Budget Matters - The Moment of Truth - National Priorities Project | Bringing The Federal Budget Home: "Budget Matters
The Moment of Truth
Written by Chris on December 03, 2010 in General Budget , Government .
Earlier today, the 18 members of the President's National Commission on Fiscal Responsibility and Reform voted to approve the final version of the proposal issued by the Commission's Co-Chairs, Sen. Alan Simpson and Erskine Bowles. The vote was 11-7, short of the 14 votes which, according to the panel's rules, are needed to prompt congressional action.
Failure to reach the 14 vote threshold also means that the Simpson-Bowles proposal is not the Commission’s final report. Yet despite this, the question of federal deficit reduction and controlling the national debt will not go away. In addition to the Simpson-Bowles proposal -- the final version of which is called 'The Moment of Truth' -- seven other major deficit reduction proposals have been released in recent weeks, by foundations, think tanks, and even individual members of the Commission who found serious fault with the panel's work. Links to the various reports are included below.
There is also a large contingent of policy experts who believe that given the nation's troubled economy, discussing ways to control the federal deficit by cutting government spending is absolutely the wrong conversation to be having at this time.
This is the debate of our lifetime. More than Iraq, more than Afghanistan, even more than health care reform, this debate has the potential to impact our nation, and even the world, for decades. None of us can afford to sit this one out. For anyone who doubts this, you need only think back to the November elections. People are worried about their futures and deeply concerned about the role that government will play in healing our nation.
NPP is committed to helping our constituents inform this critical debate. Through our major products such as 'the President's Budget' and 'Tax Day' we provide a wealth of information on the federal government's priorities and how your tax dollars are spent. Using our 'Federal Budget 101' website and webinars we bring you vast amounts of information on the federal budget process and how you can take part in decision-making. Our newest products, NPP's 'Jobs, Deficits and Taxes' webinar and our two new blog series 'DC Speak' and 'On The Block' all focus on demystifying the on-going discussion of these vital topics. Links to NPP resources are also included below.
We cherish your participation, both as participants in the national debate and as drivers of our work. As our vision statement says, 'We hold the vision of an informed and engaged democracy where all people affected by federal spending priorities have the ability and opportunity to shape our nation's budget.' We also encourage you to share with us your ideas and suggestions on the kinds of materials that will help you become a better and more effective player at this important time.
DEFICIT REDUCTION PROPOSALS
The Moment of Truth (Final Simpson-Bowles proposal)
Restoring America's Future (Rivlin-Domenici plan)
Report by Commission Member Rep. Jan Schakowsky
Toward Common Ground: Bridging the Political Divide to Reduce Spending (US Public Interest Research Group and the National Taxpayers Union)
Investing in America’s Economy: A Budget Blueprint for Economic Recovery & Fiscal Responsibility (Demos, Economic Policy Institute, and the Century Fund)
Getting Back in the Black (Peterson-Pew Commission on Budget Reform)
How to Cut $343 Billion from the Federal Budget (Heritage Foundation)
The 21st Century Plan for America’s Leadership (Commission Member Andy Stern)
Annual analysis of the President's budget: NPP's analysis of the FY2011 federal budget spans FY2008 to projected FY2012. The publication offers state-level data for health, education and energy and cross budget category comparisons: .
Tax Day 2010: NPP issued a breakout of the allocation of individual tax-payer dollars, in spending categories which correspond to our President's budget analysis. View the report, as well as our individual tax chart: .
NPP's Database: Our one-of-a-kind database contains state and local level data on federal spending and correlated social well-being indicators. In 2010/11, NPP broke ground on the Data 2.0 Project to overhaul the database and its contents in partnership with Sunlight Labs and Forum One. Due for completion early in 2011, this work will greatly expand the usability of NPP's information: .
Federal Budget 101 on the website: A comprehensive guide to the federal budget with associated charts: http://www.nationalpriorities.org/charts and http://www.nationalpriorities.org/budget_briefs.
Data for Democracy webinars: This initiative is dedicated to helping our constituents use NPP's localized federal spending data and tools more effectively. Launched recently with the webinar Out of Balance, the feedback on this series is incredibly positive. State-level figures are available to help participants “bring home” the webinar's main messages. Out of Balance's success prompted us to hasten the development of Federal Budget 101 and Jobs, Deficits & Taxes, available here: http://nationalpriorities.org/en/resources/webinars/.
