| Number 481 | May 31, 2011 |
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This Week: A Stroll Through the News with Nygaard |
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Greetings, I'm afraid this issue of the Notes is just a little bit wonky. That is, heavy on details and inside references that some non-specialists might not fully understand. My apologies. If Nygaard Notes were a daily publication, we would have a regular feature on the budget process that would include enough information to allow the average reader to keep up. That is, we would do what the mass media in this country should be doing on a routine basis, but rarely do. Since I devote an entire issue two the subject, it would not be unreasonable to imagine that I wholeheartedly support the People's Budget. That's not the case. In fact, I'll quote economist Richard Wolff here, who states my point of view very succinctly: "Such a budget, if ever passed, would leave intact the basic organization of production in the US economy. That is, it would leave the mass of people as workers with too little in wages and too much in debts to be able to spare the time and effort, let alone money, needed to be a major force in the political life of the US. So, instead of becoming enamored with a budget that only goes partway—and will not pass, in any case—we would all do better to focus our energy trying, as Wolff says "to expose, criticize and thereby help to transform the basic economic structure of our economy so that the will of the majority of people (to which the People's Budget is clearly closer than the alternatives) can begin to have the controlling political effects a democracy intends but which our current economic system precludes." In the struggle to transform our economy, a bit of knowledge of current proposals can be useful, and it is in that spirit that this issue of the Notes is offered. Transformationally yours, Nygaard
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"Quote" of the Week: "The voice of the people is crystal clear. Here's economist Jeffrey Sachs of Columbia University, writing in the Huffington Post on April 8th: "There are now four budget positions on the table. Far to the right is Paul Ryan's plan... Then there is President Obama's budget, which is really... in the center-right of the political spectrum... In the progressive middle is the People's Budget.... The fourth position is the public's position... "The voice of the people is crystal clear. In one opinion survey after the next, the public says that the rich and the corporations should pay more taxes. The public says that we should tamp down runaway health care costs through a public option, one that would introduce competition to drive down bloated private health insurance costs. The public says that we should get out of Iraq and Afghanistan and reduce Pentagon spending... "The fact is that the People's Budget is the public's position. That's why it is truly a centrist initiative, at the broad center of the U.S. political spectrum." Do you notice what's missing here in this list of budget positions that are "on the table"? I discuss elsewhere in this issue the missing position, one that might be considered "far to the left." |
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Elsewhere in this issue I refer to the "People's Budget" proposal from the Congressional Progressive Caucus as "The Budget You've Never Heard Of." Am I overstating the case? Let's have a look at how the proposal has been treated in the mass, or corporate, media. The mass media, after all, is still where most of us get our information about the issues of the day. Not everyone reads Nygaard Notes, you know. I used the Lexis/Nexis database of hundreds of major (and not-so-major) newspapers to compare coverage of three major federal budget proposals in the week after each of them was released. The White House released its budget on February 7th, the Republican budget proposal was released by Wisconsin Representative Ryan on April 5th, and the People's Budget was released on April 13th. I just searched the newspaper database for the words "budget" and "released" and either "Obama" or "Paul Ryan" or "Progressive Caucus." Here's what I found: In the week after its release, there were 149 articles in the world's English-language newspapers that mentioned the release of the Obama budget. There were 100 articles on the Ryan (Republican) budget. And on the Progressive Caucus budget there were—er, was—one. That's correct: One single mention of the release of the People's Budget. And that was a letter to the editor. This is why I call it The Budget You've Never Heard Of. I searched again, this time looking only in U.S. newspapers, and leaving out the word "released." I thought perhaps the "release" wasn't reported, but the proposal itself was discussed in the media. This time, the score for the week after the respective releases was: Obama budget = 771; Paul Ryan budget = 100. Progressive Caucus budget = 22. That seemed a little more balanced. Until I looked at the type of coverage. Sample headlines for the articles that mentioned the People's Budget include: "Soak Rich, Bust The Budget" (Investor's Business Daily, April 18). "How the Left Would Rule" (Lewiston Idaho Morning Tribune, April 17); Plenty of Rain on Progressives' Budget Parade (The Washington Post, April 14, 2011). |
