Balanced budget. Fiscal cliff. Sequestration. Spending cuts.
We’ve been inundated with discussions of all of the above in the past several months, but with good reason.
Decisions made by Congress to address the federal budget impact us all. Two of the most prominent budget proposals have come from leadership in the House and Senate: the Ryan Budget (House) and the Murray Budget (Senate). Both budgets were passed by their respective chambers earlier this month and are widely different in terms of what they contain and what they seek to do.
The House proposal seeks to balance the budget through $5 trillion in spending cuts to non-defense programs over 10 years. It also calls for nearly $6 trillion in tax cuts, most of which benefit wealthy households and corporations. That is really $6 trillion in lost revenues – or, to put it another way, could translate to $6 trillion in tax hikes to low- and middle-income families or drastic spending cuts to domestic programs.
To be sure, balancing the budget is a worthy goal. But it is best reserved for times when the economy is further along in its recovery. As it currently stands, balancing the budget (i.e., closing the $10.2 trillion deficit gap we are expected to reach by 2019) in 10 years would decimate what remains of the social safety net, increase unemployment and reverse improvements in the economy.
Under present circumstances, stabilizing the debt over the next 10 years is a more responsible goal, and that is exactly what the Murray Budget seeks to do.
The Murray Budget is a more even-handed proposal that replaces sequestration and calls for a 50:50 ratio of spending cuts and revenue increases.
It includes $837 billion in spending cuts over 10 years, but protects important programs that assist low-income families in affording the basics and helps their children succeed, such as the Supplemental Nutrition Assistance Program, Head Start, Pell Grants for college, and Social Security.
It also maintains the expansion of Medicaid to 133% of the Federal Poverty Level, which will increase access to healthcare to millions of low-income families nationwide when its implementation begins in 2014. In addition, it includes $100 billion for job creation, $50 billion for transportation and infrastructure, and another $10 billion for worker training programs, all of which would help boost employment and the economy in the near future.
On the tax front, it calls for placing limits on tax expenditures claimed by the wealthiest 2%; changing corporate tax law to prevent corporations with offshore operations from avoiding paying their fair share; and closing other tax loopholes for wealthy households and corporations, resulting in $975 billion in deficit reduction.
Through these measures, the Murray Budget reduces the deficit by $1.8 trillion over 10 years, which is more than enough to stabilize the debt.
In the coming weeks, we are likely to hear more about the Senate and House budgets, as well as a proposal by the White House (expected the week of April 8).
With spending cuts from the sequester already being felt by real people in Michigan and across the nation (see CHN’s “Sequestration Impact” weekly reports), it is important that these future budget negotiations do not make things worse for working families, seniors, disabled individuals, and the unemployed.
— Yannet Lathrop