Every year, the Congressional Progressive Caucus releases a budget proposal, and every year it gets roundly ignored. As the big budget plans — the White House's, the House Budget Committee's, the Senate Budget Committee's — are vigorously covered in the press (including by me!), nary a word is said about the CPC's offering.
This makes sense, of course. The CPC represents a little more than a third of the minority party in the House and has one member in the Senate; its plans are objectively less important, and less likely to shape policy, than ones coming from the president or the majority parties in the House and Senate.
But its budget — or "the People's Budget," as CPC likes to call it — deserves your attention. It's a far better contrast to the aggressive spending cuts of the House and Senate GOP budgets than President Obama's much more timid offering. Like the congressional GOP, and unlike Obama, the CPC isn't trying to lay out a realistic spending course or create a starting point for negotiations. It's trying to lay out a comprehensive vision for transforming the federal government, to give grassroots activists something to rally around and to pressure presidential contenders. It sets out a clear theory for where the Democratic Party should head next that Hillary Clinton and others need to reckon with.
Spend a lot more money
House and Senate Republicans would cut trillions from the budget, mostly from health and social welfare programs. So naturally the CPC budget adds trillions to the budget. While the Congressional Budget Office projects the federal government will spend about $49 trillion between 2016 and 2025, the progressive budget envisions $52.4 trillion in spending — a net increase of about $3.4 trillion.
And with those trillions, it does just about everything a progressive could ask for, short of fully implementing Swedish social democracy in America:
- $745 billion goes to an infrastructure program, meant to both create jobs and repair deteriorating roads, bridges, and the like.
- $128 billion goes to a new tax credit for low- and middle-income workers.
- The debt limit deal of 2011 — including the budget sequestration — is repealed in full, and more spending on non-defense discretionary programs is added on top of that, for a total discretionary spending hike of nearly $1.9 trillion.
- A bevy of new education programs are introduced, including universal pre-K and a matching fund to help public universities "increase aid to students to help them cover the total cost of college attendance without taking on debt."
- While the budget declines to change Social Security (believing that to be an issue best addressed outside of the budget process), it calls for the program to be significantly expanded.
There are a few cuts, too, and you can probably guess where:
- Defense spending is slashed, and the overseas contingency operations (OCO) budget, used to fund operations in Afghanistan and Iraq, is canceled entirely.
- Medicare is allowed to bargain for lower prescription drug prices.
- A public option is added to Obamacare, saving money and paying for the budget's repeal of the Affordable Care Act's tax on expensive health plans (a policy beloved by health wonks but loathed by labor, a major base of support for CPC members).
Obama's budget proposes a few of these things. He wants universal pre-K. He wants to draw down the war budget. Both he and the CPC include expansions to the Earned Income Tax Credit and the Child Tax Credit.
But despite favoring it in 2009 and 2010, Obama doesn't include a public option in his budget. He doesn't include nearly a trillion in infrastructure spending. He doesn't undo the debt ceiling deal and massively expand domestic discretionary spending. The Obama administration has suggested that while past budget proposals included concessions meant to elicit Republican support, it's done with that strategy now. Compared with the CPC budget, though, the Obama budget request still looks a lot like a compromise.
Soaking the rich
While not as aggressive in seeking budget balance as the GOP's plans, the CPC budget does achieve "primary budget balance" (that is, the budget would be balanced except for interest payments on past debt). And to do that, it needs higher taxes — a lot of higher taxes. The budget would raise $6.9 trillion more in revenue over a decade.
Some of that is from increased economic growth the CPC claims the budget would spur, but at least $6.3 trillion of it comes from specific tax increases. For context, George W. Bush's 2001 tax cut cost $1.35 trillion over 10 years, and his 2003 one cost $350 billion. The CPC tax hike is about four times larger in scale than the Bush tax cuts.
The tax hikes themselves read like a progressive wish list:
- While the fiscal cliff deal at the beginning of 2013 let the Bush tax cuts for couples making over $450,000 expire, the CPC budget knocks that threshold down to $250,000.
- It then creates 45, 46, 47, 48, and 49 percent tax brackets for people making over $1 million annually (the 49 percent bracket would only apply to people with billions in earnings).
