Yesterday, President Obama outlined a fiscal policy proposal to reduce the federal debt by $4 trillion.
His plan accepts some of the cuts demanded by the Republicans, a total of $770 billion over 10 years. Analysis shows that these cuts will cost jobs and will come disproportionately from programs that help low-income working families. (Though the President says new targeted investments in education, healthcare, technology, research, and "green" jobs should offset.)
In addition the President proposed reductions in Pentagon spending by $400 billion over 10 years.
He rejected Republican proposals to gut, undermine, or eliminate Medicare and Medicaid and urged full implementation of the health reform law, which non-partisan estimates show will save $340 billion in healthcare costs over 10 years (and another $1 trillion in the following decade).
He proposed implementing a prescription drug program that would allow Medicare to negotiate prices with drug companies to reduce costs, producing a $200 billion in savings with shifting costs to seniors (as proposed by the Republicans).
The President also rejected Republican proposals to privatize Social Security and reduce its benefits (a demand that has nothing to do with the federal budget deficit).
Again, the President called for elimination of the Bush tax cuts for the richest Americans, projecting a savings of $320 billion over 10 years. In addition, the President's plan would close loopholes that favor the richest Americans and corporations, reducing the deficit by as much as $1 trillion, according to some estimates.
In all, with these and other proposals, the White House believes it's plan will reduce the debt by $4 trillion in 10 years.
The President's outline earned strong words from the labor movement. AFL-CIO President Richard Trumka said:
President Obama gave a promise to America’s working people that he wouldn’t follow the path of the radical Republican fiscal agenda that leads to lost jobs and a national decline of standards. That commitment is essential at this crucial moment for children, students, seniors and everyone who hopes for a secure economic future.
Republican's "slash and burn" budget
1. Cuts $1.8 trillion – 150% higher than the President's plan – the from public investments in education, anti-poverty programs, environmental protections, public health and safety enforcement, and the like. Roughly two-thirds of the cuts come from programs that impact working families.
2. Eliminates 2.2 million jobs in two years.
3. Eliminates $207 from Medicaid by cutting grants to states to provide care for low-income uninsured, moving the burden of care to states, increasing the number of uninsured and guaranteeing a new, more intense healthcare crisis. The Republican plan would leave 54 million people without care, despite health reform's promise to provide new coverage for 32 million Americans.
4. Creates a "voucher" system for privatized Medicare that within 10 years would shift thousands of dollars in medical costs each year to the seniors who rely on the program, as much as half of their income within two decades. The Republican spend would also shift trillions in taxpayer dollars to private insurance companies and avoid making the program more efficient. It would also reduce costs by increasing the age for qualification for Medicare.
Within a very short period of time, with cost-shifting, privatization schemes, and massive amounts of new tax dollars for insurance companies, Medicare as a meaningful program would simply cease to exist.
But the proposed changes would still create $20 trillion in added costs over the next few decades. Medicare would simply be a massive payout to insurance companies.
5. Cuts in education, healthcare, and general welfare would be offset by a new round of tax cuts for the rich and wealthy corporations – to the tune of $4.2 trillion.
6. Creates "phantom savings" for the President's planned troop withdrawals from Iraq and Afghanistan – which the authors of the plan oppose. Also, contains $200 billion in mathematical errors.
7. Massive spending cuts offset by massive tax cuts for the rich would mean that the net effect of the Republican debt reduction would total a mere $155 billion (despite the plan's claim to cut the debt by over $5 trillion), a mere drop in the $14 trillion bucket.
People's Budget (offered by the Congressional Progressive Caucus)
1. Provides $1.7 trillion in job-creating investments in infrastructure (highways, bridges, high-speed rail, passenger rail, airlines, ports) over the next 10 years. The plan includes start-up capital for a national infrastructure bank to provide loans to leverage public and private investments in these projects.
2. Protects Social Security benefits but adds to the already significant fiscal strength of the program by raising the maximum taxable amount from $106,000 to $170,000 for contributions into the SS fund. This small change would add $1.2 trillion to the fund over 10 years and increase additional outlays by only $2.8 billion. (Under the current system everything over $106,000 goes untaxed.)
3. Adds a public option to the health reform passed in 2010. At a minimal cost, would reduce Medicare expenses by tens of billions over the next decade.
4. Ends the war in Afghanistan and ends military operations in Iraq. It provides funding for both through 2012, but beginning in 2013 ends all funding, saving $1.6 trillion by 2021.
5. Reduces military spending by $800 billion through the reduction of forces and nuclear weapons and elimination of wasteful weapons programs.
6. Changes tax policies to include allowing the Bush tax policies to expire at the end of 2012, increases the highest tax brackets (including the creation of new brackets for millionaires and billionaires), eliminates the special privileges the richest Americans get for capital gains, and creates a progressive real estate tax. Continues tax relief of working families including child tax credits, education incentives, an expansion of the standard deception for joint-filers (a special benefit mainly for heterosexual married couples) etc. These tax policies alone would create close to $4 trillion in savings and new revenue in the next decade.
7. Proposes adjustments to tax policies on corporations (like GE), fossil fuel producers, Wall Street speculators, a pollution tax, and new taxes on companies that put their holdings offshore to avoid taxes, generating tens of billions in new revenue each year.
8. The plan would reduce the debt by over $5 trillion in 10 years. In all the People's Budget ends war, creates new investments in public infrastructure and hundreds of thousands of jobs, shifts spending priorities from military to domestic needs, and reduces the deficit and debt more hoer humanely – and quickly – than the Republican budget.
The tea party proposal? Rep. Michele Bachmann, R-Minn., doesn't believe in math so her group didn't produce a plan.
