Despite a weak economic recovery and persistent, unacceptably high unemployment, Washington is prematurely pivoting from job creation to deficit reduction. Worse yet, many of the budget proposals flooding Washington are nothing but reverse Robin Hood plans to redistribute wealth from working families to the most privileged among us.
Last week, House Budget Committee Chairman Paul Ryan, R-Wisconsin, unveiled a reckless budget that includes a plan to privatize Medicare by forcing recipients to buy insurance on an open market, where premiums have more than doubled over the last 10 years, to gut Medicaid by shifting costs to states and reducing funding, to cut taxes on corporations and wealthy individuals and to reduce the nation's ability to make needed investments by capping overall levels of federal spending.
This plan would undermine economic growth and job creation for years and exacerbate ever-widening income inequality. Instead of these reckless cuts, job creation and strengthening the economic recovery must be our priority.
It is our obligation to the American people to address our long-term fiscal challenges without sinking the economy back into recession, further undermining the struggling middle class, or stripping investments that pave the way for long-term growth and American competitiveness in the global economy.
Members of the Congressional Progressive Caucus, supported by technical assistance and analysis from the Economic Policy Institute, have proposed a progressive budget that paves the way for robust job creation as an alternative to Ryan's austerity-focused plan.
Ryan's budget places the burden of deficit reduction on the backs of working-class Americans while financing tax cuts for the wealthy and favors to powerful special interests.
The "People's Budget" would create jobs and invest in long-term growth, investing $1.7 trillion in job creation, infrastructure, education and scientific research and development over a decade. The most effective path for deficit reduction is to dramatically reduce unemployment and get Americans working in good jobs, earning more and paying taxes.
This budget does that. The People's Budget also strengthens Social Security by raising the taxable maximum to include 90% of economy-wide earnings and eliminating employer-paid caps on their high-income employees.
Together these policies would maintain the solvency of Social Security, without any reduction in benefits, at least 30 years beyond current projections. It also secures access to affordable health care by adding a competitive public option and negotiating drug prices with big pharmaceutical companies resulting savings of nearly $250 billion over a decade.
The budget would responsibly end the wars in Iraq and Afghanistan and impose sensible budget constraints on the Defense Department. The budget makes targeted public investments, but cuts overall spending by $1.7 trillion over a decade.
It requires corporations to pay their fair share by eliminating taxpayer subsidies to oil and gas companies and closing international tax loopholes that deprive the United States of jobs, investment and revenue. It taxes exotic and risky Wall Street financial instruments to curb speculation and recovers the costs of the financial crisis.
The budget restores fairness to the tax code by asking more from those who can afford to pay more. Instead of cutting taxes for the wealthiest Americans, the budget raises taxes on those who have seen most of the income gains over the last decade by adding new tax rates for millionaires and billionaires. The budget taxes investment income as wage income, ending an unfair tax system that taxes income from wealth at lower rates than the wages of teachers and nurses.
The People's Budget offers a credible way to balance the budget within a decade without engaging in any budgetary gimmicks.
Fiscal responsibility does not require gutting social programs and public investments that promote economic security and generate growth. Instead, it requires standing up to the powerful lobbies whose special interests are not in our national interest and abandoning unfair tax policies that favor the wealthy and privileged.
These policies more than achieve long-term sustainability by slowing health care, bringing the budget to surplus within a decade, and bringing debt down below a sustainable 65% of the economy. A budget is more than a mathematical exercise; it is the most definitive embodiment of our national values.
We believe the People's Budget reflects the values of the population at large rather than the interests of lobbyists. The budget deficit is not an excuse to wage ideological war against government and the social programs that have delivered economic security, health and progress for the better part of a century. We have an obligation to rebuild a stronger America with opportunity and economic security for all.
Rep Mike Honda is a member of the House Budget Committee. Follow Rep Honda on Facebook and Twitter. Rep Raul Grijalva is co-chair of the Congressional Progressive Caucus. Follow Rep Grijalva on Facebook and Twitter. Larry Mishel is the president of Economic Policy Institute.
