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House Democratic Budget Focuses On Infrastructure And Job Creation, Reduces Deficit By $1.7 Trillion

20 days after automatic sequestration cuts went into effect, Congress is still trying to reconcile House Republicans’ and Senate Democrats’ budget proposals. On Wednesday, House Democrats introduced their own vision for the federal budget, promising to balance the budget by 2040 without the draconian spending cuts proposed by the GOP, while offering double the stimulus funding in the Senate Democratic plan.

The House Democrats’ budget, authored by Rep. Chris Van Hollen (D-MD), includes $1.2 trillion in revenues and reduces the deficit by $1.7 trillion, slightly less than the Senate’s goal of $1.85 trillion. Other highlights include:

$200 billion in stimulus. Like the Senate budget, House Democrats set aside $50 billion for urgent infrastructure repairs, but sets aside an additional $10 billion to establish an infrastructure bank. Borrowing from President Obama’s blocked American Jobs Act, the House budget surpasses the Senate’s on funding to boost employment for teachers, police officers, firefighters, and veterans. $19 billion is also set aside as a tax credit for businesses that increase their payroll.

A focus on job growth. The Century Foundation estimates Van Hollen’s budget would boost GDP growth by .4 percent and add roughly 450,000 jobs more than under current policy in 2013, while cancelling sequestration would add even more. The House GOP budget, in turn, would keep sequestration in place, eliminating 750,000 jobs in 2013 and more than 2 million in 2014. Compared to the House GOP budget, Van Hollen’s budget would boost GDP 1.8 percent and add more than 2.1 million jobs by 2014.

Protection for the safety net. While the Republicans’ plan would end the guaranteed Medicare benefit, privatize health insurance for seniors and turn Medicaid into a block grant program run by the states, the House Democrats affirms protections for Medicare, Medicaid and Social Security.

Elimination of tax breaks for millionaires. Van Hollen’s budget permanently extends Bush tax cuts for the middle class while generating $1 trillion in new revenue by ending tax cuts and closing loopholes that benefit the wealthiest Americans. It also includes a “Buffet Rule” to ensure millionaires do not pay lower tax rates than the middle class.

The House Republicans’ plan purports to balance the budget in 10 years through severe spending cuts, though they would have to raise taxes on the middle class in order to pay for the tax cuts for millionaires without adding to the deficit.

The Democratic budget still cuts $80 billion from government programs. As multiple studies have noted, the past 3 budget deals have been dramatically skewed towards spending cuts, to the extent that the next deal should be 90 percent comprised of new tax revenues in order to round out a balanced deficit reduction plan.

Why Progressives Need To Talk About Economic Mobility If They Want To Fix Inequality

The conservative trickle-down approach to the economy assumes that maximizing rewards for those at the top is the path to both growth and prosperity for the society as a whole.  If inequality rises, that does not matter, runs the conservative argument, because absolute levels of prosperity will rise for everyone even if the top gains more.

The progressive approach to the economy is radically different.  This approach posits, based on a mass of accumulating evidence, that inequality is not a benign byproduct of growth, but rather a toxic barrier to both middle class prosperity and strong growth in general.  In other words, high levels of inequality interfere with the both the quality and quantity of growth experienced by a society.  Hence the idea that an economic agenda  must concentrate on lifting up the middle class to generate both broadly-shared prosperity and fast growth.  The two goals are inextricably linked and one cannot be attained without the other.

Of course, the progressive agenda may be the correct one, but that does not mean it can be easily sold to the public and politicians.  It would require a serious reorientation of national priorities and considerable investments in areas like education and infrastructure–spending that is likely to meet considerable resistance in the current environment.  Therefore, the question of how to frame the agenda in the political marketplace is key.

One obvious approach is to frame the agenda directly as a means of reducing inequality.  Call this the redistributionist approach.  This approach is not without merit.  Start with awareness of and views about economic inequality.

There is no doubt Americans are aware of rising inequality.  In the Pew Research Center’s 2012 American Values survey, respondents were asked if they agreed that today the rich get richer while the poor get poorer. About three-quarters (76 percent) agreed, while just 23 percent disagreed.  And the public believes it’s not just the poor who are losing ground to the rich—it’s the middle class as well. In the same survey three-quarters (76 percent) also say the gap between the standards of living of the middle class and the rich grew over the last decade, compared to just 16 percent who think it narrowed.