- It would tax capital gains and dividends as normal income, more than doubling the top tax rate on investment income from 23.8 percent to 52.8 percent (including the 3.8 percent surtax included in Obamacare).
- It sets estate tax rates of 55 percent and 65 percent — well over the current top rate of 40 percent, and above where the tax was in the Clinton administration — and increases the number of estates that have to pay it.
- It creates a financial transactions tax (for example, there'd be a 0.25 percent tax on stock trades) and taxes companies' earnings abroad as they occur, rather than letting companies "defer" taxation by keeping profits overseas.
- Last but certainly not least, there's a $25-per-ton carbon tax, which increases by 5.6 percent every year to increase pressure on polluters; a quarter of the revenue is rebated to help low-income families deal with higher energy costs, and much of the rest would be used to fund research into renewable energy.
Some revenue proposals are shared with the Obama administration. The CPC budget caps deductions at 28 percent, so that people in higher brackets don't get huge benefits from them; so does Obama's. Obama would charge a fee on the assets of large financial institutions; so would the CPC budget.
A more liberal budget than Obama's
Despite some similarities, Obama's budget is much more cautious, with much less radical consequences for the tax code. Some of that is strategic. Despite vocally supporting a cap and trade plan to put a price on carbon emissions, Obama doesn't include that or a carbon tax in his budget, knowing it's dead in the water.
On other issues there appear to be legitimate disagreements. Obama is proposing raising the top capital gains rate to 28 percent, not 52.8 percent. Perhaps he wants the top rate to go even higher, but his advisers are certainly more sensitive than the CPC's to the argument that big taxes on capital income hurt growth. His advisers are also likely wary of a 49 percent bracket on any kind of income, and of taxing financial transactions, on the merits. The CPC is just, naturally, to Obama's left on some things.
Why the CPC budget matters
In certain ways, though, the CPC budget holds back. Many in the caucus have endorsed HR 676, Rep. John Conyers' (D-MI) plan to expand Medicare coverage to all Americans, but the budget settles for adjustments to Obamacare rather than single-payer. And while Sen. Bernie Sanders (I-VT), the caucus's lone member in the upper house and the ranking member on the Senate Budget Committee, has signaled sympathy for the view that long-run budget balance doesn't really matter, the CPC budget still tries to shrink the deficit, more than even Obama's budget does.
The downside of that approach is that it limits the budget's usefulness as a left flank. But it also keeps it close enough to the mainstream that it can't be laughed off by Hillary Clinton. The vast majority of items in this budget — give or take a 49 percent tax rate — are things she would, in principle, like. Clinton proposed a price on carbon in the 2008 race. Her health-care plan then included a public option. She called for more infrastructure spending. Even the CPC budget's massive increase in domestic discretionary spending is, as the Economic Policy Institute notes in its analysis of the plan, still below the historical norm:
In a way, then, the budget serves as a dare. It lays out a vision most Democrats would have embraced before the post-2010 turn to austerity, and asks the mainstream of the party if they're willing to abandon that vision, to capitulate in the face of years of die-hard Republican opposition. Obama's budgets have to deal with the reality of a Republican Congress, but Clinton does not. She'll be running in a Democratic primary; she can be afford to dream a little bigger.
If Clinton's campaign lays out an economic platform resembling the CPC's — one with a public option, with a carbon tax or cap and trade, with increases in domestic spending — then the CPC has won. It's forced the party standard-bearer to keep these ideas on the table. But if Clinton deviates from them, then the CPC budget — and, in all likelihood, Sanders when he runs against her — challenges her to explain why, to identify what has changed to make 2016 Hillary Clinton less ambitious than 2008 Hillary Clinton.
Clinton doesn't have a particularly easy path ahead of her. Passing a national health insurance plan has been the central goal of American welfare liberalism at least since Theodore Roosevelt's 1912 presidential bid, and now that Obama has finally accomplished that, the party has to figure out where to go next, whether to forge ahead with more welfare state expansions or to retrench. The CPC has one very comprehensive answer to that question, and it deserves a response.