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Analysis of 2016 People’s Budget

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Grijalva EllisonThe ‘People’s Budget’Analysis of the Congressional Progressive Caucus Budget for Fiscal Year 2016

By Thomas L. Hungerford | March 18, 2015

Executive summary

http://www.epi.org/publication/the-peoples-budget-analysis-of-the-congressional-progressive-caucus-budget-for-fiscal-year-2016/

The Congressional Progressive Caucus (CPC) has unveiled its fiscal year 2016 (FY2016) budget, titled The People’s Budget—A Raise for America. It builds on recent CPC budget alternatives in prioritizing near-term job creation, financing public investments, strengthening the middle and working classes, raising adequate revenue to meet budgetary needs while restoring fairness to the tax code, protecting social insurance programs, and ensuring fiscal sustainability.

Refer to the end of this paper for Figures A–C, visualizing the People’s Budget’s impacts on deficits, debt, and nondefense discretionary funding; Tables 1 and 2 detailing the policy changes within the budget; and summary tables 1 through 4 depicting budget totals as well as comparisons with the current law baseline.

The People’s Budget aims to improve the economic well-being of the working and middle classes by focusing on finally closing the persistent jobs gap, and it provides substantial upfront economic stimulus for that purpose. This paper details the baseline assumptions, policy changes, and budgetary modeling used in developing and scoring the People’s Budget, and it analyzes the budget’s cumulative fiscal and economic impacts, notably its near-term impacts on economic recovery and employment.1

We find that the People’s Budget would have significant, positive impacts. Specifically, it would:

  • Accelerate the economic recovery. The People’s Budget would sharply accelerate economic and employment growth. It would boost gross domestic product (GDP) by 3.9 percent and employment by 4.7 million jobs at its peak level of effectiveness (within one year of implementation), while ensuring that fiscal support lasts long enough to avoid future “fiscal cliffs” that could throw recovery into reverse.2
  • Promote job growth and achieve full employment. The budget’s near-term economic stimulus measures would create 4.7 million jobs in calendar year 2015 and an additional 3.8 million jobs over the following two years. By the end of calendar year 2018 the People’s Budget would support 9.1 million job years and would ensure a prompt and durable return to full employment.
  • Make necessary public investments. The budget finances roughly $528 billion in job creation and public investment measures in calendar year 2015 alone and roughly $1.34 trillion over calendar years 2015–2017.3 This fiscal expansion is consistent with the amount of fiscal support needed to rapidly reduce labor market slack and restore the economy to full health.
  • Facilitate economic opportunity for all. By expanding tax credits and other programs for middle- and working-class workers, boosting public employment, and incentivizing employers to create new jobs, the People’s Budget aims to boost economic opportunity for all segments of the population.
  • Strengthen social insurance. The People’s Budget strengthens the social safety net and proposes no benefit reductions to social insurance programs—in other words, it does not rely on simple cost-shifting to reduce the budgetary strain of health programs. Instead, it uses government purchasing power to lower health care costs (health care costs are the largest threat to long-term fiscal sustainability) and builds upon efficiency savings from the Affordable Care Act. The budget also expands and extends emergency unemployment benefits and increases funding for education, training, employment, and social services as well as income security programs in the discretionary budget.4
  • Smartly cut spending. The budget focuses on modern security needs by repealing sequestration cuts and spending caps that affect the Defense Department but replacing them with similarly sized funding reductions. It ends emergency overseas contingency operation spending in FY2016 and beyond, and ensures a slow rate of spending growth for the Defense Department for the remainder of the decade.
  • Ask everyone to contribute his or her fair share. The budget restores adequate revenue and pushes back against income inequality by adding higher marginal tax rates for millionaires and billionaires, equalizing the tax treatment of capital income and labor income, restoring a more progressive estate tax, eliminating inefficient corporate tax loopholes, levying a tax on systemically important financial institutions, and enacting a financial transactions tax, among other tax policies.
  • Reduce the deficit in the medium term. The budget increases near-term deficits to boost job creation, but reduces the deficit in FY2017 and beyond relative to CBO’s current law baseline. The budget would achieve primary budget balance (excluding net interest) and sustainable budget deficits below 2 percent of GDP in FY2017 and beyond.
  • Target a sustainable debt level. After increasing near-term borrowing to restore full employment, the budget gradually reduces the debt ratio to a fully sustainable 66.0 percent of GDP by FY2025. Relative to current law, the budget would reduce public debt by $3.2 trillion (11.6 percent of GDP).

