Progressive Caucus Alternative Deficit-Cutting Plan

Isaiah J. Poole

With all of the attention around what looks to be a bad budget deal between the White House and Congress to avert a government shutdown, almost lost was the fact that progressive leaders in the House have produced the outlines of a budget that will do more to reduce the deficit long-term than what the Republicans have proposed—without asking poor and middle-class families to bear all of the budget-cutting pain.

The principles were spelled out in a letter to the House Budget Committee’s ranking minority member Rep. Chris Van Hollen, D-Md., that denounced as “monumentally reckless” the fiscal 2012 budget plan by House Budget Committee Chairman Rep. Paul Ryan, R-Wis. The letter says that for Democrats “it is essential to offer a clear contrast” to the Ryan plan. “From the current budget debate, it is clear that Republicans are leading us down a road to ruin.
Democrats stand with the people, and our legislative proposals should reflect that.”

The caucus has not released as detailed a document as the one released by Ryan, the disingenuously labeled “Path to Prosperity.” However, what caucus co-chairs Reps. Raul Grijalva and Keith Ellison have released could hardly have drawn a sharper contrast.

Instead of permanently locking in place the Bush tax cuts in the wealthy, the Caucus budget would let those expire in 2012 and allow those rates to return to what they were during the Clinton administration. Under legislation introduced by Rep. Jan Schakowsky, there would be new 45 percent, 46 percent and 46 percent tax brackets for multimillionaires and billionaires. Also, capital gains income would be taxed at the same rate as regular income.

Instead of dismantling Medicare, as Ryan’s budget does, and throwing seniors into the private insurance market, where they would be forced to cover an increasing share of their health care costs, the Progressive Caucus would maintain the current structure and save significant costs by allowing Medicare to bargain with pharmaceutical companies for bulk rates, much as the Veterans Administration already does. Republicans have consistently opposed such a move.

Where the Ryan budget would cut infrastructure spending, close job training centers and limit funding for career education, the Progressive Caucus proposes spending $1.45 trillion in education, infrastructure, training, and research and development.

Instead of proposing increasing the Social Security retirement age or cutting benefits as Republican leaders have proposed, the Progressive Caucus budget would increase payroll taxes to the percentage of total wages they were set in the mid-1980s, when a bipartisan group crafted a compromise long-term Social Security solvency plan. Adjusting payroll taxes to cover 90 percent of taxable earnings, which was intended by that compromise, would alleviate nearly all of the concern about Social Security’s long-term solvency.

Finally, while there are serious doubts about whether the Ryan budget meets its claims about loing-term deficit reduction, the Progressive Caucus budget is balanced at about 22.3 percent of gross domestic product by 2021. That is a far more realistic target than the eventual 15 percent of GDP to which the Ryan budget wants to shrink the federal government.

Progressive Caucus members are planning to discuss the budget in detail before the Ryan budget proposal is brought to the House floor. We’ve already heard the line repeated ad nauseum that Democrats aren’t serious about deficit reduction. That’s false, of course. Progressives are quite serious, and unlike the conservative approach of conferring more benefits to people at the top while slashing benefits to those in the middle and the bottom, progressives have serious plans for making sure we all share in the work of building a society in which we all prosper.

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