.
Robert Borosage, co-director of the Campaign for America's Future, summed it up this way: "The Budget for All exposes the folly of trying to achieve deficit reduction while offering the most affluent Americans trillions in top end tax cuts, as the Republican plan proposes. It exposes the lie that the country cant afford to put people to work and still get our books in order. And it shows clearly that the nation can not only afford to protect Social Security and Medicare, but cant afford not to. The Budget for All reflects the priorities of a majority of Americans in poll after poll. Those who oppose it trample both common sense and majority opinion."