Back to Work - Bill Clinton [33]
The most comprehensive alternative to the budgets passed by the House Republicans and recommended by the Simpson-Bowles Commission is the budget plan of the Congressional Progressive Caucus. It proposes to balance the budget in just ten years with an array of tax increases on upper-income Americans, especially those with incomes over $1 million a year; on estates, with steeper increases on those worth more than $50 million; on capital gains (taxing them at ordinary income rates); on corporate income; and on complex financial transactions. It would also cap standard deductions at the 28 percent rate for those in higher brackets, eliminate tax preferences for oil, gas, and coal companies, and index the alternative minimum tax to inflation. Their changes are projected to raise about $4 trillion over a decade.
On Social Security, their proposal would raise the maximum taxable limit to 90 percent of employee earnings now, not in 2020 as in the Simpson-Bowles plan, and eliminate the cap altogether for employers. On Medicare and other health programs, it keeps the president’s budget savings, adds a public option to the health-reform plan to hold down overall costs, and calls for more negotiated price discounts on government health programs’ high-volume drug purchases from pharmaceutical companies. Beyond health care, all the spending reductions are in the military budget, $1.8 trillion over ten years.
The third part of the progressives’ plan calls for investing more money in programs designed to create jobs and raise incomes: almost $1.5 trillion in an infrastructure bank to finance both traditional projects and new ones like faster broadband connections, a modern electric grid, and building retrofits; more funds for environmental conservation and community economic development; higher investments in education, job training, and special help for veterans and the long-term unemployed; and more spending for housing, rental, and child-care programs for lower-income Americans.
The bottom line on the progressives’ budget plan is that it produces a balanced budget in ten years with deficit reduction of $5.6 trillion, comprising revenue increases of $3.9 trillion, net spending cuts of $869 billion, and interest savings of $856 billion. There are lots of obvious objections to it from those with different perspectives. Seventy percent of the gap is closed with taxes, only 30 percent with spending restraint. It would enact the highest taxes in fifty years on very wealthy Americans. Its corporate tax proposals are so at variance with even our high-tax competitors that multinationals may be tempted to relocate to other countries. Depending on the tax rates and how they’re structured, the financial-transactions tax could either bring in a lot of money or lead to many high-dollar transactions now done in the United States being moved overseas, with a net loss in revenue from the taxable incomes on the people who do the transactions. And the progressives’ plan doesn’t deal with the demographic challenges to Social Security and the health-inflation challenges of Medicare, Medicaid, and other government-funded health programs.
Of course, in this Congress, progressives don’t have the votes to pass their plan. But the plan does two things far better than the antigovernment budget passed by the House: it takes care of older Americans and others who need help; and much more than the House plan, or the Simpson-Bowles plan, it invests a lot of our tax money to get America back in the future business. That makes its specifics worth studying for possible changes and inclusion in a plan with more balance between spending restraint and new taxes.
To sum up, we have a debt problem that will get worse if we do nothing. Increasingly, the debt is being financed by other nations buying our bonds. Most of the responsibility for the debt that has already piled up lies