Stern offered a credible plan on Wednesday, calling for substantially larger tax increases than Simpson and Bowles proposed, along with a shift in government spending toward infrastructure investment.
But the strongest alternative is a detailed plan advanced by Schakowsky.
The Congressional Progressive Caucus member and key ally of outgoing House Speaker Nancy Pelosi--who has dismissed the Simpson-Bowles approach as a non-starter--has been the sanest voice in the commission's debate about how to balance budgets, reduce debt and grow the economy.
"Lower- and middle-class Americans did not cause the deficit. Just ten years ago the federal budget was generating a surplus as far as the eye could see. That surplus was turned into a deficit due to massive tax cuts--mainly to wealthy Americans; two wars paid for by borrowed money; and a major recession caused by the recklessness of the big Wall Street banks. Over the last decade the incomes of middle-class Americans have actually shrunk, while those of the wealthiest 2 percent of the population have exploded," argues Schakowsky, who says, "The middle class did not benefit from the Republican economic policies that led to the current deficit--they were the victims--they should not be called upon to pick up the tab."
As such, Schakowsky has rejected the Simpson-Bowles scheme, which would weaken Social Security, Medicare and Medicaid while cutting taxes for multinational corporations. "The president's Fiscal Commission has been given a concrete goal: to achieve primary budget balance in 2015, ensuring that all spending is paid for except for interest on the national debt," she explained after the co-chairs laid out their plan. "Their proposal," she explained, "would have serious consequences for lower- and middle-class Americans, and that is why I cannot support it."
But Schakowsky did not just say "no."
She presented an alternative plan to reduce the deficit by $427 billion over the next five years, far surpassing the target proposed by President Obama, and she would do it with an eye toward protecting the poor and the middle class and strengthening the economy.
"Fixing the federal deficit is not an end in itself. The goal of budget policy should be to assure long-term, widely shared economic growth," explains Schakowsky. "Economic growth is not just good for businesses and families--it will reduce the deficit. Sustained, long-term economic growth requires that we end the trend of concentrating more and more wealth in the hands of the rich and less and less in the hands of a middle class that can then afford to buy the products and services that will sustain economic growth."
Notably, Schakowsky preserves Social Security and other programs
that protect and serve working Americans. Instead of undermining the
program, she would assure its long-term solvency by eliminating the
wage cap on the employer side and raising it to 90-percent on the
employee side, applying FICA to all wage income below the cap and
establishing a modest legacy tax on wealthier Americans.
This is part of a broader plan from Schakowsky, which has five key elements:
1. Increased economic stimulus to spur growth in the immediate term
à ‚¬ Provide $200 billion to invest over the next two years in measures
to create jobs and spur economic growth, including passing the Local
Jobs for America Act; and funding for education and law enforcement;
Unemployment Insurance, Federal Medical Assistance Percentages (FMAP)
and Supplemental Nutrition Assistance Program extensions; and
infrastructure.
à ‚¬ Adopt the president's proposals to eliminate overseas tax havens and incentives for outsourcing.
2. Smart, targeted spending cuts
à ‚¬ Non-defense discretionary--$7.55 billion in savings through
increased efficiency and cuts to programs that benefit large
corporations that don't need assistance.
à ‚¬ Defense discretionary--$110.7 billion in cuts from the 2015 defense
budget, including efficiency savings, reducing our troop levels,
cutting weapons systems we don't need and scaling back the wartime
increases in the size of the military.
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