A budget for America's future

by: Paul Rosenberg

Tue Nov 30, 2010 at 03:00

Earlier this morning I did a diary about the new report, "Investing in America's Economy: A Budget Blueprint for Economic Recovery and Fiscal Responsibility," from Our Fiscal Security, a joint venture of Demos, The Century Foundation and the Economic Policy Institute. In it, I noted, "I'll have more later today about a second progressive proposal, which in part builds on this report."  Well, here it is.

This second proposal is  the "Report And Recommendations Of The Citizens' Commission On Jobs, Deficits And America's Economic Future", organized out of the Institute for America's Future.    I participated in a press teleconference this morning and I've looked at the report, and the two reports are far more similar than they are different.  In fact, when asked about the differences in the teleconference, the response was a laundry list of similarities, before any relatively small difference were brought up.  It's not that surprising, really, given that the Citizen's Commission main includes a note saying:

Our deliberations were also informed by recent work by the Economic Policy Institute, especially their report, "America's Economy: A Budget Blueprint for Economic Recovery and Fiscal Responsibility," published by Demos, EPI and The Century Foundation on November 29, 2010.

One might say that the primary difference is the kind of organizations involved and what they are up to,which also results in some differences in framing their messages. Our Fiscal Security is an alliance of three think tanks. The Citizen's Commission is a broader array of organizations involved in activism, with a large membership and active involvement at the community level across the nation, especially through the union movement, which was represented at the teleconference by Larry Cohen, president of the Communications Workers of America.

"Working Americans have had it with the austerity model," Cohen said. "The austerity model has lead to the worst incomes disparity in our history." He went on to note that other countries--whether developed or developing (he specifically cited Germany and Brazil)--were taking a very different approach. He said it was a "fallacy that we're all consumers" in terms of our main identity, instead, he said that for most Americans, "their main identity is as workers," meaning that a share of future prosperity they help to create is more significant to them than the promise of cheaper goods and penny-ante tax cuts. "We're encouraged by the report, and we're committed to it's implementation," he concluded.

Angela Glover Blackwell, founder and president of PolicyLink, put it bluntly, "We can't slash our way to prosperity,"

Robert Borosage, co-director of Campaign for America's future fleshed her statement out by comparing our current situation with the last time we had such a high debt-to-GDP ratio. Higher, in fact: the aftermath of WWII.  We didn't worry or focus on the deficit then, he pointed out.  We worried about rebuilding the American economy on a peace-time footing. We paid for converting factories from military to civilian production. We paid for the GI Bill, and for the explosion of home-ownership in newly-built suburbs. We even paid to help rebuild Europe via the Marshall Plan.  And it's that same sort of focus on bravely building the future, and growing the economy,. rather than cowering in fear and slashing the budget that makes the Citizen's Commission report, "consistent with the American way," he explained.  The report itself drew a contrasting historical parallel--the premature budget-slashing of 1937 that lead to a renewed recession which was only finally overcome through the massive military spending of WWII.

And Robert Kuttner warned that the failure to recognize the need for growth gave rise a false balance argument. Interviewers typically "assume the paramount problem is deficit," he said, so they ask, "Why can't Democrats cut spending and Republicans raise taxes?"--a "solution" that would do nothing to solve the problem of an economy mired in long-term underperformance.

The report's executive summary presents a clear vision of how it differs from other proposals out there:

Paul Rosenberg :: A budget for America's future

This commission has two major priorities. The first is to assure that the U.S. economy recovers fully and returns to a fast track of growth. This is the right way to reduce the current high deficit. The second is longterm public investment in sustainable growth, ensuring a healthy economy that can generate adequate revenue for needed public services. We have outlined three key principles that any plan for growth and deficit reduction must follow:
  • Grow the economy. Don't kill growth and jobs in the name of deficit reduction.
  • Target what truly drives deficits. Don't fix what isn't broken.
  • Invest in future sustainable growth while balancing our national accounts.
These are not just moral imperatives. They are economic prerequisites for successful deficit reduction.

This also translated into a three-pronged approach in terms of time-frames that Borosage explained in the teleconrence:

First: Invest $500 billion per year on growth for two years.  A targetted front-end stimulus is key to getting the economy back to near full employment as quickly as possible--which will also serve to slash the immediate deficits, as tax revenues rebound.

