Four Reasons The Coming Congressional Budget Battle Matters

Isaiah J. Poole

We’ve heard many conservative elected leaders adopt a new tone when they talk about income inequality, but this week House Republicans will double down on the same-old-same-old when they release their proposed federal budget, which will continue their push to enrich the wealthy at the expense of the rest of us.

What is different is that, with Republicans in control of both houses of Congress, the stakes are higher – as will be the audacity of some of their proposals. But also higher will be the opportunities to rally the public around a contrasting vision of how the economy would work for working people if our politics weren’t rigged to favor the few.

That vision will be in the Progressive Caucus alternative budget to be released Wednesday. As in past years, that budget will not only draw the sharp contrast between the conservative extremism of the Republicans but will push the limits of the economic debate beyond those of the Democratic establishment to embrace the demands of workers for good jobs at fair wages in a growing, sustainable economy.

Here are four reasons why this year’s budget debate matters, and why you need to be actively engaged.

1. Republicans will try to keep us focused on a fake deficit crisis instead of the real need – sustainable growth and good-paying jobs.

Truth is, we’ve already reduced federal deficits too far, too fast – at the behest of a bipartisan austerity mania. That is a key reason the U.S. economy, according to the Congressional Budget Office, last year was running $723 billion below its potential. In the context of a $17 trillion economy, that’s a big deal – it’s jobs that weren’t created, money that did not end up in the pockets of workers, economic opportunities that did not materialize.

Yet, even though the CBO now says that the federal budget deficit this year will be 2.7 percent of gross domestic product (down from almost 10 percent of GDP when President Obama took office) and is projected to fall below the 50-year average in 2016, expect to hear more Republican complaints about “out-of-control spending,” especially on “entitlements.”

Nonsense. The number one priority for Congress should be to grow the economy in ways that produces good-paying jobs. And that means the federal government needs to do more, not less, to expand opportunity and provide more security for people trying to climb the economic ladder.

Watch for how the Progressive Caucus makes that case with its budget. In previous years, they have argued that the way to avert a long-term deficit crisis is to ensure that the economy is operating at true full employment – the point at which everyone who wants work can find work and in which the gains from work are broadly shared through rising wages.

2. We will continue to shortchange the investments we need for sustainable growth.

One of the most tangible things Congress could do this year to support long-term economic growth is to pass a robust surface transportation reauthorization bill. No one disputes the fact that the country spends too little to maintain its roads, bridges and public transportation, and Congress faces a deadline of later this year.

But Republican leaders have shown no willingness to propose solutions that match the scope of the problem and rally support for those solutions. Instead, they, along with some Democrats and even the Obama administration, are looking to a tax break scheme they hope will coax corporations to bring into the country profits they have stashed overseas to avoid taxation at the full statutory rate.

The alternative starts with committing to spending the money we need to ensure our transportation network can support future economic growth – and insisting that the corporations that profit from using our transportation networks pay their fair share toward maintaining them. Doing that is essential to creating the good-paying jobs we need to help close the jobs gap we still have from the 2008 recession.

3. The health care assault is about to get real.

The repeated and ineffectual votes to “repeal Obamacare” by congressional Republicans remain a source of ridicule, but what they will try to do to Medicare and Medicaid is no laughing matter.

It’s been a long-time vision of conservatives to convert Medicaid into a block-grant program that states would manage – or turn their backs on, as many right-wing states did by refusing to set up health-care exchanges. While Republicans tout the block-grant idea as a way to make management of Medicaid more local, the real objective is to cut costs – not by taking on the actions of drug, insurance and health care companies that drive up costs unnecessarily, but by making it harder for working people to get health care when they need it.

Also, while Senate Republicans are loathe to talk about specifics, expect to see significant cuts in Medicare spending as well – but, again, the burden of those cuts will be on seniors. When Rep. Paul Ryan was chair of the House Budget Committee, his initial plan was to replace Medicare with a voucher seniors could use to buy private health insurance (presumably in a world without Obamacare’s mandates for providing coverage or its cost controls) and raise the eligibility age. Ryan has since moved on to the tax-writing Ways and Means committee, so we’ll have to see what schemes congressional Republicans will embrace.

There will be likely a show over supporting a bipartisan fix in the reimbursement rates for doctors who serve Medicare patients, but that shouldn’t be allowed to obscure the important longer-term fight over how we provide health care security to seniors.

4. We’re going to see upside-down tax policies on steroids, with the rich paying less and the poor paying more – even as conservatives keep pursuing the folly of a “balanced budget.”

Republicans have made it clear that one of their top policy goals is to lower top-end and corporate tax rates – the lower the better. What they won’t talk about – but we must – is who would end up paying for those tax cuts.

One very real consequence is that many poor and middle-class families are likely to see their taxes go up. A particular target would be the earned-income tax credit; they particularly dislike that some very-low-income families get a cash “refund” as a result of the credit.

But even the households who don’t see a higher tax bill under the Republican’s revenue plans would see a loss of government services they depend on, or a shift in costs. These are the families that will be caught in the squeeze between lower tax rates for the wealthy and the drive for a balanced federal budget within the next 10 years. As the Center for Budget and Policy Priorities noted last week about the budgets the House passed the last two years, “more than two-thirds of the cuts would have come from programs focused on low- and moderate-income households, even though such programs account for less than one-quarter of all program costs.”

Expect the Progressive Caucus budget alternative to show how all of this is unnecessary. We can have a tax code that requires corporations to pay a share of taxes closer to what they paid when Ronald Reagan was president – at a time when U.S. corporations were no less globally competitive than they are now. We can tax wealth at the same rate as we tax work, and end the perversity of day-traders and hedge-fund managers paying lower tax rates than teachers and first responders. We can be generous enough to give a hand up to fellow citizens who are left behind in today’s economy, and visionary enough to use the capacity of government to fashion a different kind of economy.

The coming budget debate is about more than numbers and political scorecards. Perhaps even more so than previous years, this is a debate over whether America will be an even more hostile place for working-class people or a country that takes seriously the challenge of making its economy and politics work for everyone.

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