There are three budget proposals on the table that have been made public: The President’s, Paul Ryan’s, and the Progressive Caucus. So far all the talk is on Ryan’s cutting of Medicare. It has defined the Republican politics. Newt Gingrich found that out. As I understand the President’s proposal it uses the 2008 budget as a baseline – a baseline we are already below. But no one is talking much about the Progressive budget.
The Progressive and Ryan budgets are good symbols of the world views currently held by many on the two sides. The Democrats being democrats are not as monolithic and many will object to the severe defense cuts in the Progressive budget, but it seems to me that these proposals can be the end points that let everyone meet in the middle.
The National Priorities Project compares the two proposals.
|Congressional Progressive Caucus People’s Budget||Rep. Ryan’s The Path to Prosperity|
|Underlying Philosophy||Strengthens role of government in reducing income inequality and providing social safety net. Reduces deficit through combination of increased revenues and reductions in spending||Relies on private sector to spur economic growth and employment using a trickle down approach. Reduces deficit solely through spending cuts|
|Revenues||Shifts tax burden towards higher income earners and corporations||Decreases taxes for wealthy and corporations|
|Individual Taxes||Allows for the expiration of Bush era tax cuts||Maintains the Bush era tax cuts|
|Reverts highest individual tax brackets to 36% and 39.6% from 33% and 35%||Cuts the top individual tax rate to 25% from 35%|
|Enacts new tax brackets for high income earners (45%-49% for $1 million – $1 billion range||Consolidates the current six tax brackets|
|Taxes capital gains and dividends as ordinary income||Eliminates $800 billion in tax increases imposed by the Patient Protection and Affordable Care Act|
|Limits tax benefit of itemized deductions to 28%|
|Enacts progressive estate tax in which larger estates pay higher tax rates|
|Corporate Taxes||Imposes financial transaction tax on derivatives and speculative financial products||Reduces corporate tax rate to 25% from 35%|
|Repeals tax deductions and preferences for oil, natural gas and coal producers||Eliminates loopholes and deductions that allow some corporations to pay no tax|
|Taxes US corporate foreign income as it is earned instead of as dividend|
|Imposes tax equal to 0.15% of covered liabilities for banks with more than $50 billion in assets|
|Investment||Emphasizes public investment as engine for job creation and economic growth||Believes that public investment crowds out private investment|
|Rebuilds infrastructure – highways, railways, National Infrastructure Bank|
|Funds highway construction through increase in Gasoline Tax of 25 cents|
|Health Care and Social Safety Net||Maintains government role in providing vital public services and programs||Limits government provision of social programs|
|Maintains Medicare reimbursement rates for doctors||Privatizes Medicare starting in 2022 for new beneficiaries|
|Establishes public health care option in health care exchanges starting in 2014||Repeals Patient Protection and Affordable Care Act|
|Negotiates drug prices with pharmaceutical companies||Raises age of Medicare eligibility to 67 from 65|
|Increases Social Security benefits based on higher employee contributions||Converts Medicaid into block grants to the states|
|Raises Social Security contribution limits, including employer contributions for high earners||Converts SNAP (food stamps) into block grant to the states. Requires recipients to work or get job training|
|Reduces Pell grants to 2008 levels|
|Imposes time limits and work requirements for recipients of federal housing assistance (Section 8)|
|Defense||Makes significant cuts in annual defense spending and ends the wars in Iraq and Afghanistan in FY2012||Largely exempts the military from spending cuts|
|Funding for Security||Generates $2.3 trillion in savings compared to the CBO baseline over the FY2012-2021 period||Provides real growth for “security” in each year through 2021, totaling $214 billion in new spending|
|Annual Pentagon Spending||Reduces DoD baseline budget by $692.2 billion over 10 years compared to CBO, or $816.7 billion compared to the Obama Pentagon spending plan||Reduces DoD waste by $178 billion. Reinvests $100 billion of this into key combat capabilities and uses $78 billion to reduce the deficit|
|Overseas Contingency Operations (Iraq & Afghanistan)||Provides $161.4 billion for “Overseas Contingency Operations” (OCO) in FY2012 and withdraws U.S. forces from Iraq and Afghanistan. Provides no funding for OCO starting in FY2013, saving $1.6 trillion between 2013-2021 compared to the CBO baseline||Continues Iraq and Afghanistan wars and provides $117.8 billion in FY2012. Anticipates over $1 trillion in savings from reduced costs of the “Global War on Terror” over the next decade by using the Pentagon’s $50 billion annual “placeholder” for OCO costs|
|Government||Maintains size and role of government||Reduces size and scope of government|
|Provides percentage increases for discretionary programs||Reduces size of government to 20% of GDP by 2015 and 15% of GDP by 2050|
|Reduces non-security discretionary spending to pre-2008 levels|
|Reduces public sector employment by 10% through attrition by 2014|
|Institutes government pay freeze through 2015|
|Increases federal employee contributions to retirement|
|Privatizes Fannie Mae and Freddie Mac|
|Decreases regulation of the energy industry|
|Establishes a binding cap on total spending as a percentage of the economy|
|Requires any increase in debt levels to be accompanied by spending reductions|
I couldn’t find a chart that adds the President’s budget proposal, but here is a short summary.
Key Budget Facts
- The Budget includes more than $1 trillion in deficit reduction – two-thirds of it from cuts — and puts the nation on a path toward fiscal sustainability so that by the middle of the decade, the government will be paying for what it spends and debt will no longer be increasing as a share of the economy.
- The President meets his pledge to cut the deficit he inherited in half by the end of his first term.
- Five-year non-security discretionary spending freeze will reduce the deficit by over $400 billion over the next decade and bring this spending to the lowest level since President Eisenhower sat in the Oval Office.
- 10-year Deficit Reduction: $1.1 trillion, excluding war savings and not extending 2001 and 2003 tax cuts for high-income earners. Two-thirds are from spending cuts.
- 2011 Projected Deficit: $1.645 trillion, 10.9 percent of GDP; 2012 Projected Deficit: $1.101 trillion, 7.0 percent of GDP; 2015 Projected Deficit: $607 billion, 3.2 percent of GDP; 2017 Projected Deficit: $627 billion, 3.0 percent of GDP
The budget itself is composed of proposals made by federal agencies under guidelines from the White House budget folks, but it seems to be a timid version of the Progressive Budget.
The choices are pretty clear. And the news this week – increased unemployment and no job creation – has everyone saying it is bad news for the President. But with the layoffs of public employees is it surprising that unemployment is rising? Wasn’t keeping the Bush tax cuts supposed to create jobs? Where exactly are all these jobs? The Republicans are all about not raising taxes on anyone and cutting the size of government and government benefits. They don’t care about the widening gap between rich and poor but seem to be perfectly happy to accept tax payer paid benefits. Like Congressman Woodall. (R- GA) who thinks we should all be self reliant except for him.
The bottom line: We have two visions of American and the one that wins will determine our future.