Second:, Once growth gets going, continue with sustained, paid-for investments on the order of $400-$450 billion in eductuine, training, and infrastructure for future growth, particularly  green energy, at the same time cutting unproductive spending, most notably in the military, where we spend almost as much as the rest of the world combined..

Third: Long-term, target what drives the long-term projected deficit--primarily systemic health care costs--don't "fix what isn't broken," Borosage said.  What we face is "not an entitlement problem," it's "a healthcare cost problem," which can be solved without slashing, much less dismantling Medicare, by improving the entire American healthcare system.

One distintive feature of the report's proposals is the revenue sources it looks to, which include financial speculkation taxes, a surcharge on top earners, taxing capital gains and dividends as normal income, cap and trade or a carbon tax, increasing the motor fuels tax, and others.  The logic of these taxes is to tax those who most afford to pay, those who have benefitted disproporationately in the past and not paid their fair share, and to help move us in the direction of a sustainable green economy, which will also reduce costs due to global warming that are not yet even considered in other plans. Here are the details:

2. New Revenues - For Deficit Reduction, Fairness, and Investing in the Future.

Increase overall tax revenues with a set of reforms that end excessive benefits for the wealthy, protect the middle class, add jobs, promote growth, and ensure tax fairness. We propose a set of revenue increases and other tax changes that would raise approximately $500 billion in 2015, while protecting the financial security of all Americans. Proposals are listed below with estimated 2015 costs and savings.
End Bush-era tax cuts for the wealthiest 2 percent of Americans.
Revenues: Already included in Obama budget projections.
Financial Speculation Tax. A tax on financial transactions of 0.25-0.50 percent on all transactions would have two benefits. It would reduce the speculation that led to the last recession and contributed to the current deficit, and it could raise an estimated $130 billion a year.
Revenues: $130 billion.
Establish a Surcharge on Top Earners.Revenues: $53.2 billion.
Tax capital gains and dividends as normal income.Revenues: $88.5 billion.
Cap Use of Itemized Deductions at 15 percent and Expand Charitable Giving Credit.
Objectives: Revenues for deficit reduction, job creation and investment; support additional charity giving.
Revenues: $87.9 billion.
Additional proposals regarding corporate income and dividends.Revenues: $112 billion.
Enact an Estate Tax with a Progressive Schedule of Marginal Tax Rates (per Sanders/Whitehouse bill).
Revenues: $4.5 billion.
Establish a Cap and Trade or Carbon Tax.Revenues: $52 billion.
Repeal tax subsidy for mergers and acquisitions.Revenues: $5 billion.
Increase the Motor Fuels Tax.
Additional Objectives: Decreased use of fossil fuels.Revenues: $33 billion
Expand the Earned Income Tax Credit.
Objectives: Help working families escape poverty, increase spending to stimulate the economy and create jobs.
Cost: $1.6 billion.
Make the Child Tax Credit Fully Refundable.Cost: $4.2 billion
Permanently Extend the Making Work Pay Tax Credit.
Objectives: Tax savings for 96 percent of households, stimulating the economy through purchase of goods and services.
Cost: $36 billion.
Total Net Revenue Increases:$524.3 billion

This is just the beginning of what those involved see as a prolonged struggle, a struggle to reshape the future of America.

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Almost all of this is eminently sensible. (4.00 / 1)
Except Cap & Trade, of course, as that's just a financial scam wrapped in the flag of Libertarian Fantasy... courtesy one Goldman Sachs. A carbon tax is vastly preferable, since it's not another scam to enrich investment bankers and avoid regulatory oversight.

I just wish proposals such as this were more widely disseminated. I think most of this would poll pretty well, if not all of it, with a decent "product launch," as it were. If only people knew about such thinking. If only...

"More than any other time in history, mankind faces a crossroads. One path leads to despair and utter hopelessness. The other, to total extinction. Let us pray we have the wisdom to choose correctly." -Woody Allen, My Speech to the Graduates

I Expect There Will Be Polling (0.00 / 0)
And it might not get much fanfare at first, but they are determined to get it out there, one way or another.

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3

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