Friday, April 8, 2011

The People's Budget: The Progressive take on debt reduction

Ever since Paul Ryan released the GOP's budget plan the left have been howling at the moon.  They have been going overboard with their screams of calamity to the middle class.  As a political tactic, this can be helpful in the short term, but sooner or later someone is going to tell the left to put up or shut up.

To save themselves from that fate, the  Congressional Progressive Caucus have put together a budget plan of their own, they call it The People's Budget.  Phil Klein from the Washington Examiner gives us a sneak peek at what the left's has in store for America.

Next week, the group of progressives plans to introduce its alternative to Ryan's proposal, called "The People's Budget." Based on an advanced peek provided by a senior Democratic aide, it promises to return the nation to surpluses by the end of the decade and reduce the debt, only with a much different approach from Ryan's.
To extend the long-term solvency of Social Security, it would propose dramatically increasing payroll taxes on both the employer and employee side, and funneling the money into even more generous benefits.
Payroll taxes are economically destructive, because they make it more expensive for employers to hire new workers, meaning lower real wages and higher unemployment.
Yet the tax increases wouldn't end there. The People's Budget would rescind last year's tax deal to raise rates on higher income levels, boost taxes on capital gains and dividends, increase the estate tax, institute three "millionaire tax rates," with the highest reaching 47 percent, tax corporate foreign income, impose a "financial crisis responsibility fee," and institute a "financial speculation tax."
Overall, taxes would rise to 22.3 percent of the economy, compared with 18.3 percent under the Ryan proposal.
The plan would also build on Obama's most notable initiatives. It includes an additional $1.45 trillion in economic stimulus spending. On health care, the plan would add a government-run plan, or "public option," to Obamacare and have the government negotiate drug prices.
Yet while other parts of government would grow, the defense budget would be gutted. The proposal would "reduce baseline defense spending by reducing strategic capabilities, conventional forces, procurement, and R&D programs."
The left loves to say the Republicans have no new ideas, but this is nothing new at all. All this budget is is good old fashion Tax and Spend, but done on a grand scale.  

What I find completely galling about it is that Democrats ran up the credit card with things many Americans objected to in the first place (the bailouts, the stimulus and ObamaCare) and now want to tax us to death to pay for it all.

Megan McArdle from the Atlantic points out the obvious conclusion to all this new spending:
I actually think it's remarkable that the percentage is so low. A 47% federal tax rate on top incomes, plus increases on estates, capital gains, and dividends, and all you get is . . . 22.3% of GDP? A bare 1.3% above the collections envisioned by Simpson-Bowles? [...]
No, if you want to get the budget under control without meaningfully cutting into entitlements, you're going to need to hike taxes substantially on the middle class. I'm waiting for the first politician to say this out loud.
I don't think McArdle will have to wait too long. The shrinking of the Nanny State is inevitable and that is a threat to the lefts' endless quest for power and control. Faced with that scenario, Democrats will peel away their phony veneer of compassion and someone will say "tax the middle class".

Given how much of the public has grown quite tired of all the big spending in Washington, it will be fun to watch Democrats try to sell this plan as an alternative to Paul Ryan's.

Via: Memeorandum
Via: The Washington Examiner
Via: The Atlantic


Anonymous said...

What needs to happen, what should happen, is that the percentage of those paying taxes goes up. Let's say, maybe to 60 percent of the current working population rather than the less than fifty percent it is now. (You can't really count government employees as tax paying citizens, since their money returns to the treasuries from which it came.) Just imagine the outcry if more people had to pay taxes.

Reed said...

Clifton, that name was suppose to be "Reed." My finger missed the correct button on my keyboard.

Anonymous said...

Love your website. It's refreshing to hear the truth.

SecondComingOfBast said...

But they are already taxing the Middle Class. Every time Bernanke releases more money into the economy he adds to inflation, which means prices rise on everything. The Middle Class has to bear the brunt of that, all so the feds can take more in the form of taxes from businesses without raising the actual tax percentages.

Euripides said...

Is a "People's Budget" anything like a "People's Republic"? With enough tax and spend, it's likely to become such as the middle class becomes impoverished.

I also disagree with Anonymous 11:43. Higher or more taxes only encourages these statist politicians to spend even more money. The only real answer to fiscal insolvency is to cut spending and debt.

Steverino said...

That budget is based on an impossible assumption: that tax revenue would rise to 22.3% of GDP. For the past 60 years, no matter what the marginal rates were or the corporate rates, tax revenue has never been that high percentage of GDP. In fact, it has only rarely exceeded 18% of GDP.

People and corporations will adjust their behavior to avoid taxes when the rates are raised. Anyone who doesn't get this just doesn't understand human nature.

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