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Tables 1 and 2 detailing the policy changes within the budget; and summary tables 1 through 4 depicting budget totals as well as comparisons with the current law baseline, appear at the end of the report. The People’s Budget aims to improve the economic well- being of low- and middle- income families by finally closing the persistent jobs gap that has plagued the U. S. For that purpose, The People’s Budget provides upfront economic stimulus large enough to go beyond closing the CBO’s measure of the output gap (a measure of how far from potential the economy is operating). The budget would close the output gap and target genuine full employment by pushing the unemployment rate down to 4 percent.

This paper details the budget baseline assumptions, policy changes, and budgetary modeling used in developing and scoring The People’s Budget, and it analyzes the budget’s cumulative fiscal and economic impacts, notably its near- term impacts on economic recovery and employment. We find that The People’s Budget would have significant, positive impacts. Specifically, it would: Finally complete the economic recovery. The People’s Budget would sharply accelerate economic and employment growth; it would boost gross domestic product (GDP) by 3 percent and employment by 3. This would both close the CBO estimate of the output gap and further push unemployment down, to 4 percent, our estimate of genuine full employment. The budget would also ensure that the mixture of spending and revenue changes provides a net fiscal boost long enough to avoid a future fiscal cliff (i. Make necessary public investments.

The budget finances roughly $2. This fiscal expansion is consistent with the amount of fiscal support needed to rapidly reduce labor market slack and restore the economy to full health. Furthermore, The People’s Budget also aims to hit more ambitious long- term public investment targets, by returning nondefense discretionary spending (NDD) to its historical average as a percentage of GDP by 2. 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. Strengthen the social safety net.

The People’s Budget strengthens the social safety net and proposes no benefit reductions to social insurance programs—in other words, it does not rely on simple cost- shifting to reduce the budgetary strain of health and retirement programs. Instead, it uses government purchasing power to lower health care costs (health care costs are the largest threat to long- term fiscal sustainability) and builds upon efficiency savings from the Affordable Care Act. The budget also expands and extends emergency unemployment benefits and increases funding for education, training, employment, and social services as well as income security programs in the discretionary budget. Smartly cut spending. The budget focuses on modern security needs by repealing sequestration cuts and spending caps that affect the Defense Department but replacing them with similarly sized funding reductions that are less front- loaded and will allow more considered cuts. It ends emergency overseas contingency operation (OCO) spending in FY2.

Defense Department for the remainder of the decade. Increase tax progressivity and adequacy. The budget restores adequate revenue and pushes back against income inequality by adding higher marginal tax rates for millionaires and billionaires, equalizing the tax treatment of capital income and labor income, restoring a more progressive estate tax, eliminating inefficient corporate tax loopholes, levying a tax on systemically important financial institutions, and enacting a financial transactions tax, among other tax policies.

Reduce the deficit in the medium term. The budget increases near- term deficits to boost job creation, but reduces the deficit in FY2.

CBO’s current law baseline. The budget would achieve primary budget balance (excluding net interest) and sustainable budget deficits in FY2.

After increasing near- term borrowing to restore full employment, the budget gradually reduces the debt ratio in the now full- employment economy over time, actually exceeding a key benchmark of sustainability (of a stable debt- to- GDP ratio during times of full employment). Relative to current law, the budget would reduce public debt by $5. GDP) by FY2. 02. 6.

For the sixth year in a row, the Economic Policy Institute Policy Center (EPIPC) has provided assistance to the Congressional Progressive Caucus (CPC) in analyzing and scoring the specific policy proposals in its alternative budget and in modeling its cumulative impact on the federal budget over the next decade. The policies in CPC’s fiscal year 2. The People’s Budget: Prosperity not Austerity—reflect the decisions of the CPC leadership and staff, not those of EPIPC (although many of the policies included in the budget overlap with policies included in previous EPI budget plans). Upon CPC’s request, the nonpartisan Citizens for Tax Justice (CTJ) independently scored the major individual income- tax reforms proposed in The People’s Budget. All other policy proposals have been independently analyzed and scored by EPIPC based on a variety of other sources, notably data from Congressional Budget Office (CBO), the Joint Committee on Taxation (JCT), the Office of Management and Budget (OMB), and the Tax Policy Center (TPC). Hunter Blair, the author of this year’s analysis, would like to acknowledge former EPI Policy Center staff members Thomas Hungerford, Joshua Smith, Andrew Fieldhouse, and Rebecca Thiess, whose analyses of previous CPC budgets served as the template for this report.

Introduction. The People’s Budget is focused on both short- and long- term economic objectives. In the short run, The People’s Budget targets a rapid and durable return to genuine full employment through the use of expansionary fiscal policy. In the long run, The People’s Budget pushes back on decelerating productivity growth by making necessary and sustained public investments. The budget was developed from the evidence- based conclusion that the present economic challenge of joblessness results from a continuing shortfall of aggregate demand—the result of the Great Recession and its aftermath—and that the depressed state of economic activity is largely responsible for elevated budget deficits and the recent rise in public debt. Further, much recent research indicates that aggregate demand is likely to remain depressed in coming years without a fiscal boost (this hypothesis about chronic ongoing demand shortages is often referred to as “secular stagnation”).

Labor market slack resulting from this continuing demand shortfall is in turn exacerbating the decade- long trend of falling working- age household income and the three- decades- long trend of markedly increasing income inequality. Moreover, since late 2. The slack in the labor market can still be seen through the low labor- force participation rate, high labor- underutilization rate, and the low employment- to- population ratio of prime- age workers (ages 2. Expansionary fiscal policy can help ensure a prompt and durable return to a full- employment economy which will in turn spur rising wages. Accelerating and sustaining economic growth, promoting economic opportunity, and pushing back against the sharp rise in income inequality remain the most pressing economic challenges confronting policymakers. To directly address these issues, The People’s Budget invests heavily in front- loaded job- creation measures aimed not only at putting people back to work, but also at addressing the deficit in physical infrastructure and human capital investments.