No wonder that a poll from October 2011 conducted by Pulse Opinion Research for The Hill found that two in three Americans believe that the middle class is now shrinking. And in a Democracy Corps post-2010 election survey, the public endorsed the idea that America is no longer a country with a rising middle class by 57-36.  Finally, an October, 2007 poll conducted by political scientists Benjamin Page and Lawrence Jacobs for their book, Class War: What Americans Really Think about Economic Inequality, found 81 percent of the public saying that the gap in wealth between wealthy Americans and the middle class has grown over the last 25 years, compared to just 10 percent who said it has remained the same and 8 percent who said it had gotten smaller.

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Investment Company Urges Americans To Stash Money In Belize, ‘One Of The World’s Top Tax Havens’

Tax havens are in many ways the liger of the financial world: everyone knows they exist, but few among us have ever seen one. They exist in a realm most of us remain blissfully unaware of, accessed only by the wealthiest in society.

However, fresh off their 15 minutes of fame during Mitt Romney’s presidential campaign, tax havens are now being promoted more openly as investment companies try to stoke rich people’s fears and encourage them to avoid paying U.S. taxes.

Exhibit A is an investment company named Buy Belize, whose website appeals to wealthy individuals who “lose sleep over the security of [their] assets & hard-earned money” using right-wing language terminology such as “death taxes,” which they incorrectly list at 55 percent (it’s actually 40 percent). The group encourages people to take their money out of the United States and store it in Belize instead, which they call “one of world’s top tax havens — a truly safe locale for your money.” Buy Belize also offers to set up shell companies — International Business Companies — to “protect investments from taxes as well as legal judgments.”

Buy Belize also advertises on The Glenn Beck Program, appealing to wealthy people who are “frustrated, nervous, and worried about change” to open offshore accounts in Belize, “one of the last tax havens left in the world.”

Listen to the radio ad:

Offshore accounts are a principal mechanism rich people and corporations use to avoid paying taxes in the United States. A study last year found that the super-wealthy around the world are shielding at least $21 trillion in secret offshore tax havens, and the problem has grown significantly in the past few years. And it isn’t just Mitt Romney who stores his wealth in foreign tax havens. In 2012, the 60 largest corporations in America offshored $166 billion, costing American taxpayers billions in lost revenue. As a result, this loss of tax revenue is draining federal and state budgets.

To learn more about offshore accounts, listen to NPR’s Planet Money as they demonstrate opening up a shell company “UnBelizeAble.”

Faith Leaders Across America Protest Budget Cuts To Programs That Help The Poor

A collection of faith groups will today hold protest actions across the country calling on Congress to pass a budget that invests in programs to help low-income Americans instead of giving tax breaks to the wealthy and corporations. The coalition will hold 21 events in 13 states, according to a release from Faith in Public Life, encouraging Congress “to protect families and seniors, reject austerity, and remind them we have enough for all in this country.”

As part of the event, leaders will deliver loaves of bread and fish to Congress, a play on the Biblical story in which Jesus fed 5,000 hungry people with bread and fish. That took “a miracle,” the groups said in a release, but “it doesn’t take a miracle for Congress to pass a moral budget.”

“In Jesus’ time, it took a miracle to feed all the hungry. But today in America, we have enough resources to feed everyone, house everyone, and educate everyone if our leaders have the political will to put the common good before tax breaks for big corporations and the super wealthy,” Rev. Dr. J. Herbert Nelson, II, Director of the Presbyterian Church (U.S.A.) Office of Public Witness, said in a release from Faith in Public Life. “Congress needs political courage, not miracles, to pass a just and moral budget that makes the wealthy pay their fair share and protects struggling families from further hardship.”

One of the events will take place outside the district office of Rep. Paul Ryan (R-WI), the author of the House Republican budget that would grant tax cuts to the wealthy while finding two-thirds of its budget cuts from programs that help the poor. Faith leaders criticized that budget as “immoral and counter to our values” when it was released last week, and faith groups like the Nuns on the Bus campaign have targeted Ryan and other Republicans for their insistence on similar budget cuts in the past.

