Economists: “People’s Budget” is best for the people

Congress is back in session this week and despite all the news about Osama Bin Laden’s death, the budget battle is moving back to top topic on Capitol Hill

The GOP is remaining solidly behind its Paul Ryan-designed plan that forces seniors to pay more for health care by replacing Medicare with vouchers, cuts taxes for corporations and the rich, slashes Medicaid, repeals health care reform and eliminates some 2 million jobs, according to the Economic Policy Institute.

The Republicans’ thinking is based on four big lies.

The first is that the deficit can be cut without first tackling the jobs crisis. The second lie is that Social Security contributes to the deficit. Third, it is somehow a “bold” and “brave” thing to shift Medicare costs to the elderly rather than fight the profiteering health care giants. And the fourth lie: Tax increases on workers and cuts in programs they benefit from are better for the economy than taxes on the rich.

In fact, the GOP plan does very little to actually trim the deficit. It calls for $4.3 trillion in spending cuts, but then gives away $4.2 trillion in tax cuts, mostly to the rich and the corporations.

Last week the labor-backed Economic Policy Institute released what it called a “snapshot” of 10-year deficit-reduction projections for three budget plans: the Republican plan, the budget “framework” outlined by President Obama, and the “People’s Budget” put forward by the Congressional Progressive Caucus.

The EPI study finds that while both the Republican plan and the Obama plan achieve some deficit reduction over the next decade, the People’s Budget goes a step further by  actually creating a budget surplus in 2021.

The EPI says: “The Ryan plan’s savings come mostly from domestic spending cuts, cuts in Medicaid and Medicare. Obama’s framework cuts the deficit through some domestic spending cuts and slight reductions in defense spending, and saves money through health care reform and broad-based tax reform.”

The report goes on to say:

“In contrast, however, the People’s Budget achieves deficit reduction mainly by shifting the tax burden more fairly to high income individuals and corporations.” This plan’s proposals “include rolling back the Bush tax cuts, taxing capital gains as ordinary income, raising the payroll tax cap and enacting a financial transactions tax. The plan also cuts defense spending, enacts a public option for health care coverage and makes room for $1.4 trillion in vital investments in infrastructure, education and innovation over the next decade.”

In a May 2 article titled “An Economy for All,” OurFuture.Org’s Richard Eskow wrote, “We’re attacking the wrong enemy.”

“For the economy in 2011,” he said, “our urgent problems are unemployment, wasteful war spending, extravagant tax cuts for the wealthy and a real economy that’s locked in stagnation.”

Labor economists say that in the real economy, premature budget cuts will cost hundreds of thousands of jobs at a moment when we should be spending to create jobs. As Congress discusses budget cuts instead, it makes the problem worse.