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Last week I quoted a columnist for the London Economist saying, "Have you ever heard of the Congressional Progressive Caucus budget plan? Neither had I." Since basically nobody has heard of the budget—known as the "People's Budget," I offer here a very brief summary of some the key features. Immediately following it is a list of the sources I used to assemble this summary, for those who want to know more. Some Basic Facts 1. By 2021, the People's Budget would yield a budget surplus of $30.7 billion. 2. By 2021, the accumulated federal debt (the "national debt") as a share of the economy is projected to be 75.6 percent, according to the baseline of the Congressional Budget. If the People's Budget were adopted, that figure would fall to 64.1 percent. That compares with 67.5 percent of GDP under the House Republican Budget and 87.4 percent of GDP under the president's budget. 3. The People's Budget is projected to run lower deficits and place public debt on a more sustainable trajectory than either the House Republican Budget or the president's budgets. The projected surplus in 2021 (0.1 percent of GDP) compares with a deficit of 1.6 percent of GDP under the House Republican Budget and 4.9 percent of GDP under the president's budget. 4. According to economist Jeffrey Sachs, writing in the Huffington Post on April 8, 2011, "the People's Budget would close the deficit by raising taxes on the rich, taming health care costs (including a public option), and ending the military spending on wars and wasteful weapons systems." 5. "The People's Budget would reduce primary spending by $868.9 billion, increase general revenue by $2.8 trillion, and increase payroll tax receipts by $1.2 trillion over a decade ... Responsibly ending the wars in Afghanistan and Iraq and recalibrating Department of Defense priorities would save $2.3 trillion. Roughly $1.7 trillion would simultaneously be invested for general public investment and a surface transportation reauthorization bill, including an I-Bank [Infrastructure Bank]. Health care savings would decrease deficits by $308.1 billion from 2012 to 2021, more than offsetting the 10-year cost of maintaining the current rate of Medicare physician reimbursements, adjusted for inflation. ... net interest payments are projected to fall by $856.3 billion over 2012-21. In total, the People's Budget would reduce deficits by $5.6 trillion over 2012-21 ..." The above quotation is taken from "The People's Budget: A Technical Analysis" by the Economic Policy Institute. In their analysis, they say that "The policy options that make up the People's Budget fall into five broad categories public investment, Social Security, health care reform, Department of Defense spending, and tax reform." I'll condense their 30-page summary here (it's mostly direct quotes from the lengthy original): Physical Infrastructure The People's Budget "would rebuild and modernize the national surface transportation infrastructure and expand investments in highways, highway safety, passenger rail, and high-speed rail, among other projects. The proposal includes an up-front investment of $50 billion above current law for 2012." "To help finance these long-term infrastructure improvements, the People's Budget plan calls for a National Infrastructure Bank (I-Bank) to leverage private capital and direct investment toward projects of national importance. The People's Budget would raise the motor fuel excise tax by 25 cents "as a direct funding mechanism to recapitalize the Highway Trust Fund and finance this surface transportation reauthorization proposal." *** Social Security "The People's Budget does not propose any reductions in [Social Security] benefits. The People's Budget raises the taxable maximum to include 90 percent of economy-wide earnings, and eliminates the maximum that employers pay on behalf of their high-income employees." *** Health Care Reform "Beginning in 2014, national health insurance exchanges will be established (as a result of health care reform) through which individuals and families may purchase private coverage, increasing competition in largely fragmented, regional insurance markets. Under [the People's Budget proposal], the Secretary of the Department of Health and Human Services would administer a public health insurance plan to be offered alongside private plans through the exchanges." The People's Budget would allow the federal government to use market power to negotiate lower drug prices on behalf of all Medicare beneficiaries. This will