issue: Fiscal Policies

PPI Report Warns of Economic Risks in Trump’s Proposed Tariff Agenda

Posted on by Max Sherrill

WASHINGTON —Throughout his 2024 campaign, former President Donald Trump has made imposing a double-digit tariff on all imports and a 60% tariff on goods from China a central pitch to voters, and has even suggested replacing the income tax with tariff revenue. The Progressive Policy Institute (PPI) today released a critical new report, “It’s Not 1789 Anymore: Why Trump’s Backwards Tariff Agenda Would Hurt America,” authored by Laura Duffy of PPI’s Center for Funding America’s Future, which warns of the steep costs of Trump’s plans to impose taxes on all imports at levels not seen since the Great Depression.

In the report, Duffy draws striking parallels between Trump’s plan and the debates over and effects of historical tariff policies going back to 1789. She argues returning to tariff-heavy strategies would not only make it impossible to fund government spending commitments that have grown since the country’s founding, but would also harm downstream industries and greatly burden American taxpayers and workers.

“When the United States was much poorer and less developed, tariffs were one of the only feasible ways to collect revenue. But even as far back as 1789, leaders recognized the weaknesses of relying on tariffs as a basis of our tax system,” said Duffy. “Today, no developed country relies on tariffs as a major revenue source, and Trump’s tariff proposals would be fiscally irresponsible, economically destructive, and costly to American families.”

Duffy outlines four main problems with Trump’s tariff proposal:

  • Inadequate Revenue Generation: Modern government spending levels cannot be supported by tariffs alone, which generate far less revenue compared to income taxes.
  • Non-Transparency: Tariffs are complex and hidden, making them vulnerable to special interests and rent-seeking by domestic industries.
  • Equity Concerns: Tariffs likely place a disproportionate burden on low-income households, which tend to spend more on imported goods.
  • Economic Disruption: Tariffs raise costs for industries relying on imports and invite retaliation from other countries, leading to reduced production and lost jobs.

Because of these issues with tariffs, Duffy argues that the shift to tax income instead of trade was a success for progressive policy goals and the United States’ growing global leadership role alike. Instead of turning back the clock to a much earlier (and less prosperous) era of American history as Trump suggests, Duffy recommends the United States address its budget deficits and promote equity by shifting the tax code towards fairer and less destructive taxes like a value-added tax.

Read and download the report here.

The Progressive Policy Institute (PPI) is a catalyst for policy innovation and political reform based in Washington, D.C. Its mission is to create radically pragmatic ideas for moving America beyond ideological and partisan deadlock. Learn more about PPI by visiting progressivepolicy.org. Find an expert at PPI and follow us on Twitter.

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Media Contact: Ian O’Keefe – iokeefe@ppionline.org

It’s Not 1789 Anymore: Why Trump’s Backwards Tariff Agenda Would Hurt America

Posted on by Max Sherrill

Introduction

“[W]e should find no advantage in saying that every man should be obliged to furnish himself, by his own labor, with those accommodations which depend on the mechanic arts, instead of employing his neighbor, who could do it for him on better terms.”

— James Madison

In a stark break from nearly a century of fiscal and trade policy, former president Donald Trump has made imposing significant import tariffs a central part of his policy agenda for a second term. At various times, he has campaigned to put a 10% to 20% tariff on all imports and a 60% tariff on goods from China, and he has even speculated about completely replacing the income tax with tariff revenue. If he were elected and made good on these promises, the average tariff rate would soar to levels not seen since Congress imposed the Smoot-Hawley Tariff of 1930.

Though Trump’s proposals to base the tax system on tariffs have been virtually unheard of in the post-World War II era, debates over tariffs are as old as our country itself. During the 18th and 19th centuries, when the federal government’s obligations were dramatically smaller than today, tariffs were indeed the major source of tax revenue. Contrary to Trump’s claims that imposing Depression-Era level tariffs will restore America to a supposed former state of greatness, leaders of the past long recognized the weaknesses of relying on tariffs for revenue, and their concerns offer valuable lessons today. In particular, tariffs:

1. Fail to raise enough revenue to finance a modern federal government.
2. Are especially non-transparent taxes that invite preferential treatment.
3. Undermine equity by imposing arbitrarily unequal tax burdens on different households.
4. Cause damage to downstream industries and the economy as a whole.

As a result of these weaknesses, the United States (in line with every other advanced economy) largely abandoned tariff-heavy fiscal policy by the mid-20th century to facilitate the federal government’s expanding socioeconomic goals and greater role in the world. Revisiting the contentious history of tariffs in the United States — going all the way back to the Tariff Act of 1789 — reveals why Trump’s promise to return to using tariffs as a basis of tax policy would severely undermine the United States’ fiscal stability, tax fairness, and economic growth today.

