The People's Budget

The Congressional Progressive Caucus has produced The People's Budget, a genuinely smart and responsible way to address fiscal and economic issues in America. It's refreshing to read after all the lavish Beltway praise heaped on Republican Paul Ryan's fraudulent, cruel budget built of supply-side fairy dust... not to mention thirty-some years of conservative fiscal irresponsibility and recklessness as official Republican policy.

Follow the link, and you can read a budget overview and a technical analysis.

The CPC proposal:

• Eliminates the deficits and creates a surplus by 2021
• Puts America back to work with a “Make it in America” jobs program
• Protects the social safety net
• Ends the wars in Afghanistan and Iraq
• Is FAIR (Fixing America’s Inequality Responsibly)

What the proposal accomplishes:

• Primary budget balance by 2014.
• Budget surplus by 2021.
• Reduces public debt as a share of GDP to 64.1% by 2021, down 16.5 percentage points from a baseline fully adjusted for both the doc fix and the AMT patch.
• Reduces deficits by $5.6 trillion over 2012-21, relative to this adjusted baseline.
• Outlays equal to 22.2% of GDP and revenue equal 22.3% of GDP by 2021.

Paul Krugman writes:

I’ve been remiss in not calling attention to the budget proposal from the Congressional Progressive Caucus. It’s not going to happen — but then neither is the Ryan plan. And unlike the Ryan plan, it actually makes sense.

The CPC plan essentially balances the budget through higher taxes and defense cuts, plus some tougher bargaining by Medicare (and a public option to reduce the costs of the Affordable Care Act). The proposed tax hikes would fall mainly on higher incomes, although not just on the top 2%: super-brackets for very high incomes, elimination of deductions, taxation of capital income as ordinary income, and — the part that would be most controversial — raising the cap on payroll taxes.

None of this is economically outlandish. Marginal tax rates on high incomes would rise substantially — enough to make even liberal economists slightly uncomfortable — but the historical evidence suggests that the incentive effects wouldn’t be too severe. Overall taxes as a share of GDP aren’t given, but they would clearly remain well below European levels.

It’s worth pointing out that if you want to balance the budget in 10 years, you pretty much must do it largely by cutting defense and raising taxes; you can’t make huge cuts in the rest of the budget without inflicting extreme pain on millions of Americans. So the CPC plan is actually much more of a real response to the deficit worriers than all the nonsense we’re hearing from the right. What it doesn’t do is address the long-run health cost issue, which is essential looking beyond the next decade. But as a medium-term proposal, it’s quite sensible.

My guess, in fact, is that in the end we’ll do something along these lines, although probably with more of the tax burden falling on the middle class.

So why does this plan get no attention, while the cruel fantasies of the right get headlines? I’ll leave that as a question for readers.

I linked some earlier liberal proposals in a December post that centered on a cool (if limited) interactive feature from New York Times that allowed readers to balance the budget. The main obstacle to fiscal sanity is political will. The Republicans are entirely plutocratic and corrupt, and the Democrats are partially so. It's crazy that the Ryan budget can be treated as "serious," and I wish liberal plans were given much more attention – because they work and typically benefit everybody, not just the rich and powerful. Responsible governance – what a radical concept!

Update: Blogger was down for a while, and this post was taken off-line, which also erased the comments on the post.