save $157.9 billion from 2012-2021. *** Military Spending "Ending the wars in Iraq and Afghanistan will save $1.6 trillion over the 2013- 21 period." Specific proposals to reduce base Department of Defense spending include: "reducing active duty Army personnel strength to 427,000 by 2014 (a decrease of 120,000); reducing the Marine Corps personnel strength by 30 percent to a force of 145,000 by 2014; reducing the Navy by 20 percent to a fleet of 230 ships; and reducing the Air Force by 15 percent, reducing the number of squadrons by 18 of 60. These force structure savings would total $593.7 billion over the 2012-21 period." "Specific proposals for strategic capabilities include reducing the U.S. nuclear arsenal, cancelling the Trident II missile, limiting modernization of nuclear weapons infrastructure and research, and selectively curtailing missile defense and space programs... Overall, these policy proposals would gradually reduce defense appropriations by $692.2 billion over the 2012-21 period... Taken in conjunction with ending the wars in Afghanistan and Iraq, the realignment of conventional and strategic forces would result in $2.3 trillion worth of savings..." *** Tax Reform The People's Budget would "allow the Bush-era tax cuts to expire but extend marriage relief, credits, and incentives for children, families, and education." The People's Budget would enact a progressive estate tax The policy would include a $3.5 million exemption ($7 million for married couples), "leaving 99.75 percent of all estates fully exempt." The People's Budget would enact the Fairness in Taxation Act "which would create several new tax brackets for high-income earners: $1-10 million would be taxed at 45 percent; $10-20 million, 46 percent; $20-100 million, 47 percent; $100 million to $1 billion, 48 percent; $1 billion and over would pay 49 percent. Citizens for Tax Justice (CTJ) estimate that the Fairness in Taxation Act would generate $748.2 billion over the 2011-20 period." The People's Budget would tax capital gains and qualified dividends as ordinary income. "The People's Budget would eliminate the preferentially low rates on long-term capital gains and qualified dividends, and it would tax all capital income as ordinary income under the marginal tax rate structure." "The People's Budget would limit the benefit on itemized deductions for high earners. The People's Budget would decrease the regressivity of itemized deductions while maintaining incentives built into the tax code by limiting the rate at which itemized deductions can reduce tax liability to a maximum of 28 percent. This policy would only affect itemizing tax filers currently in the top two income brackets." The People's Budget would impose a "Financial Crisis Responsibility Fee" on large financial institutions. "Specifically, the budget would impose a leverage tax ... on large banks with more than $50 billion in assets. "...imposing such a tax could generate $31.3 billion over the 2012-16 period and $70.9 billion over the full 2012-21 period, recouping more than three-fold the net taxpayer cost of the Troubled Asset Relief Program (TARP)." There are all sorts of other tax reforms in the People's Budget. I won't go into all of them, but will simply list a few for those who are interested. The People's Budget would impose a small tax on transactions of exotic financial products, eliminate fossil fuel tax preferences, reinstate Superfund taxes, and tax U.S. corporate foreign income as it is earned (putting an end to the trillion-dollar tax dodge perpetrated by corporations "parking their profits" overseas. Support for the People's Budget should not be an end in itself (see this week's Editor's Note), but I do think that a basic knowledge of this document, the People's Budget, can help activists to more effectively respond to the prevailing neo-liberal mentality that would leave us all, as individuals, at the mercy of a merciless market. It's in that spirit that this summary was written. |
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The official summary and overview put out by the Congressional Progressive Caucus (CPC) can be seen here. (12 pages) The Economic Policy Institute put out a 30-page "Technical Analysis" of the People's Budget. I relied on it heavily in putting together the summary you just read. Don't let the title intimidate you; it's not all that technical. For a look at the right-wing alternative to the People's Budget, you can look at all 73 pages of the Republican budget, which they call "The Path To Prosperity." It's also known as The Ryan Budget. An advocacy group that (I guess) one would call "liberal" put out a useful nine-page report called "Budgeting for America's Middle Class: A Report Card Comparing Federal Budget Proposals." A place called the "Main Street Insider" offers a little video called "90 Seconds for the People's Budget." It really is about 90 seconds, and worth watching. (There is text, too; also very brief.) |