Read the Full Report.

 

New PPI Report Proposes to Repeal and Replace the Biggest Tax Paid by Working Americans

Posted on by Alex Terr

WASHINGTON — With major provisions of the Tax Cuts and Jobs Act set to expire at the end of next year, the president and Congress elected less than two weeks from today will have a historic opportunity to craft a new tax code that is fairer, more pro-growth, and more fiscally responsible. The Progressive Policy Institute (PPI) today released a new report, “A Real Tax Cut for Working Americans: Repealing and Replacing the Payroll Tax,” that offers a bold proposal to do just that by repealing the regressive and anti-work payroll tax, which is the biggest tax 123 million American households pay on their hard-earned wages. 

This new publication, which is authored by Ben Ritz, Vice President of Policy Development for PPI, and Laura Duffy, a Policy Analyst at PPI’s Center for Funding America’s Future, is a key output of PPI’s Campaign for Working America, launched earlier this year in partnership with former U.S. Representative Tim Ryan of Ohio. The Campaign aims to develop and test new themes, ideas, and policy proposals that help Democrats and other center-left leaders make a compelling economic offer to working Americans, bridge divides on cultural issues like immigration and education, and rally public support for the defense of democracy and freedom globally.

“Donald Trump has spent months pandering to workers by offering to exempt everything from tips to overtime pay from taxation. But these proposals would collectively add trillions of dollars to inflationary budget deficits while providing little benefit to the overwhelming majority of working Americans who earn most of their income through ordinary wages,” said Ritz. “PPI’s proposal, on the other hand, would increase most workers’ take-home pay while reducing our nation’s unsustainable deficits.”

The report proposes adopting a value-added tax to replace the revenue lost by repealing the payroll tax, which would spread the burden of taxation from workers’ wages to other forms of business income and previously accumulated wealth. PPI estimates that the swap could increase after-tax income for up to 90% of working families while also reducing annual budget deficits by up to $300 billion. It would also lower marginal tax rates on most workers’ wages, boosting individuals’ incentives to work and driving the innovations that grow our economy.

“Virtually all of the United States’ peer countries rely on value-added taxes to finance their social programs because they’re good at raising revenue in a relatively pro-work and pro-growth way,” Duffy added. “Transforming the U.S. tax code to tax consumption instead of payrolls would therefore be a progressive and fiscally responsible way to reward work and improve the lives of working families.”  

Read and download the report here.

The Progressive Policy Institute (PPI) is a catalyst for policy innovation and political reform based in Washington, D.C. Its mission is to create radically pragmatic ideas for moving America beyond ideological and partisan deadlock. Learn more about PPI by visiting progressivepolicy.org. Find an expert at PPI and follow us on Twitter.

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Media Contact: Ian O’Keefe – iokeefe@ppionline.org

Ritz in MSNBC: Trump’s own followers literally laughed at his crypto debt idea

Posted on by Max Sherrill

But the GOP presidential nominee wasn’t kidding about his magical solution for the national debt, which Republicans only seem to care about during Democratic presidencies. In fact, Trump made the same suggestion in a Fox News interview last month, saying that “a little crypto check” could “wipe out” the $35 trillion. If it were that easy, one wonders why he didn’t do it during his first term.

Now, the suggestion — as dumb as it sounds — seems like a way to reward the crypto bros who’ve backed Trump’s campaign. To better understand how disastrous this idea could ultimately be in practice, I recommend reading this Forbes article by analyst Ben Ritz, and this Medium article by crypto entrepreneur Tavonia Evans.

In the meantime, it appears we can add cryptocurrency to wind power, basic economics, climate change and reproductive health to the long list of topics about which Trump is utterly clueless.

Read more in MSNBC.

Ritz for The Concord Coalition’s Facing the Future Podcast: A Radically Pragmatic Plan to Pay for Progress

Posted on by Max Sherrill

 

Ben Ritz, Vice President of Policy Development at the Progressive Policy Institute (PPI), joins Facing the Future. Ben co-authored a PPI plan released in July called “Paying for Progress: A Pragmatic Blueprint to Cut Costs, Boost Growth & Expand American Opportunity.” The plan would balance the budget over 20 years using a mix of spending cuts, revenue increases, and economic growth. It was part of the Peter G. Peterson Foundation’s Solutions Initiative 2024: Charting a Brighter Future, a series of proposals from seven think tanks to set the debt on a sustainable trajectory. Concord Coalition Chief Economist Steve Robinson joined the conversation.

Ritz described the plan as a “vision for long term fiscal policy. It wasn’t just a deficit reduction exercise to us. We wanted to outline what our ideal fiscal policy looks like. We wanted it to be aspirational, but also economically pragmatic.”

