The Republican Study Committee (RSC) today released a plan that supposedly outlines $2.5 trillion in spending cuts over ten years. But as I pointed out earlier, only $330 billion of the $2.5 trillion is specified, while the rest is simply hand-waving about keeping non-defense discretionary spending at the 2006 level for a decade. As TPM’s Brian Buetler put it, “In other words, it punts the question of what to cut to future Congresses, which could just as easily bust the cap.”

Today, Rep. John Campbell (R-CA), an RSC member, appeared on Fox News with Neil Cavuto, and Cavuto also evidently noticed that the vast bulk of the RSC’s savings come from unspecified cuts. When he asked Campbell explain how the RSC magically turned $330 billion into $2.5 trillion, Campbell dropped the ball:

CAVUTO: I don’t want to pick it apart too much, because you always appreciate the efforts at spending cuts, but a lot of these eliminations and reductions, Congressman, realistically come to $330 billion of the $2.5 trillion of proposed cuts. So, in other words, the real meat, up-front cuts, while still substantial, about $330 billion, ain’t the $2.5 trillion. So what is the more realistic figure?

CAMPBELL: The more realistic figure than the two, oh, you mean other than what’s listed on here?

Watch it:

Campbell then proceeded to incorrectly claim that the $2.5 trillion in savings is a result of multiplying the $330 billion in specific cuts out over a ten year budget window, which would actually amount to more than $2.5 trillion in savings.

It’s not surprising, of course, that the RSC would be hesitant to place on paper the practical implications of its plan. Returning non-defense discretionary spending to the 2006 level — and then keeping it there — would result in billions of dollars in cuts to vital and popular programs and agencies like Pell Grants, the FBI, the Coast Guard, the National Institutes of Health and the federal prison system.

As Steve Benen pointed out, the RSC’s plan would also be “devastating” for the labor market. “Indeed, if lawmakers were to get together to plot how Congress could deliberately increase unemployment, their plan would look an awful lot like this one,” he wrote. “The RSC proposal would deliberately fire thousands of civilian workers, force states to make sweeping job cuts, and lay off thousands more who work in transportation and infrastructure.” If you’re interested in a legitimate deficit reduction plan, go here.

Our guest bloggers are Karla Walter, Senior Policy Analyst, and David Madland, Director of the American Worker Project at the Center for American Progress Action Fund.

Union membership is at record lows and is likely to drop even further tomorrow when the Bureau of Labor Statistics announces new figures for 2010. Critics claim that unions are not important to the modern economy — with only 12 percent of workers currently unionized — but the truth is that if you care about the middle class, you need to care about unions.

The middle class is markedly stronger when workers join together in unions. As the chart below demonstrates, the sharp decline over the past 40 years in the percentage of workers organized in unions has been associated with an equally sharp drop in the share of the nation’s income going to the middle class — those in the second, third and forth income quintiles*:

The power of unions to create prosperity for working families is well recognized: Organized labor is one of the few voices for the economic interests of the middle class in our government. Unions were key to creating and protecting the social safety net (including Social Security and Medicare) and winning major legislative victories for working families such as the Equal Pay Act, the Civil Rights Act, the Family and Medical Leave Act and — most recently — the Affordable Care Act.

And unions ensure that workers are paid fair wages. Unionized workers today make significantly more on than their non-union counterparts — about $2.50 more per hour than an otherwise comparable worker in the typical state according to a recent study by the Center for Economic and Policy Research.

When unions were stronger in the middle part of the last century, American workers wages rose as they became increasingly more productive. But today, as union strength has decreased, this link has broken down: even though American workers grow increasingly more productive, their wages have stagnated. At the same time, more and more income has become concentrated at the very top of the income scale.

If DOL announces tomorrow that unionization rates have again fallen, it’s not just bleak news for the ranks of the unionized, it’s also bad news for the rest of the middle class.

*Sources: Union membership rate is from Barry T. Hirsch, David A. Macpherson, and Wayne G. Vroman, “Estimates of Union Density by State,” Middle class share of aggregate national income includes the second, third and forth income quintiles and is from the United States Census Bureau’s Current Population Survey (Shares of Aggregate Household Income by Quintile).

In their much-ballyhooed (and at this point, oftentimes abandoned) “Pledge to America,” House Republicans promised to reduce non-defense discretionary spending back to the 2008 level, which, as many analysts have pointed out, would entail cuts to a bevy of vital and popular programs and agencies (like Pell Grants, the FBI, all federal education funding, etc.) The House GOP claims that such a move would produce savings of $100 billion in one fiscal year.

