Wednesday March 26, 2014
Via The New Republic:
On March 12, the Congressional Progressive Caucus (CPC) released its own budget for the 2015 fiscal year. The idea of the Better Off Budget, as they call it, is to sketch out a liberal alternative for how the government should collect and spend money—that is, a budget vision that’s a bit to the left of President Obama’s and way to the left of House Budget Committee Chairman Paul Ryan’s.
This is the fourth consecutive year that House progressives have released such a proposal. It’s also the fourth consecutive year that nearly everybody in Washington has ignored it.
And while nobody expects the proposal to become binding—Democrats don’t have the votes, not even in the Senate—it’s not clear why this proposal isn’t part of the conversation. Predecessors of the Better Off Budget won praise from well-respected and mainstream economists, including Paul Krugman and Dean Baker. And while you might expect such approval from progressive intellectuals, the proposal has fans elsewhere on the ideological spectrum. The Economist has called it “courageous” and the Committee for a Responsible Federal Budget commended it as well.
It’s not hard to see why. The primary goal of the Better Off Budget is to close the “output gap” that opened after the financial crisis—that is, to tap the economic resources that have been idling for the last few years, leading to higher unemployment and lower wages. Obama’s budget seeks to do the same thing, but wouldn’t close the gap by nearly as much. Ryan’s budget would more or less ignore the gap altogether. In 2013, the gap—measured as potential gross domestic product versus actual gross domestic product—stood at $790 billion. The CPC budget closes it in three years by investing in infrastructure, state aid and a government jobs program. By 2017, the Economic Policy Institute estimates, it will create 8.8 million new jobs.
The new spending would not lead to higher deficits, by the way. On the contrary, the House progressives are also calling for higher taxes on the highest earners and corporations—enough to bring in more than $6 trillion in additional revenue over the next decade. That would more than make up for the new spending. Overall, living within the budget would reduce the deficit to 1.4 percent of GDP in 2024.
Representatives Raul Grijalva of Arizona and Keith Ellison of Minnesota co-chair the Congressional Progressive Caucus. Ellison and I spoke by phone on Thursday.
Danny Vinik: What reception has the Better Off Budget received? Have you heard anything from Republicans or other Democrats?
Keith Ellison: The biggest response I’ve heard is from ordinary Americans and they’ve been very happy that we’re making public investments in things that Americans know are important. People have said thank you for lifting the sequester, thank you for standing against the austerity budget—the kind of thing Paul Ryan is known to propose. The Better Off Budget is a budget that includes some conservative ideas like [House Ways and Means Chairman] Dave Camp’s Wall Street excise tax. A full bipartisan bill to reveal the topline budget numbers for intelligence activities is something we’ve had support on too. We’ve gotten good reaction from people who are privacy-minded for that. Americans know what we need. I’ve been in the district this week and they’re talking to me about job training, public investment in rail lines and roads, renewing unemployment insurance, fully funding SNAP nutrition assistance. The folks who run the food shelves say that people are really hurting, even in a low unemployment state like Minnesota. There are certain pockets where people are really, really hurting.
DV: Anything in particular from Republicans?
KE: Like I said, some conservatives have approached and said that they like the fact that we’re requiring, in our budget, to reveal the topline budget numbers for intelligence activities in each intelligence agency. They like that. We’ve gotten some libertarian folks who have really made that point. At the end of the day, people love it because it will create 8.8 million jobs. That’s the thing. That’s what it’s about: infrastructure, state aid, public works and education. That’s the crisis we’re in. We’re not in a debt crisis. We’re in a job crisis and if we had more jobs we could do some damage to the debt. People know that.
DV: Speaking of the debt, your budget puts it on a more downward path than even the president’s budget does. Was there any reason the Congressional Progressive Caucus went further than the president?
KE: We actually didn’t stop and say, “Well what is the president doing? We’re going to do more.” We did what we think is right for the country. We believe that raising this kind of revenue and this kind of job outlook is the right trajectory for the country to be on.
DV: Do you think the president should have included more deficit reduction in his plan then?
KE: There are some things in the president’s plan that are noteworthy and valuable and important. You should understand too about the Better Off Budget, we don’t regard deficit reduction as the most important problem. We regard jobs as the most important problem. Good jobs. We’re not the ones to dispute with the president about the amount of deficit reduction in his plan versus ours. That’s not the battle we want to fight. We want to talk about whose budget creates more jobs. That’s what we really think is the emphasis. I don’t know if that answers the question of whether or not—the way you presented the question is do we think the president should do more deficit reduction. I don’t think we’re that worried about that. What we’re really worried about is job creation.
DV: Your budget does more than the president’s for job creation as well.
KE: Yea, and do I think his budget ought to do more for jobs? I will say yes. On the deficit thing, I don’t really have an opinion. On the job thing, I think that job creation and good pay should be everyone’s primary focus.
DV: The Better Off Budget is supposed to fill the output gap in the first few years. Beyond that it raises a lot of revenue and increases spending a lot too, many conservatives would react to it as raising taxes too much on the rich, reducing investment and hurting job growth. Do you pay any attention to any of those critiques?
KE: No, I don’t buy that critique because the rich are doing really well now. The rich—and I’m talking about corporations and people—are going to put money into productive use when there is adequate demand. Think about it, if you’re rich, sitting around, you can—How many jeans are you going to wear? You can get the best car available, it’s going to cost you $100 million or so. It’s only one car. You can’t drive five of them. We need middle class people doing better. That’s what’s going to help this economy. If you can’t make it on $500 million a year, you’re just not trying. I’m sorry. Lot of these rich people, their great grandkids can never spend the money that they have amassed. Why not tax them [and] put the money into productive use in the economy? After all, this country offers the environment in which they can make all that money. They’ll still have a lot of money. They’re not going to be standing in the free cheese line.
DV: Going back to the corporations side of that—
KE: [Bill] Gates and [Warren] Buffett give away half their money. They impose a self-tax. They’re still pretty rich. You know. This idea that taxing rich people means that there won’t be money for investment is just untrue. It’s not right. You cannot prove that point empirically.
DV: Speaking of Gates and Buffett giving away half their money, I’m sure they also benefit from the charitable tax deduction. You cap the mortgage deduction for second homes and vacation homes. Did you consider going any other tax deductions—such as ones for retirement that the rich predominantly benefit from?
KE: The revenue we generate that’s based on what’s here is what I think is right and proper. I think that we do raise a lot of money in the budget. I think it will put us on a trajectory that will allow everyone to say that they pay their fair share. For example, one revenue raiser is [Representative] Jan Schakowsky’s bill. I think it’s a great bill. That bill ask those with income over a million dollars to contribute a little more to America’s economic growth. She has this graduated thing for the super-rich. Plus we have the [financial] transaction tax in there. That will not only generate a lot of money, it will also help quite a bit in terms of stopping flash trading and that will be good. The mortgage interest deduction, we eliminate that for vacation homes and yachts. If you have a vacation home and yacht, you shouldn’t look to taxpayers to provide you with that.
DV: Along with the financial transaction tax, you also included Dave Camp’s excise tax. Was that added in after he unveiled his plan or did you have something similar already and just added his name?
KE: The financial transactions tax we have been supporting for a long time. We looked around for good ideas, we thought that this one (Camp’s bank tax) was a good idea and so we put it in. To tell you the truth, I’m not sure how that idea originated and how it made it into the Better Off Budget. But when we sat and thought about it, we thought, well this is a good idea. We’re not going to let party prohibit us from using a good idea so we put it in there.
This interview has been edited and condensed.