UPDATED 4/8/11 to include a link to the budget framework released by the Congressional Progressive Caucus.
Apparently, neither side is completely happy with their respective party’s spending blueprint. Nearly two months ago, President Obama released his budget. And along with today's RSC contribution, additional proposals from across the aisle are expected to be released soon by the House Democratic leadership, the Congressional Black Caucus, and the Congressional Progressive Caucus (pdf).
As expected, the RSC budget is the most aggressive of the bunch. Under its proposal, the budget achieves balance in FY 2020, projecting surpluses of $50 billion that year and $115 billion in FY 2021. This would be achieved by bringing spending down to 18 percent of GDP by 2017, allowing revenues to creep back up to 18 percent of GDP by 2014, and freezing both at those levels thereafter.
On the spending side, the RSC would return FY 2012 non-defense discretionary spending to FY 2006 levels, which they estimate equates to a 25 percent cut compared to the enacted FY 2010 budget. For 2013-2021, non-defense discretionary spending would never rise above 2008 levels. The RSC also proposes larger Medicaid reductions than in the Chairman's budget -- cutting to 2006 levels and restricting Medicaid's spending growth to the rate of inflation. The RSC's Medicare plan includes a slightly more aggressive approach to raising the eligibility age, but is otherwise the same as the Chairman's proposal -- except that the RSC's premium support plan begins in 2017 as opposed to 2022. The RSC also proposes to gradually raise the Social Security normal retirement age to 70 for younger workers. While this does not have an immediate significant revenue effect, it is notable for its specificity compared to the Chairman and President's plans.
On the revenue side, the RSC proposal is very similar, if not the same as the Chairman’s proposal. It makes permanent the 2001 and 2003 tax cuts and does not allow the Alternative Minimum Tax (AMT) to hit additional households. It also repeals all tax increases included in the recent health care law.
Additionally, the RSC proposal would reduce the corporate tax rate to 25 percent. However, aside from those details, they propose few other specific tax policy changes beyond elimination of a handful of agriculture subsidies.
CRFB commends the RSC and others for putting specific ideas on the table. This is another bold proposal intended to right the country’s floundering fiscal ship. But we continue to warn that bold proposals alone are not enough. Bipartisan support is necessary for actual agreement on a solution, and that requires an honest discussion which includes revenues and defense spending as part of the equation.
UPDATE: In a memo to House Budget Committee Ranking Member Chris Van Hollen (D-MD), Progressive Caucus co-chairs Raul Grijalva (D-AZ) and Keith Ellison (D-MN) summarized their group's as-yet-unreleased FY 2012 budget proposal, which they call "The People's Budget." Their plan would reach budget surplus by 2021, bringing debt to 64.4 percent of GDP in that year. They would achieve this through revenue from a mixture of individual and corporate tax changes as well as defense cuts, enactment of a public option, and other health care reforms, while increasing investments in things such as education, R&D, and infrastructure. The Progressive Caucus would also enact Social Security reforms which would bring the program into solvency through an increase in the payroll taxable maximum on the employee side and removal of the payroll taxable maximum on the employer side while increasing benefits.