It is intriguing to review the messages of the Faithful Budget to our nation’s leaders in light of the House and Senate budgets for FY 2016 released last month. Recall that the “Faithful Budget” requests them to craft a federal budget that

• Fulfills our shared duty to each other in all segments of society
• Serves the common good
• Robustly funds support for poor and vulnerable people in this land of immense wealth
• Allows each person to live a life of dignity free from hunger and poverty
• Supports an economy that generates sufficient jobs at fair wages, so that everyone has the opportunity to improve his or her economic condition
• Advances fiscal responsibility while increasing support for those who are poor and vulnerable
• Focuses on job creation and economic revitalization
• Produces a tax system based on fairness
• Makes long-term investments required to help those most in need to build assets

House and Senate Budget Proposals for FY 2016 Run Counter to the Faithful Budget

Yet, as the Center on Budget and Policy Priorities (CBPP) points out in its March 23 analysis of congressional budget plans, both the House and Senate (their budgets are similar, though not identical) cut more than $3 trillion over 10 years (2016-2025) from programs that serve people of limited means – roughly 70% of the cuts to non-defense spending, even though these programs constitute less than 25% of federal program costs. The overall impact of the GOP budgets is to vastly increase economic inequality, negatively impacting those in the middle class and devastating the lives and hopes of those below or near the poverty level. The Faithful Budget’s admonition on our shared duty to each other and our responsibility for the common good has been totally ignored.

These extensive cuts run the gamut of key programs that support moderate and low-income people: healthcare, Head Start and other early interventions for children, job training, SNAP (food stamps), Pell Grants, and other mandatory (i.e. entitlement) programs that are unspecified, but may include child nutrition and Supplemental Security Income (SSI) for elderly and disabled people in poverty. In addition, more than 13 million families would see an average benefit cut of $1,073 through reductions to the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC), which would expire after 2017.

The CBPP report calls the cuts in the congressional budget plans “strikingly imbalanced,” and those of us who support the Faithful Budget would give an even harsher assessment of the documents.

“Tax Minimization”

We are currently living through a period of “tax minimization,” both corporate and individual, in which, as a society, we tolerate and often desire to derive benefit from tax laws that shift payment for shared governance to those who have less ability to underwrite their costs. We then allow the wealthiest among us to share in the benefits of American society but avoid payment of their fair share. The Faithful Budget is very clear that fair taxation is a key responsibility that everyone bears in order to provide adequate revenue for maintaining the common good. This public investment ensures that equitable public policies will ensue and they, in turn, will strengthen our democracy.

Even public opinion polls indicate that our system of taxation is skewed toward the wealthy. In examining how the congressional budget proposals stack up against Americans’ priorities, the National Priorities Project in their March 19 research article note that:

• 68% of Americans think wealthy households don’t pay enough in taxes
• 91% think middle-class households pay enough or too much in taxes
• 79% think low-income households pay enough or too much in taxes
• 66% think corporations pay too little in taxes.

In addition, 64% say reducing the budget deficit is a top priority for Congress and the president. (Several of these polls are Gallup Polls).

Neither the House nor the Senate budget raises new revenue for deficit reduction or for investments in infrastructure or other examples of the common good. It would appear that deficit reduction will be paid for by average Americans rather than by corporations or the wealthy, since no corporate or individual loopholes are closed in either budget. Although both budgets call for comprehensive tax reform, each also calls for the reduction of the top corporate rate from 35% to 25% and for reduced individual income tax rates – two brackets (10% and 25%) are proposed.

The House proposal further eliminates the Alternative Minimum Tax that ensures that high earners who use multiple loopholes are paying at least some income taxes, but the Senate proposal is silent on this issue.

The Faithful Budget, on the other hand, reinstates a just tax system, including investment in the economic wellbeing of the nation, while protecting those of limited means. The Faithful Budget believes that this type of policy will best serve to reduce the long-term deficit because it is based on fairness and shared commitment.

How Does the FY 2016 Budget of the Congressional Progressive Caucus (CPC) Correspond to the Principles of the Faithful Budget?

More in line with the principles of the Faithful Budget are those of the FY 2016 budget of the Congressional Progressive Caucus (CPC). As in previous years, the CPC solicited the assistance of the Economic Policy Institute (EPI) in analyzing and scoring the CPC’s policy proposals and in determining their impact on the federal deficit over the next decade.

Unlike the House and Senate budget proposals, the CPC’s proposals clearly aim to improve the economic wellbeing of the working class by:

• Accelerating job growth, especially through infrastructure improvement and other public investments (finances $528 billion in job creation and investment measures in 2015 alone and almost three times that level in the following two years)
• Facilitating economic opportunity for all segments of the population through expanding tax credits and incentivizing employers to create new jobs
• Strengthening social insurance and the social safety net, not by reducing benefits, but by reducing costs – for example, using government purchasing power to lower healthcare costs, building on efficiency savings from the ACA, and increasing funding for education, training, employment and income security programs
• Cutting spending, first by reducing the military budget, and then slowing its growth over the next decade, and ending the Overseas Contingency Operation (OCO) funding, which has been tantamount to a slush fund
• Emphasizing fairness in the tax code by requiring the wealthy to pay somewhat higher rates, eliminating some of the most egregious corporate income tax loopholes, equalizing the treatment of capital income and labor income, and levying a financial transactions tax, among other examples
• Targeting a sustainable debt level of 66% of GDP by FY2025.

Specifically, the CPC

• Zeroes in on corporate tax evaders by preventing companies from avoiding U.S. tax through “inversions” – legally but not actually moving overseas, as well as preventing corporations from avoiding taxes on any profits held overseas. By creating a sales tax on financial transactions, the CPC proposes to raise $921 billion over 10 years
• Focuses on tax fairness for the wealthy by raising rates by 2% for those earning more than $250,000 annually; brings the tax rates on capital gains back to the level of pre-2001; and, places a cap on the value of itemized deductions that mostly benefit the wealthy
• Maintains current tax rates for those earning less than $250,000 per year; creates a new “hard work” tax credit and expands slightly eligibility for the EITC, including childless workers; and, triples the maximum child care tax credit to $3,000 per child.
• Reduces deficits of $3.4 trillion over 10 years by increasing both spending and revenues (www.nationalpriorities.org/analysis/2015/competing-visions-2015/).

This brief journey through the CPC document should clarify why it is closer to the principles of the Faithful Budget on taxation than are the GOP budget proposals.

Evaluating Other Budget Proposals against the Principles of the Faithful Budget

Finally, to assess any budget proposal relating to the federal tax code, it is helpful to ask these questions?

1. Does the budget raise sufficient revenues to meet the needs of all segments of the population?
2. Does it call for shared responsibility among all individuals and corporations?
3. Does it provide adequate income assistance and related services to workers and their families who need it?
4. Does it strengthen and/or expand help for low-income workers with children?
5. Does it provide incentives for people to pursue or maintain employment, develop their human potential, invest in their financial security, achieve self-sufficiency and increase earnings?
6. Does it promote the common good by supporting public programs that provide what markets cannot do well, including education at all levels, affordable housing, healthcare, and security for vulnerable groups such as children, immigrants, and people who are elderly and disabled?
7. Does it eliminate wasteful or inefficient tax loopholes and tax expenditures in both the individual and corporate spheres?
8. Does it promote intergenerational responsibility?
9. Does it work simply so that taxpayers can easily understand the rules and comply with them?