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.

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Senate Democratic Budget Reduces Deficit By $1.85 Trillion, Half From Revenue

Sen. Patty Murray (D-WA)

A day after House Republicans outlined their budget proposal for fiscal year 2014, Senate Democrats unveiled a broad outline of their budget, which Senate Budget Committee Chair Patty Murray (D-WA) said will reduce the deficit to less than three percent of gross domestic product while bringing total deficit reduction to $4.2 trillion over the last four years.

The Democratic budget would replace the automatic budget cuts, known as sequestration, that took effect on March 1 with a different set of cuts that will achieve $1.95 trillion in total cuts and revenues. Here are the main provisions of the Democratic budget as outlined by Murray:

$1.85 trillion in total deficit reduction: The Senate budget achieves $1.85 trillion in total deficit reduction split evenly between spending cuts and new revenues and bringing total deficit reduction since President Obama took office to more than $4 trillion once combined with past spending cuts and tax increases. It includes $493 billion in domestic spending cuts, $275 billion of which would come from health savings determined by the Senate Finance Committee. The other $240 billion would come from defense and the end of the war in Afghanistan, and the budget would save $242 billion in interest savings.

$975 billion in new revenues: The budget would achieve half of its deficit reduction from new revenue increases derived from the elimination of tax expenditures and loopholes, though it does not include specifics on which would be eliminated. That would be left to the Senate Finance Committee as part of a broader tax reform bill. A report from the Center for American Progress found that there were more than $1 trillion in tax expenditures that could be eliminated. Those include subsidies for oil and gas companies, a loophole that benefits hedge fund managers, ending tax breaks for corporations that move jobs overseas, and limits on deductions for wealthy taxpayers.

$100 billion in stimulus spending: The budget also includes $100 billion for programs meant to boost the economic recovery, including $50 billion for infrastructure projects. The rest would go toward worker training programs and other forms of stimulus spending, according to Murray.

The Democratic budget would not achieve balance over the 10-year budget window, a point the Budget Committee’s Republicans repeated throughout the markup today. The House GOP budget, by contrast, claims to balance in 10 years, though those claims are built almost entirely on unrealistic revenue projections.

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