Tags : deficit federal budget
At some point, I need to sit down and create a comprehensive cross-plan comparison... but I haven't read any but the Simpson-Bowles plan.
Rivlin's plan, I have read elsewhere, includes a quasi-VAT-like consumption tax, which I am usually opposed to on regressivity grounds, although I have heard it argued that Rivlin's particular consumption tax purports to be more progressive than the current overall tax structure. I don't know if that's true; I'd have to read the details, and get analysis from, e.g., the folks at the Tax Policy Center.
Schakowsky's plan is likely more progressive, based her remarks from yesterday's C-SPAN televised committee meeting. So far, I'm liking the Demos-EPI proposal, especially in terms of budget priorities... but I haven't finished reviewing it yet. Peterson-Pew & Heritage Foundation's plans I can easily guess to be far more to the conservative right than I am likely to find acceptable. The rest, I don't know anything about.
All of which leaves me to comment on the final [so far] Simpson-Bowles proposal:
- First, as a matter of general principle, I approve the concept of broadening the tax base and lowering rates. Hardly anyone disagrees... except of course those who are effected by the removal of the special exemptions and credits.
- The "simplification" of reducing the number of individual income tax brackets is gimmicky. I still think there should be MORE brackets, not fewer. In particular, more brackets at the upper end, to further differentiate between the upper 10%, 5%, 1%, and 0.1% percentiles. Pre- and after-tax income distribution analyses I've seen suggest that relative to their somewhat less well-off neighbors, the upper 1% and 0.1% don't quite [IMO] contribute their fair share [although this is likely due to their incomes being disproportionally sourced from capital gains, which are [currently] taxed at much lower rates than ordinary income; if capital gains and dividends are to be taxed at normal ordinary income rates, this goes away.] Off the top of my head, I'm thinking 5%, 10%,15%, 20%, 25%, 30% and 35%.
- I am pleased by the somewhat improved effects on tax progressivity / incidence. I just still don't think it's gone far enough. The upper income groups have disproportionally benefited from government largesse (read tax expenditures), both during Reaganomics and under Bush, Jr. The bill has come due, and it is time for them to repay the favors given... especially since the favors given have not translated into jobs or financial stability for the vast majority of us.
- The Estate Tax should be reinstated. I'm open to various specific levels of exemption, rates, etc.
- Not a nickel of SocSec benefit cuts - including not raising the retirement age - until and unless the cap on wages subject to the payroll tax is removed (entirely). Not only would this set SocSec on actuarial solvency for as far as the eye can see, but it further shifts the overall tax burden upward (where it belongs).
- A Financial Transactions Tax (e.g., see Baker/CEPR) needs to be incorporated. As does a Financial Activites Tax (see Slemrod et al). And an Excess Reserves Tax.
- Corporate governance needs to be reformed to require a binding majority shareholder approval of executive pay. Corporate boards and compensation committees have done a horrible job of properly structuring incentives and/or evaluating the value of CEO performance. As fiduciaries, they have lost the right to continue setting their own course without oversight from shareholders.
- The corporate income tax for multi-national corporations must be reformed... but NOT to a territorial system! A territorial system is nothing but another giveaway to large corporations, and does nothing to reduce the incentive to offshore jobs. It is a race to the bottom, benefiting no one but the MNCs; why should the United States be obligated to adopt the tax structures of banana republics? Instead, a Global Formulary Apportionment system must be implemented.
- Medicaid/Medicare prescription drug costs must be subject federal government negotiation of prices. There is really no excuse for leaving this money on the table.
- Automatic triggers for: a) a public option health care plan by the end of 2015 if the of government health care expenditures exceeds GDP+1%, and; b) a single payor system by 2020 if still not reduced to GDP+1% by then.
- Discretionary spending budget needs to be re-prioritized to first promote domestic job creation, next to education investment. Everything else follows.
- Reconsider cap and trade or a carbon tax. The externality needs to priced into energy. Global climate change deniers are number than a pounded thumb.