Schakowsky deficit plan challenges Fiscal Commission: Do right by America’s middle-class, families and retirees

A lot of hay has been made over a recently-released Fiscal Commission proposal for reducing the federal deficit. The plan, developed by co-chairs Erskine Bowles and Alan Simpson, includes several dramatic policy proposals like increasing the Social Security retirement age, cutting the defense budget, major changes to the federal tax code, and a federal government hiring freeze, among others.

Rep. Jan Schakowsky (9th District, IL) also serves on the Bowles-Simpson Commission — but she doesn’t support their recommendations, saying, “Their proposal would have serious consequences for lower and middle class Americans…[who] did not cause the deficit.”

This week, Rep. Schakowsky walked her talk by releasing an alternative to plan that reduces the deficit by $426.95 billion by 2015 — more than double what Bowles-Simpson propose — while providing $200 billion in immediate economic stimulus to boot. And all without requiring any draconian benefit cuts to Social Security.

So what kind of budget policy jujitsu did Rep. Schakowsky use to draft her plan – and more importantly, what’s in it?

Rep. Schakowsky’s deficit reduction plan is pretty even-handed: spending cuts, changes to the tax code, and tax increases are in almost equal measure. Cuts include: discretionary non-defense spending ($8.55 billion), defense ($110.7 billion), health care ($17.2 billion), farm subsidies ($7.5 billion). Changes to the tax code – ending tax breaks, loopholes, etc. – total $132.2 billion; and new tax revenue would raise $144.6 billion. Schakowsky also includes more than a dozen of the Bowles-Simpson proposals in her own plan. And both forecast a balanced budget in the long-term.

The big difference between the two plans is this: who picks up the tab.

The Bowles-Simpson plan would raise the Social Security retirement age and lowers the top corporate tax rate. Rep. Schakowsky offers alternatives that will support businesses and middle-class tax payers, like a robust single-payer public option for health care (saving $10 billion) and taxing capital gains as ordinary income (bringing in $88.1 billion). Notably, Schakowsky’s plan also doesn’t require a increase in the retirement age. As she notes: “Social Security has nothing to do with the deficit. …there is simply no relationship between the two and attempting to conflate them does a grave disservice to America’s seniors.”

Schakowsky’s plan certainly isn’t the final word on finding an answer to the federal deficit, but its proposals will provide a strong counterweight to those that would seek to balance the budget on the backs of middle class families and retired seniors.

Read more about Rep. Schakowsky’s plan »

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Posted in A Fair Deal at Work, An Inclusive Economy, Check, Retirement Security

Comments

  1. Nerin William says:

    I just finished reading Schakowsky’s plan from her website –
    http://schakowsky.house.gov/images/stories/1118_Schakowsky_Deficit_Reduction_Plan.pdf
    It not only made so much sense to me, it also was a wonderful education how many tax loopholes are given to the wealthy and corporations. It educated me as to federal disbursements I was not aware of.

    Then I thought; wouldn’t this be a fantastic way to educate me about our State expenditures and tax loopholes. Let’s see what a “Schakowsky” type plan would look like in WA. Let’s take a serious look at our tax loopholes and cut them rather than care for the poor, unemployed, homeless and those without adequate health care plans.

    • Nerin, you raise a good point – and in fact, EOI has done just that on several occasions over the past few years. You can read a full analysis of them in our policy brief Everybody Else Gets One, and you can check out our Ax It or Tax It blog series from last winter, in which we demonstrated out the the state’s entire revenue shortfall could have been eliminated just by closed a some of the 567+ tax breaks and exemptions currently on the books in Washington.

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