The Progressive Caucus released a budget proposal this week which would stop the upcoming sequester, and replace the austerity cuts by closing unpopular loopholes and making targeted reductions to the budget. While the plan has literally no chance of passage in Congress, it does provide a good outline of how far rank-and-file Democrats are willing to go to reduce the deficit.
Below are some of the most significant proposals in the plan, which together would cut deficits by $1.08 trillion over 10 years:
End subsidies to fossil fuel companiesThis proposal would save $94 billion by ending subsidies, financial assistance and preferential tax treatment for oil, gas and coal producers. According to the Progressive Caucus budget, this policy is based on the argument that “the fossil fuel industries are among the most profitable on earth” and yet some pay zero federal income taxes.
Shutdown expensive and often unpopular loopholes
The Progressive Caucus targets five loopholes in particular, which it claims could bring in $278 billion over 10 years.
- The $17 billion carried interest loophole, which allows hedge fund managers and other investors to count certain types of compensation as investment income rather than ordinary income.
- A $4 billion loophole that gives private jet owners special tax depreciation benefits and allows yacht owners to decrease income tax bills by claiming the vessel as a second home.
- The U.S. could make $161 billion by closing a loophole that allows offshore profit shifting, and $71 billion by closing the foreign-earned income loophole, which allows Americans couples working abroad to avoid U.S. federal taxes on the first $190,200 of income.
- The proposal would also close the $25 billion “Facebook Loophole,” which allows companies to deduct stock options cashed in by an employee at an inflated current market value rather than the original cost.
Cap deductions and exclusions at 28 per cent
Because itemized deductions reduce taxes for a person based on their income tax rate, people in higher income tax brackets can save more than twice as much for the same writeoff as a person with lower income can.
The Progressive Caucus proposes capping the rate at 28 per cent for individuals who make more than $223,000 annually. This would save almost half a trillion dollars — $482 billion — over 10 years.
Shift a fraction of troops stationed in Europe back to the U.S.
Moving 10,000 of the more than 70,000 troops stationed in European bases back to the United States would save $3 billion, according to the budget.
Slow down the expansion of the U.S. Navy
The U.S. is continually investing in additional hardware for the Navy, but slowing the rate of investment and decreasing the quantity of these new acquisitions could save tens of billions of dollars.
Specifically, the Progressive Caucus proposes reducing the purchase rate of new Virginia-class submarines to one new ship per year for a savings of $22 billion, as well as eliminating one of the new Ford-class aircraft carriers for a $14 billion savings.
The U.S. currently has more nuclear submarines than anyone else and more in-service aircraft carriers than the rest of the world combined.
Reduce the number of troops to pre-war level and cut funding for military bandsThe U.S. could save a total of $51 billion reducing U.S. active duty ground force levels by 4 per cent through attrition, and halving the amount of money spent on military bands to $200 million annually.
Reduce the nuclear weapons arsenal
The Smarter Approach to Nuclear Expenditures Act by Rep. Ed Markey would scale down the nuclear arsenal, reducing funding for certain nuclear weapons programs and submarines, and slowing down nuclear weapons research. The act would save $106 billion over 10 years.
Cap defence contractor compensation
The Progressive Caucus proposes capping compensation for individual defence contractors at $199,700, which is roughly the compensation of a 4-star general. The move would save $50 billion.
At the moment, the cap is at an all-time high of $763,029.
Enact savings on aircraft buys
The proposal would save $23 billion by replacing purchase of the F-35 with F/A-18 variants.
According to the Progressive Caucus budget, the F/A-18 variants are an acceptable replacement, given that the U.S. has 3,029 fourth-generation fighters — three times as many as the nearest competitor — and that the F-35 fifth generation fighter has been plagued with issues.
The proposal would also cut $9 billion by ending production of the controversial V-22 Osprey dual rotor aircraft.
In 2009, the Government Accountability Office found that the Osprey was 186 per cent over-budget and not suited to fly in extreme heat, sand, or enemy fire.
NOW WATCH: Briefing videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.