The coalition includes interfaith, Christian, and Jewish groups, including the PICO National Network, Interfaith Workers Justice, and NETWORK, the Catholic social justice lobby that organized the Nuns on the Bus campaign.

How A Path To Citizenship For Undocumented Immigrants Would Boost The American Economy

As Congress continues to piece together comprehensive immigration reform legislation, a new study from the Center for American Progress asserts that legal status and a path to citizenship for America’s 11 million undocumented immigrants would provide substantial boosts to the nation’s economy in the immediate future.

The study from Robert Lynch and Patrick Oakford examined three immigration reform scenarios: immediate legal status and citizenship, immediate legal status and a path to citizenship within five years, and legal status but no path to citizenship. The first scenario, immediate citizenship, would provide the largest economic boost, adding $1.4 trillion to economic growth, a $791 billion increase to Americans’ personal incomes, and 203,000 jobs over the next decade. It would also boost incomes of undocumented workers by $691 billion over the next decade, adding $184 billion in tax revenues to state and federal coffers.

Even under the second scenario — immediate legal status and a path to citizenship within five years — the benefits would be large, and though there are still benefits to reform without a path to citizenship, they are significantly smaller than the benefits from the other scenarios:

“These immigration reform scenarios illustrate that unauthorized immigrants are currently earning far less than their potential, paying much less in taxes, and contributing significantly less to the U.S. economy than they potentially could,” Lynch and Oakford wrote in the study. But the study also makes it clear that the benefits of immigration reform and a path to citizenship aren’t restricted to undocumented immigrants — they extend to American workers as well.

Other studies have shown that immigration reform would have positive effects on jobs and economic growth, wages for both immigrants and American workers alike, the creation of new businesses, and growth for state economies.

Stimulus Improved Infrastructure, But U.S. Needs $3.6 Trillion In Investments By 2020

The American Recovery and Reinvestment Act, the economic stimulus package signed into law by President Obama in 2009, improved America’s infrastructure, but the United States still needs a massive investment over the next seven years to keep its infrastructure up to date, according to a report card from the American Society of Civil Engineers.

The report gave American infrastructure a D+ grade, tying the 2001 grade as the highest the United States has ever received and an improvement from the D it received in 2009. But the U.S. also need substantial investments between now and 2020 to keep its infrastructure in good repair (a B grade), according to the report. The U.S., the report estimates, will spend roughly $1.6 trillion between now and 2020 on infrastructure investment, far short of the $3.6 trillion it needs to reach a B grade:

The stimulus bill helped turn around the American economy during the Great Recession in part because it included substantial investments into infrastructure projects. Obama proposed further infrastructure investments as part of the American Jobs Act in 2011, but that plan was repeatedly blocked by Republicans in both the House and the Senate. Other funding for infrastructure improvements has been put off or reduced because of budget cuts and deficit reduction efforts.

Still, with unemployment high and borrowing costs at historic lows, the United States could afford to boost its investments into infrastructure to close the gap the ASCE says exists at a cost to the federal government that is far lower now than it will be in the future. At the same time, those investments would provide a sizable boost to the American economy.

Econ 101: March 20, 2013

Welcome to ThinkProgress Economy’s morning link roundup. This is what we’re reading. Have you seen any interesting news? Let us know in the comments section. You can also follow ThinkProgress Economy on Twitter.

  • Cyprus rejected a proposed bank tax, throwing bailout efforts into further chaos. [Reuters]
  • Housing giant Freddie Mac will sue more than a dozen banks over losses incurred due to manipulation of interest rates. [Reuters]
  • The Senate Banking Committee approved nominees to run the Securities and Exchange Commission and Consumer Financial Protection Bureau. [Politico]
  • Workers are beginning to lose jobs because of sequestration. [Huffington Post]
  • After a decade at war, many American troops are struggling to find jobs. [Washington Post]
  • State cuts to unemployment insurance are making life harder for jobless workers. [Wall Street Journal]
  • Amid austerity efforts, British unemployment rose for the first time in a year. [BBC]

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