The Republican Study Committee (RSC) — which last year crafted a “jobs plan” that would have caused $10 trillion in deficits while producing few, if any, jobs — is out today with a spending proposal that ups the ante for the GOP, claiming to cut $2.5 trillion from the budget. The RSC even goes through the motions of laying out $330 billion in specific savings over ten years.

But where does the rest of the $2.5 trillion come from? Reducing non-defense discretionary spending to 2006 levels until 2021:

Eliminate automatic increases for inflation from CBO baseline projections for future discretionary appropriations. Further, impose discretionary spending limits through 2021 at 2006 levels on the non-defense portion of the discretionary budget.

So what we have here, in essence, is a document concluding that $330 billion in specific cuts plus some hand-waving equals $2.5 trillion. It’s the underpants gnome theory of federal budgeting.

What the GOP leaves out is the real consequence of reducing all non-defense discretionary spending to the 2006 level. Such a cut would mean significant reductions in Pell Grants, federal highway funding, the National Park Service, federal education funding, cancer research, Immigration and Customs Enforcement, the Drug Enforcement Administration, the FBI, the Coast Guard, and the Secret Service. Here are some specifics*:

Pell Grants: About $14.9 billion in cuts

National Park Service: $600 million

Immigration and Customs Enforcement: $2.9 billion

Secret Service: $300 million

Coast Guard: $2.6 billion.

National Institutes of Health: $5 billion

Federal Prison System: $1.5 billion.

Every dollar that is preserved in those programs and agencies means that a deeper cut has to be made somewhere else. The RSC also left the defense budget completely off the table.

Even the specific cuts that the RSC laid out, like those to the Manufacturing Extension Partnership (MEP) Program, Economic Development Administration, and mass transit, would be detrimental, particularly to innovation and job creation. It’s a real problem that Republicans believe randomly choosing a year in which federal spending was lower in total dollars, and asserting that we should just go back to that, is a responsible and effective way to budget.

*Sources: Office of Management and Budget and Congressional Budget Office data

Center for American Progress Associate Director for Tax and Budget Policy Michael Linden provided data analysis for this post.

The House Ways and Means Committee will hold the first in a series of hearings on tax reform today, after Treasury Secretary Tim Geithner met with corporate CFOs last week to discuss corporate tax reform. The administration has been hinting that it may pursue corporate tax reform — ridding the corporate tax code of its labyrinth of loopholes and giveaways, and using the savings to lower the statutory corporate income tax rate — but has insisted that any corporate tax reform be “revenue-neutral,” with the new code raising as much revenue as the old code.

I wrote last week that even revenue-neutral corporate tax reform would constitute a missed opportunity, forcing more of the burden of deficit reduction onto working people, while corporate tax receipts make up an ever-shrinking proportion of overall government revenue. But according to Dow Jones Newswire, the corporate barons with whom Geithner met aren’t even willing to accede to revenue neutral reform, preferring that they receive tax cuts:

At that meeting, people briefed on discussions said, Geithner repeated a point he has made publicly that any tax overhaul should be “revenue-neutral”–that is, while tax rates may go down, the amount of revenue generated from corporate taxes, should not. Business leaders say they are willing to talk about giving up some current tax breaks in exchange for a lower rate. But they aren’t embracing “revenue-neutral” reform, preferring to talk about “fiscally responsible” reform where overall revenue from the corporate tax system may go down at least in the short term.

It makes sense that corporations would push for a corporate tax code even more preferential to their interest than the one they already have. But it would be absolute folly to actually move corporate tax reform in this direction.

At the moment, corporations are hauling in record profits and sitting on nearly $2 trillion in cash reserves. At the same time, according to the Office of Management and Budget, “corporate tax receipts will account for just 7.2% of federal revenues in 2010, with large corporations contributing less than one-sixth as much as small business and individual taxpayers to the Federal Treasury.” Fifty years ago, corporate tax receipts were 23 percent of federal revenue, and “and individual income tax payments were less than twice those of large corporations’ tax payments.”

The corporate tax code is an undeniable mess that encourages the use of tax havens and is riddled with giveaways to mature industries (like Big Oil). It needs to be fixed, but with full recognition that the U.S. needs to find more revenue if it is going to grapple with its long-term structural deficit.