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News from EPI EPI releases technical analysis of Congressional Progressive Caucus Back to Work budget

Budget alternative would boost GDP growth by 5.7 percentage points, target full economic recovery by 2015

Today, the Economic Policy Institute Policy Center released its analysis of the Congressional Progressive Caucus’ Back to Work budget. The analysis, by Andrew Fieldhouse and Rebecca Thiess, outlines the budget’s fiscal and economic impacts, focusing on the CPC’s proposed use of renewed expansionary fiscal policy to rapidly restore full employment.

The CPC’s budget addresses head-on the most pressing challenge facing policymakers—the unrelenting jobs crisis—while also ensuring a sustainable fiscal future. As its title suggests, the Back to Work budget prioritizes putting Americans to back to work, creating 6.8 million new jobs within one year by investing in the country’s physical infrastructure and nondefense discretionary programs, as well as enacting aid to state and local governments, public works programs, and targeted tax credits. The budget invests around $700 billion for job-creation measures and public investment in 2013, and $2.0 trillion over 2013-2015.

“Instead of fixating on near-term deficit reduction and austerity—which will further slow recovery—our top priority should be returning the economy to full health,” said Fieldhouse. “On job creation, the Back to Work budget puts its money where its mouth is instead of delivering platitudes and unacceptably high unemployment rates.”

“The Back to Work budget stands in stark contrast to Congressman Ryan’s draconian austerity budget,” said Thiess. “This budget proves that slashing safety net programs and reneging on commitments to seniors and vulnerable citizens is not needed to ensure sustainable fiscal trajectory. Rather than defund government programs, this budget promotes opportunity and invests in the American people, paid for with changes to the tax code that increase progressivity and push back against widening income inequality.”

While the Back to Work budget would increase near-term deficits to boost employment, targeted spending cuts and progressive tax reforms would decrease the deficit below 2 percent of GDP beyond fiscal 2015. It would return defense spending to 2006 levels, eliminate corporate tax loopholes, end the preferential treatment of investment income over wages, raise tax rates on households earning over $250,000, and add higher tax brackets for millionaires and billionaires. On net, the budget would place debt held by the public on a downward trajectory, to a more-than-sustainable 68.7 percent of GDP by fiscal 2023.