Transcript Document

Michael Ettlinger
Vice President, Economic Policy
Center for American Progress
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Full balance in
2030
Primary balance
in 2015
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Budgeting for Growth and Prosperity:
A Long-term Plan to Balance the Budget, Grow the Economy, and
Strengthen the Middle Class
Michael Ettlinger, Michael Linden, and Seth Hanlon
http://www.americanprogress.org/issues/2011/05/budgeting_for_growth.html
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Federal health care spending, as a share of GDP,
under CBO baseline and CAP plan, 2012-2035
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Baseline
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CAP
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4
2
2034
2032
2030
2028
2026
2024
2022
2020
2018
2016
2014
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2012
0
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Control discretionary spending
Security
Security spending, as a share of GDP, under CAP
plan, 2012-2035
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• Create a unified security budget
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• Cut defense spending by $110
billion in 2015
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• Place a cap on security spending
that grows at the rate of inflation +1%
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Security spending, in billions of constant 2010
dollars, under CAP plan, 2012-2035
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$1,000
2034
2032
2030
2028
2026
2024
2022
2020
2018
2016
2014
2012
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$900
$800
$700
$600
$500
$400
$300
$200
$100
2034
2032
2030
2028
2026
2024
2022
2020
2018
2016
2014
$0
2012
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Major Elements of CAP’s revenue plan
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Comprehensive income tax reform
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Reduce greenhouse gas emissions through a price on carbon and a
foreign oil import fee
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Modest financial transactions tax
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Other bells and whistles
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Comprehensive income tax reform
Fairer
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Itemized deductions (mortgage, charitable) and retirement incentives become credits worth the same to all
taxpayers
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Flat 15% marginal rate for taxpayers under $100,000 (singles under $50,000)
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Restore Clinton rate for top earners ($400,000 for couples; $200,000 for singles)
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Temporary 5% millionaires’ surtax until budget is balanced.
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Capital gains rate at 28%; dividends taxed as ordinary income.
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Child Credit expanded from $1,000 to $1,250 with no phase-out and greater refundability. EITC retained in
its current, enhanced form
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Effective tax rate, 1992-2007
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After-tax income growth, by income group
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