The Congressional Progressive Caucus (CPC) alternative "people's budget" for fiscal year 2017, formally unveiled on Tuesday, which calls for enhanced investments in public infrastructure and renewable energy and public education, as well as wage growth, "would have significant, positive impacts," according to an analysis by the Economic Policy Institute (EPI).
The proposal, titled The People's Budget: Prosperity Not Austerity, would "help address two of the most glaring problems in the American economy today: a still-incomplete economic recovery and decelerating productivity growth," said EPI budget analyst Hunter Blair. "Further, the budget's target of genuine full employment is essential if low- and middle-wage workers are going to see significant gains in hourly pay in coming years."
CPC is calling for a $1 trillion investment into transforming the country's crumbling roads, highways, and facilities "into a 21st century network, creating jobs and improving economic opportunities in the process," wrote Rep. Raúl Grijalva (D-Ariz.), CPC co-chair, in a statement (pdf) released Tuesday.
It also outlines plans for improved public education and debt-free college; supports wage increases and higher taxes for households making $250,000 or more a year; and allows states to transition to single-payer healthcare, among other provisions.
What does that mean for the rest of us? As EPI explains, the budget would:
- Finally complete the economic recovery. The People’s Budget would sharply accelerate economic and employment growth, boosting GDP by 3 percent and employment by 3.6 million jobs in the near term. This would both close the CBO estimate of the output gap and (if the Fed accommodated) achieve genuine full employment with the unemployment rate reduced to 4 percent.
- Make necessary public investments. The budget finances roughly $295 billion in job creation and public investment measures in calendar year 2016 alone and roughly $565 billion over calendar years 2016–2017, which will rapidly reduce labor market slack and restore the economy to full health. Further, the budget continues strong public investments even after full employment is achieved, which would help reverse recent declines in productivity growth.
- Facilitate economic opportunity for all. By expanding tax credits and other programs for low- and middle-wage workers, boosting public employment, and offering incentives for employers to create new jobs, The People’s Budget aims to boost economic opportunity for all segments of the population, including those left out of the current recovery.
- Strengthen the social safety net. The People’s Budget expands and extends emergency unemployment benefits and increases funding for education, training, employment, and social services as well as income security programs and proposes benefit enhancements, not cuts, in social insurance protections.
The blueprint is a "comprehensive road map for economic reform," wrote Isaiah J. Poole at the Campaign for America's Future blog on Monday. "[It] also serves as a standard for what a presidential or congressional candidate should be willing to embrace in order to earn progressive support."
"The American economy faces two major and interrelated problems, and contrary to what one would expect given the newly resurgent cries of deficit hawks, more spending is essential to solving both," Blair writes in a post for EPI's Working Economics blog.
In the short run, The People’s Budget provides a fiscal stimulus large enough to not only close the CBO’s measure of the output gap, but also push unemployment to 4 percent provided accommodation by the Federal Reserve.
[....] In the longer run, The People’s Budget would further stimulate productivity growth through an emphasis on public investment. The People’s Budget invests heavily in infrastructure and returns non-defense discretionary spending to its historical levels by 2021. Sustaining these investments will build the country’s stock of public and human capital, a key driver of long-run productivity growth.
"The People’s Budget is exactly the sort of ambitious thinking we need to confront the climate crisis and keep fossil fuels in the ground," Friends of the Earth campaigner Lukas Ross said on Tuesday. "From reining in Big Oil to investing in renewables, the People’s Budget is hands down the greenest budget in Washington."