Schakowsky Proposes Alternate Budget Plan: Save Social Security, Tax Millionaires

Schakowsky Proposes Alternate Budget Plan: Save Social Security, Tax Millionaires

After the National Commission on Fiscal Responsibility and Reform released a polarizing deficit reduction proposal on November 10, Rep. Jan Schakowsky (D-Illinois) did not hesitate in expressing her disapproval. “This is not a package I could support,” she said at the time.

On Monday, Schakowsky, who also serves on the commission, released her own proposal, which contrasts significantly with the plan compiled by commission co-chairs Alan Simpson and Erskine Bowles. Most notably, Schakowsky’s plan approximates a $426.95 billion reduction, a higher figure than the $250 billion target President Obama recommended to the commission. The Bowles-Simpson proposal had a final reduction amount of $200.3 billion over the same time period.

“Fixing the Federal deficit is not an end in itself,” Schakowsky said in a statement. “The goal of budget policy should be to assure long-term, widely shared economic growth.”

Schakowsky’s proposal also sharply differs from the Bowles-Simpson plan by avoiding cuts to Social Security, which she said is unrelated to the country’s poor economy.

“Social Security has nothing to do with the deficit,” Schakowsky stated. “[There] is simply no relationship between the two and attempting to conflate them does a grave disservice to America’s seniors.” Cutting benefits to retirees “places them at fiscal risk and hurts the economy because they will be unable to purchase the goods they need.”

To ensure solvency, Schakowsky’s proposal eliminates the Social Security payroll tax cap for employers and raises the earnings cap on employees to 90 percent. It also establishes a 3 to 4 percent legacy tax on all workers who earn more than the cap.

Rep. Raul Grijalva (D-Arizona) was the first in Congress to issue his official support of Schakowsky’s plan. The co-chair of the Congressional Progressive Caucus, Grijalva said that the plan is a “vast improvement over the Bowles-Simpson proposal and represents a more thoughtful approach to debt reduction.”

“Our middle and lower class families did not cause our current budget shortfalls … Rep. Schakowsky’s plan reflects the fact that, as she has said so often, the sacrifices of the past several years have all been made by the middle class. It’s time we stopped telling these hard-working families to tighten their belts again for the sake of another millionaire tax cut. We need to bring our taxing and spending in line with reality, and her proposal is a bid step in the right direction.”

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Advocacy blog Think Progress also supported Schakowsky’s plan, stating, “This is a serious proposal, and should be given as much consideration as the Bowles-Simpson proposal … Schakowsky has shown that it is feasible to balance the budget without blowing a huge hole in discretionary spending.”

Sen. Bernie Sanders (I-Vermont) last week expressed his interest in working with members of Congress to develop an alternative to the Bowles-Simpson plan.

Additional elements of Schakowsky’s plan include an increased economic stimulus that would provide $200 billion over the next two years to invest in job creation, funding for education and law enforcement, unemployment insurance, Federal Medical Assistance Percentages and Supplemental Nutrition Assistance Program and infrastructure.

The proposal also suggests cutting programs that benefit large and successful corporations and eliminating $110.7 billion from the 2015 defense budget, in part by reducing the US military presence in Europe and Asia.

One of Schakowsky’s more contentious recommendations would allow the Bush-era tax cuts for the top two income brackets to expire and return to 2009 estate tax levels. Many Republicans in Congress have repeatedly stated their opposition to tax increases, particularly for the wealthy; on November 13, Sen. Judd Gregg (R-New Hampshire) said that tax cuts for the wealthy “should be permanent … if you raise taxes you’re going to stifle the economy significantly.” Rep. John Boehner (R-Ohio), who is set to become the next speaker of the House, said that making current tax rates permanent “will reduce the uncertainty in America and help small businesses to create jobs again.”

If a compromise is not reached on the issue by January, taxes for income earners at all levels will increase significantly.