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2016 “People’s Budget: A Raise for America” Unveiled

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keith ellisonDueling Visions: The CPC People’s Budget vs. the Budget for the 1%

MARCH 18, 2015

ROBERT BOROSAGE

The Congressional Progressive Caucus unveiled its fiscal 2016 “People’s Budget: A Raise For America” one day after House Republicans released their “A Balanced Budget for a Stronger America” proposal. The CPC touted a $1.9 trillion investment in America’s future and over 8 million new jobs. The House Republicans bragged about cutting $5 trillion over 10 years. The sharp contrast between the two reflect stark differences in values and ideology – and a basic choice of whether government will serve the many or the few.

The Republican budget is rightly scorned as a fantasy, a dishonest, Orwellian document,packed with magic asterisks and budget sleight of hand. But what is interesting is what Republicans claim that they value.

Republicans believe the rich and corporations have too little money and pay too much in taxes. They believe that Wall Street needs more freedom and less regulation. They believe that too many Americans have health insurance, that the poor have too much support, that schools need less money, that college should be less affordable to children from low-wage families. They believe that the Pentagon should get more money, and fight more wars. They believe that coal and oil need subsidy, not regulation.

They argue that the economy will grow faster if government spending is cut, regulations rolled back, and budgets balanced. Balancing the budget over 10 years is important enough that they sacrifice all credibility by packing the budget with omissions and distortions in order to reach the goal nominally. But balancing the budget is not important enough to ask the rich and corporations to pay an additional dime in taxes.

The CPC budget is fiscally cautious: It would bring America’s annual deficits down and begin to reduce the national debt as a percentage of GDP. But it is grounded in the reality that America faces major challenges that can no longer be ignored.

The CPC believes that our infrastructure is dangerously outmoded, so it makes a down payment on rebuilding America. It believes climate change is real, so invests in new energy and in aiding communities already staggered by extreme weather events. It believes education is vital, so it invests in universal pre-k, aid to schools and debt-free four-year college.

The CPC believes workers need a raise. So it lifts the minimum wage, calls for strengthening the workers right to organize, and lifts the floor with paid sick days, family leave, a crackdown on wage theft, revised overtime and more. It would continue health care reform, preserve Medicare and expand Social Security.

To pay for this, the CPC exacts savings from areas of massive waste. It would trim the Pentagon budget, and require an audit for the first time. It would end subsidies to Big Oil and limit them to agribusiness. It would empower Medicare to negotiate bulk discounts on prescription drugs, and create a public option in Obamacare to keep insurance companies honest.

And the CPC insists that the rich and corporations pay their fair share of taxes. It would create new tax brackets for those making a million or more. The People’s Budget raises the estate tax for the super-wealthy. It taxes the income of investors at the same rates as the income of workers. It terminates deferral, which allows multinationals to avoid taxes on money they report as earned abroad.

And the CPC argues we should tax “bads” to reduce them. It would impose a tax on polluters for carbon emissions, rebating a quarter of the revenue to protect low-wage families. It would hike taxes on cigarettes. It would impose a tax on speculation – a financial transactions tax – to curb destabilizing, computer-driven trading. It would end tax breaks for perverse CEO compensation policies.

The CPC argues the economy suffers from an absence of demand, partly driven by extreme inequality and the hollowing out of the middle class. Government investment in vital areas provides good jobs, moves the economy towards full employment and boosts demand. Government action to lift the floor under workers will help generate demand. Government crackdown on Wall Street speculation, CEOs looting companies and multinationals shipping jobs abroad will help drive investment into the real economy, not the financial casino.

The question really is who is the master? Who does government serve? Revealingly, the CPC People’s Budget provides for public financing of elections, seeking to limit the corruptions of big money. Republicans, not surprisingly, oppose any restriction on money politics.

The Republican budget – gimmicks, perverse priorities and all – will pass the House. The CPC People’s Budget will struggle to win 100 votes on the floor. But the former only reinforces what ails us. The latter offers an alternative that makes sense, that adds up. There is a way up. The rules don’t have to be rigged to favor the few. But it will take a sea change in Washington for common sense to gain majority support.