There’s another deficit reduction plan out, now from progressive think tank Our Fiscal Security.
And you know it hits the right notes since Paul Krugman gave it a preliminary endorsement: “It’s at least as responsible as any of the other plans being advanced, with a very different emphasis: more reliance on revenue, no attack on Social Security. Some of the revenue comes from indirect taxes — green taxes and fuel taxes — but the rest comes from measures that would raise taxes mainly on upper-income Americans.”
The plan even includes several trillion dollars in spending to stimulate growth.
Fiscal savings: $960 billion by 2020
Annualized cost as share of current year budget: -2.7%
'Major military actions over the past decade have led to a substantial increase in spending on the Department of defence and related agencies. A reduction from these elevated levels would seem to be warranted given the winding down of the war in Iraq.'
Fiscal savings: $1.2 trillion by 2030
Annualized cost as share of current year budget: -1.7%
'Over the long run, the projected high rate of growth in health care costs is the most important factor contributing to future deficits. !e recently enacted health care law contained a number of cost-containment provisions, but it is likely that even more needs to be done. !e health care bill will allow us to learn more about what works -- and building upon what is learned will be essential for controlling costs in the future.'
Fiscal savings: Over $300 billion by 2020
Annualized cost as share of current year budget: -0.85%
'Many of the health care act's structural reforms involve pilot projects. It is unclear which ones will succeed, where they will succeed, or how much they are capable of saving. When we look at pockets of value in the health care system, it becomes clear that it is possible to shave costs and improve care at the same time. What follows is a list of provisions in the reform legislation that we believe have the potential to save billions of dollars, while improving care. Our Fiscal Security endorses these reforms with a belief that they can have a positive impact on the long-term provision of health care. We believe that if collectively implemented, these types of reforms -- despite the lack of concrete budget scores -- can slow excess health care cost growth by at least 0.5 percentage points annually.'
Fiscal savings: $115.5 billion by 2015
Annualized cost as share of current year budget: -0.65%
'A hybrid option for raising the cap would increase the share of total earnings subject to the payroll tax to 90% on the employee side and eliminate the cap altogether on the employer side, counting all earnings up to the revised cap toward higher benefits. !is would result in employers paying a significantly larger payroll tax on very large salaries. For instance, the $14.5 million salary LeBron James receives from the Miami Heat would be fully taxed on the employer side, meaning the owners would have to pay around $900,000 in Social Security taxes (Morrissey 2010b). It would also eliminate about three-fourths (74%) of the projected shortfall (71% if the employee cap were raised gradually).'
Fiscal cost: $88 billion yearly investment
Annualized cost as share of current year budget: +2.5%
'To harness the economic and social potential of the next generation, we will have to significantly expand our investment in the educational pipeline that begins with child care and preschool. Our Fiscal Security's path includes a comprehensive upgrade and expansion of child care from birth to preschool so that all children can reap the benefits of high-quality early learning and care. Our path provides revenues to pay for the package of investments recommended by a collaboration of national and state organisations to improve quality, access, and affordability of child care (CLASP 2010). The blueprint includes: the provision of resources to upgrade the quality and training of providers; expansion of tax credits for moderate- and middle-income households; and new investments to ensure all low-income families who wish to participate can enroll in Early Head Start and Head Start. The estimated cost of investing in a high-quality early care system would average $88 billion per year.'
Fiscal cost: Up to $2.2 trillion investment
Annualized cost as share of current year budget: Timeline not specified
'According to one study (Zandi 2010), spending on infrastructure creates on net $1.57 of additional economic benefit for each dollar spent. Much of this benefit comes from job creation -- each job supported in the construction industry, for example, supports two additional jobs. Global Insight estimates that $2.50 of economic growth occurs for each $1 invested in highway construction (Lotke, Carter, Dockstader, Beckwith, and Swartz 2008). Investment in infrastructure spending is 33% more effective than spending for generic tax cuts and 10-15 times more effective than spending on most business tax cuts (Pollack 2009).'
Fiscal cost: $100 billion investment over the next decade
Annualized cost as share of current year budget: -0.28%
'The United States falls behind seven other countries -- Israel, Sweden, Finland, Japan, South Korea, Switzerland, and Iceland -- in terms of R&D spending as a per cent of GDP (OECD 2008). President Obama has proposed that the research and experimentation tax credit, which has been extended by Congress 13 times since its creation in 1981, be expanded and made permanent, at a cost of about $100 billion over the next decade. The administration has justified this cost by citing the need to keep high-skilled jobs in the United States and to promote business certainty as well as future productivity and growth. The Chamber of Commerce has supported the extension and expansion of the credit.'
Fiscal gains: $88.1 billion revenue by 2015
Annualized cost as share of current year budget: -0.49%
'The Tax Policy centre estimates that taxing capital gains and ordinary dividends as ordinary income would generate $95.5 billion in 2015 relative to current law (TPC 2007). Extrapolating from this score and adjusting for Obama policy, we estimate that taxing capital gains and ordinary dividends as ordinary income would generate $88.1 billion in 2015 and $917.6 billion over 2011-20. This proposal would also help to restore fairness to the tax code because the cost falls largely on those who can best afford to pay. In 2007, the Tax Policy centre estimated that 83.3% of the incidence of taxing capital income as ordinary income would fall on the top 1% of earners, while an overwhelming 93.7% would fall on the top 5% of earners (TPC 2008b). Taxing capital gains and dividends can work to plug a considerable portion of the long-term budget shortfall while improving equity in the tax code.'
Fiscal gains: $87.9 billion revenue by 2015
Annualized cost as share of current year budget: -0.49%
'For taxpayers opting out of the standard deduction, the value of their itemized deductions increases with their marginal tax rate, and hence with their income. For high-income earners in the top tax bracket, the benefit (the amount by which their tax liability is reduced) is equal to 35% of their itemized deductions (39.6% if the top marginal tax rate reverts back as scheduled at the end of 2010). These tax code preferences provide no benefit to the majority of taxpayers (predominantly lower-income filers) who take the standard deduction. !e president's budget proposes limiting the tax benefit on itemized deductions to 28%; Our Fiscal Security's budget path proposes a broader restriction to a 15% marginal benefit and converting two major itemized deductions to refundable credits that are available to all tax filers.'
Fiscal gains: $629 billion revenue by 2020
Annualized cost as share of current year budget: -1.77%
'This change would yield an estimated savings of $629 billion over 10 years relative to the current policy baseline. Our path would mirror this policy by extending the middle-class tax provisions without extending tax cuts for the top 2% of earners.'
Fiscal gains: $77.4 billion revenue by 2015
Annualized cost as share of current year budget: -0.44%
'While a financial transactions tax would not eliminate speculation or necessarily stave off financial crises, instituting disincentives to short-term speculating would be a step toward building a more resilient financial sector. !e tax could generate revenue to fund investments to strengthen the economy in the wake of the financial-crisis-induced recession.'
Fiscal gains: $52 billion revenue by 2015
Annualized cost as share of current year budget: -0.29%
'Climate change is a real and growing problem, and the question is not whether to limit greenhouse gases but rather how to impose the limits. A carbon tax or a cap-and-trade program would harness market forces to efficiently reduce greenhouse gas emissions.'
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