So finally we have some real budget plans to consider. And no, one of them is not the Republican "plan" which, as Krugman says, is really just a bunch of numbers without any details.
No, I'm talking about a new proposal put forth by the Center for American Progress (CAP) and the excellent budget plan released earlier (last spring) by the Congressional Progressive Caucus (CPC), the Budget for All (technical analysis).
Today the Center for American Progress (CAP) released a fairly reasonable budget plan. The plan, whose authors include Robert Rubin, Larry Summers, and John Podesta, would restore the top Clinton tax rate of 39.6% for those making more than $422,000 (not $250,000 as Obama has proposed), limit total deductions to 18% of income (plus 28% of charitable contributions), increase capital gains taxes to 28%, tax dividends at the same rate as ordinary income, eliminate the "carry interest" loophole that hedge fund managers use to avoid taxes, and eliminate the Alternative Minimum Tax (AMT). It would change the estate tax exemption to $2 million per individual ($4 million per couple) and change the top rate to 48 percent, indexed for inflation. It would also increase federal taxes on cigarettes, alcoholic beverages, and Internet gambling and reform corporation taxes to lower rates, but increase total collection. On average, households with less than $100,000 in annual income would see no tax increase. Those households with from $100,000 to $500,000 would see a small increase, and taxpayers with $1 million or more would see an average 5 percent increase.
The plan would cut discretionary funding mostly in line with the President's FY2013 budget (issued last February). It cuts slightly more from the bloated military budget, but just $10 billion/year more. For immediate economic stimulus, it allocates spending a bit more for $300 billion in job-creating investments such as infrastructure construction and repair, teacher hiring and training, and home and commercial energy efficiency retrofits. And it allows $100 billion in additional tax cuts related to employment such as the payroll tax holiday or a return of the Making Work Pay tax credit.
Between the CAP and CPC budget proposals, and the plan outlined by the President in his Budget Proposal from last February, a pretty good compromise could probably be forged that stimulated the economy enough to get Americans working again, cut the budget deficit in the long run, and kept social programs intact. Too bad for us all that Congressional Republicans will probably prevent that from happening.