According to Ritz, the 20-year balanced budget goal was chosen for two reasons. “The first is that we know there are going to be a lot of unforeseen challenges. Those challenges are going to have costs associated with them. There are going to be emergencies in the future for which we need to borrow, and so we don’t see balancing the budget as a necessary end, but we believe that putting the budget on a long term path to balance will create fiscal space for that future borrowing to not be problematic. The second reason is that this was an aspirational plan. It’s not politically realistic that our plan is going to be enacted in its entirety anytime soon and so, we wanted to overshoot that goal so that even adopting half of our recommended savings would be enough to stabilize the debt.”

Ritz described the policy choices in the plan as designed to favor investment over consumption and to fully fund the level of investment. “We prioritize public investments that will grow the economy,” he explained, and noted that any necessary tax increases should be done “in the least harmful way.”

“We know that anytime you tax something, you get less of it,” he said. “So we started by raising taxes on things that we actually want less of, like carbon pollution. Raising taxes on emissions would make us have a cleaner economy, be good for growth in the long run, and help reduce the deficit.  Beyond that, we prioritize taxing consumption over taxing work and also trying to tax what we call unearned income that you get without having to do any hard work or productive investment to generate it.”

Ritz described a number of proposed changes to both Social Security and Medicare that are designed to lower costs while preserving, or enhancing the programs’ core functions. One innovative change would be in the Social Security benefit calculation.

As Ritz explained, “Right now, Social Security benefits are based on an average of your lifetime earnings and they replace a proportion of those earnings. That proportion declines as your income goes up, and so a higher income person is getting a bigger benefit than somebody who has had a lifetime lower income. A lower percentage of their income is getting replaced, but it’s still the case that we’re giving higher benefits to higher income people. So we propose to change the benefit calculation to be based, not on your lifetime earnings, but how many years you work. Hard work will get rewarded with the same Social Security,  regardless of income. That keeps Social Security as an earned benefit, but it makes it more progressive, and it helps us reduce old age poverty, while at the same time making it more affordable for the next generation.”

“If we’re going to give one message to policymakers, it is that we raise the revenue for the government spending that we support,” he said, relating that message to the upcoming debate in 2025 over how to handle expiring provisions of the 2017 Tax Cut and Jobs Act (TCJA).

“The original TCJA was not paid for,” Ritz observed. “It added to the deficit, which was already too big. We had a tax code that was not enough to pay for the promises our government was making, and then we raised even less revenue. And so our message to Congress with this plan is, not only do we think you need to not add to the deficit with any TCJA extension, we actually think you should be doing deficit reduction so that we can afford to pay for these investments.”

The Oregon Rebate: A Well-Intentioned Policy with Flawed Outcomes

Posted on by Max Sherrill

Getting public policy right is never easy. There are almost always unintended consequences and miscalculations that can lead to negative outcomes. However, when it becomes clear that a policy will not work as promised, policymakers have a responsibility to reconsider and withdraw the proposal.

This is the case with Oregon Measure 118, also known as the Oregon Rebate. The ballot measure proposes a 3% tax on a business’s gross sales above $25 million, and would apply to both S corporations and C Corporations. The revenue generated from this tax will be distributed equally among Oregonians of all ages and income levels, providing, according to the measure’s proponents, a $1,600 rebate for each person in the state.

Unfortunately, despite its good intentions, this measure will hurt, not help Oregon families.

It would create a budget shortfall. Several nonpartisan studies indicate that a 3% tax on corporate sales is unlikely to raise enough revenue to sustain a statewide $1,600 per person rebate. To maintain the rebate, the state legislature would have to cut expenses elsewhere, potentially affecting critical services like road maintenance, firefighting, and addiction recovery. Some estimates suggest that if the rebate were to become law, the state could end up with about $400 million less to spend on basic government services in the 2025-27 budget cycle.

The most vulnerable in Oregon would be left worse off. Although the Oregon Rebate was designed to create a basic level of income for all state residents, in reality, the budget shortfall will likely encourage cuts to vital safety net programs.

It would lead to higher prices for goods and services. The sales revenue tax established to fund the rebate would likely lead to higher prices, including for basic goods like food and transportation. The Legislative Revenue Office estimated that the gross receipts tax established in the measure is expected to increase prices by 1.3%. With average annual personal consumption expenditures estimated at $52,200 by the Bureau of Economic Analysis, a 1.3% increase in prices would add $679 in expenses per household. This would effectively diminish the value of the $1600 rebate, making it far less beneficial than it initially appears.

