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Fourth in a series

Searching for a Federal Budget that Serves the People

The Congressional Progressive Caucus proposal is good but could be better
By Masao Suzuki |
July 28, 2011
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San José, CA - A proposal for a federal budget that serves working people and not the rich and corporations needs to include four points. First, a budget proposal for the people needs to recognize that the biggest economic problem right now is not the federal budget deficit, but rather an unemployment rate of almost 10% more than two years after the recession officially ended. Second, given the fact that the public debt is mainly due to wars, tax cuts for the wealthy and recessions, balancing the budget must be done in a way that cuts military spending, raises taxes on the well-to-do and increases spending in the short run to get more people back to work. Third, future funding problems for Social Security and Medicare must protect the programs by increasing funding, not by cutting back on the safety net for seniors.

One proposal that tries to do this is the Congressional Progressive Caucus’ “People’s Budget,” drawn up by the 85 members of the Progressive Caucus. This proposal has been almost totally ignored by the mainstream corporate media. A search of the New York Times, Washington Post, and Wall Street Journal show not a single mention of this proposal in a news article. This news blackout and self-censorship by the mainstream media is designed to do one thing: limit the debate to two options, the right-wing Cut, Cap, and Balance proposal that would slash social programs, cut taxes for the rich and corporations, while pushing the economy in a Depression; and the bipartisan Senate and/or Obama - House Republican deals that would go in the same direction, but just not as much.

To its credit, the Congressional Progressive Caucus’ “People’s Budget” goes the other way. It begins with a plan to boost spending on roads, bridges, rail and other infrastructure immediately to create jobs. The People’s Budget also calls for significant cuts in military spending and ending all of the Bush-era tax cuts for the well-to-do in order to try to bring down the budget deficit. It would also increase taxes on corporations, especially on the Wall Street firms, where greed led up to the financial crisis in 2008. Last, but not least, the Progressive Caucus proposal would increase funding for Social Security by raising the cap on taxes (right now paychecks over $106,800 are not taxed, neither are interest, dividend or capital gains income that mainly goes to the wealthy). It would also expand Medicare by offering it as a ‘public option’ for individuals to purchase and by having the government negotiate lower prices for medicines.

While the “People’s Budget” is a good start, it really doesn’t go far enough to be a true budget that serves working people. In addition to infrastructure spending that would mainly aid construction workers, the federal government needs to start up a more general jobs program like the Depression-era Works Progress Administration (WPA), which directly employed millions of jobless workers. The Progressive Caucus wants to cut military spending (on top of ending the wars) by about $700 billion over ten years. But this represents only about a 10% cut. With the United States spending almost as much as the rest of the world combined, we can and should make much deeper cuts to military spending.

Offering a ‘public option,’ where individuals can buy into Medicare is not enough. What we need is to expand Medicare to all. Along with the government forcing down prices and profits of big drug companies and the savings from eliminating private, for-profit health insurance companies, this could cut total health care spending by as much as one-third (Canada, with its government health insurance, spends about 2/3 as much as the U.S. on health care). Universal federal health insurance would be big budget relief to state and local governments and schools, who would not have to pay so much for private health insurance for their workers and teachers, helping to turn back the tide of budget cuts. Private businesses that do offer health insurance benefits for their workers would have the playing field leveled and would face less pressure to cut their benefits to cut costs.

While this would require more taxes to go to Medicare, one way would be to raise the cap on earnings taxed for Social Security for the current 80% of t tax all income, making FICA a true ‘flat tax.’ This would be more than enough to insure Social Security payments, so the rest could go to Medicare.