THE BLOG
03/25/2013 01:55 pm ET Updated May 25, 2013

Budgeting for Job Creation and Economic Growth

There are budget choices we can make that will generate job growth, expand public investments, and protect Medicare, Social Security and Medicaid benefits while putting our federal budget in a fiscally sustainable position. In fact, the Congressional Progressive Caucus (CPC) Back to Work budget repudiates the claim that we must scale back our essential safety net programs and shortchange education, infrastructure, research and other investments in order to be fiscally responsible. First and foremost, the Back to Work budget addresses the ongoing jobs crisis by creating nearly seven million jobs and bringing unemployment down near pre-recession levels of 5 percent in roughly the first year of implementation. In contrast, current policy is expected to leave us with roughly 8 percent unemployment at the end of 2015. I am proud the Back to Work budget, crafted by the CPC with technical assistance from the Economic Policy Institute Policy Center, prioritizes our economic recovery and makes a bold effort to address the persistent jobs crisis."

The Back to Work budget addresses the job crisis through a long-term, $4.7 trillion public investment agenda that starts immediately. This includes funding to close our nation's infrastructure investment shortfall, making investments in teachers and schools, providing block grants to help states with rehiring first responders and funding safety net programs, and instituting a public works jobs program that emphasizes aiding distressed communities. These public investments are essential to fostering economic growth and facilitating more social mobility. The Back to Work budget ends the domestic spending cuts that are part of the current sequester and reverses the substantial cutbacks agreed to in the debt ceiling budget deal of 2011. Otherwise, we would see the lowest levels of public investment in more than 50 years; bequeathing our children inadequate infrastructure and education is an unwise choice.

Aside from these necessary job gains, the Back to Work budget maintains our commitments to retirement and health security by eschewing benefit cuts to Medicare, Medicaid, and Social Security. Instead, the budget protects benefits and builds on the efficiency reforms already enacted in the Affordable Care Act. The budget adopts lower negotiated prices for Medicare, offers a public insurance option, reforms pharmaceutical drug development and patent rules, and makes other efforts to reduce waste, fraud, and abuse in our health systems.

In order to prioritize public investments and protect safety net benefits, we need to realign defense priorities and wind down overseas contingency operations beginning in 2015. The defense savings in the Back to Work budget are well within the bounds of those identified as reasonable by the Sustainable Defense Task Force.

The budget funds many of these priorities with progressive tax reforms that ask the most from high-income households. We believe these households have benefited substantially from tax cuts over the past three decades and have disproportionately benefited from the available income growth. In the Back to Work budget, the Bush-era tax rates remain in place for income earners with adjusted gross income below $200,000 ($250,000 for joint filers), and rates rise to Clinton-era levels for income above that threshold. The budget also adds higher tax brackets for millionaires and permanently extends the Recovery Act expansion of refundable tax credits for low- and middle-income earners beyond their scheduled expiration. An important innovation is that the Back to Work budget taxes income from investments the same as income from work and closes corporate tax loopholes. The budget also fittingly levies taxes on the financial sector (a Financial Transactions Tax and a Financial Crisis Responsibility Fee) to help fund job creation efforts. To address concerns regarding the emission of greenhouse gases, the budget prices carbon emissions and rebates 25 percent of that revenue for refundable credits to low- and middle-income households.

The Back to Work budget is a blueprint that would meet our most critical economic challenges while improving middle-class living standards, enhancing economic security, and lessening inequality. Too often our recent macroeconomic policy decisions and debates have been steered by a misguided obsession with deficit reduction. Instead, as the Back to Work budget does, we need to let our nation's needs -- jobs, public investment, and enhanced economic security -- guide us and find the revenue sources and defense savings that enable us to achieve our goals.

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