Follow Rep. Mike Honda on Twitter: www.twitter.com/repmikehonda
It was the Arab scholar Ibn Khaldun who eloquently stated, "Government should be restrained to a minimum, for, as a necessary evil, it is the constraint of men by other men." Truer words never spoken.
Let's take supply side economics for example. When I was confronted with this notion at University studying Political Economy it struck me then as complete lunacy. Unfortunately I still see and hear way too many espouse it and strangely none of them dressed in a straitjacket as I would expect.
The other doozy and straight-jacket candidate is "taxes are bad". The US again for decades has been propagating battlecry of "Wealthcare over Healthcare". If the Democrats were smart they would start off their bargaining with putting tax rates back to the Eisenhower rates and then compromise on the Nixon rates.
The basic premise of any financial arguments already start way, way, way, to the right of centre - it's like seeing a ventriloquist talk to his dummy when the economy is debated.
The Democrats in modern day German politics would be considered to the RIGHT of the CSU which is part of the ruling CDU/CSU/FDP right-wing coalition of the Bundesrepublik Deutschland (or as Helmut Kohl used to call it, "Punsreplik Teutschland" - BTW I do an almost flawless impression of Helmut Kohl).
If the debate in the US started where it should then most of the country (and 99.9% of its legitimate media) would go "Huh?" Fox News would descend into a catatonic state.
Mr. Paul's budget is actually the centrist budget (at least). When does it balance the budget? 2040? That is not acceptable. It took 10 years to go from surplus to this point. 10 years should be the upper limit on going back.
But I have a true compromise. Most talk fondly of the Clinton years. I used to hear the left talk about his tax rates. With the republican congresses help, we actually had a surplus. The left wants higher taxes and the right wants spending cuts, let's visit the Clinton era. 2000 actually had a 2.4% surplus measured against GDP. Let's cap spending at 18.2% of GDP (what it was in 2000) and return to the Clinton era tax rates. If we still have a deficit, we can proportionally raise the tax rates targeting 19% of GDP. If the surplus is too large, we can proportionately lower the tax rates targeting 19% of GDP. The right can be happy we aren't over spending and the left can be happy that the rich are at least paying what they were under Clinton.
Will any progressive even consider this compromise?
Where, oh where, are these mystical cuts and revenue to be found?
The problem with medicare (and social security) is the same problem with all defined-benefit plans. They obligate a third party (future taxpayers) to pay the costs of an agreement made between two other parties (past taxpayers and past governments). At some point, the third party starts to fight back (when future taxpayers become the current taxpayers).
C'mon guys. You're the only ones in Congress who actually stand for values many people in this country share. Don't hide behind the Obama strategy of working the center-right. That's not a Democratic agenda. Yours is. Act like it.
If Duetsche Bank makes $1,000,000 in the US, it pays taxes to the US government assuming with our horrible tax code it doesn't manage to avoid all taxes with deductions. If Wells Fargo makes a million it pays the same taxes.
If DB makes a million euros in Germany it pays taxes to the Germany govt. If Wells Fargo makes a million it pays the same taxes to the Germany government and, under this proposal, it also pays taxes to the US government. DB does not pay the US government. So, to net the same profit, Wells has to be better by whatever the US corporate rate is. Can progressives not see that this makes it impossible for a multinational company in the US to compete globally? What am I missing?
Proposed top rate on investing in a new business to create jobs: 49%
That won't have any effect on economic growth, will it?
I don't know why this is so hard to understand. Most of the people making $10,000,000 plus a year do it investing, not as wages. If you slash the rate of return on investments by TRIPLING the tax rate, people invest less becuase it is no longer worth the risk.
People invest less, they make less. People make less, your revenue projections go out the window.
Seriously? With elections coming up you are going to whammy this demographic like this--who are NOT to blame for any financial crises, who have been hit to the tune of six figure losses already in the recession, but who are trying to stimulate their business and survive--maybe dare to grow and hire someone???? This is absolutely punitive of any moderate degree of success.
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