It would create unnecessary job losses. While historically low at 4.1%, the unemployment rate in Oregon has risen since last year, and many predict job creation will slow nationally. Unfortunately, Measure 118 could exacerbate this trend because a tax on gross corporate sales would harm businesses that have low profit margins.  Unlike a traditional corporate income tax which is levied on net income or profits, the Oregon Rebate proposes a tax on gross sales, applying the same tax rate regardless of a company’s profitability. This would place a disproportionate burden on businesses with high revenues but low profit margins. In response, companies with marginal profits might choose to move out of Oregon or distort their business decisions by reducing sales to minimize tax exposure, which would negatively impact corporate growth and innovation.

Given the problems with the design of the Oregon Rebate, it is not surprising that the proposal is opposed by leaders from both political parties, including Oregon House Speaker Julie Fahey, Senate President Rob Wagner, House Majority Leader Ben Bowman, Senate Majority Leader Kathleen Taylor, Oregon Governor Tina Kotek, and Senate Republican Leader Daniel Bonham. Ensuring corporations pay their fair share is an important goal and one that should be pursued. But that is not what would be achieved should Measure 118 become law.

Ritz for Forbes: No, Welfare Isn’t ‘What’s Eating The Budget’ – This Is

Posted on by Max Sherrill

By Ben Ritz

A column in the Wall Street Journal last week by House Budget Committee Chairman Jodey Arrington (R-Texas) and former Senator Phil Gramm (R-Texas), titled “Welfare is What’s Eating the Budget,” argued that “means-tested programs, not Medicare and Social Security, are behind today’s massive debt.” And it’s profoundly wrong.

To make their argument, Arrington and Gramm rely upon a measure called “unobligated general revenue,” which they define as “total revenue net of Medicare and Social Security payroll taxes and premiums and mandatory interest on the public debt.” They argue that means-tested “welfare” programs – those that provide benefits only to people below a certain income threshold – claim a higher share of this revenue than Medicare and Social Security, making them the bigger fiscal challenge facing the federal government. Even if this metric were the appropriate one for comparison (and I’ll explain why it isn’t), it wouldn’t support the assertion that welfare is a bigger contributor to today’s budget deficits than Medicare and Social Security.

The chart below shows the change in total spending on means-tested programs and general revenue used to cover the gap between dedicated revenue and spending on Medicare and Social Security benefits each year since 2001 – the last year in which the federal budget was balanced. In almost every year, the increase in annual welfare spending relative to 2001 levels was less than or equal to 1% of gross domestic product (GDP). The only exceptions were the years following the 2008 financial crisis and COVID-19 pandemic, both of which were times in which unemployment sharply increased and so more people fell into the social safety net. By comparison, the same measurement for general revenue used to pay for Medicare and Social Security was roughly twice that amount in every one of the last 15 years.

Keep reading in Forbes.

Ritz for Forbes: There’s A Better Way To Cut Taxes For Workers Than Exempting Tips

Posted on by Max Sherrill

By Ben Ritz

When Donald Trump and Sen. Ted Cruz (R-Texas) first proposed to exempt tips from federal income taxes last month, it sounded to many like a common-sense way to give tax relief to working Americans who feel left behind by Washington policymakers. But the proposal was deeply flawed: low-income service workers already have little-to-no federal income tax liability. The main beneficiaries would be savvy professionals who reclassify the bulk of their income from wages to tips, for which the legislation introduced by Cruz had no guardrails to protect against. Tax experts from across the political spectrum rightly panned the idea.

Unfortunately, Kamala Harris gave bipartisan cover to this dubious new loophole by endorsing a modified version of it last weekend. Harris marginally improved upon the GOP proposal by calling to limit tax-exempt tips to workers in the service and hospitality industry, and only for those whose total annual incomes are below a number to be specified later. But let’s say she were to use the same income threshold of $125,000 that the Biden administration used for other “means-tested” policies over the past four years. Is it really fair for a server at a high-end restaurant making $125,000 to pay a lower tax rate than a retail worker or public-school teacher making half as much? No.

If Harris or Trump want to give real tax relief to working families across the country, the right way to do so would be by repealing the 15.3% federal payroll tax that workers and their employers pay on labor income up to $168,600. The average waiter would see their annual take-home pay increase by up to $5,000 if the payroll tax were repealed, which is more than twice the tax cut they would get if tips were exempted from federal income taxes. And unlike the misguided tip tax exemption, this policy would also benefit working Americans who earn most of their incomes through wages instead of tips.

Although repealing the payroll tax in isolation from other tax and spending reforms would be prohibitively expensive for the federal government, my team at the Progressive Policy Institute published a comprehensive blueprint last month that shows it can be done while simultaneously putting the federal budget on a path back to balance within 20 years.

Keep reading in Forbes.

Ritz for Forbes: No, Bitcoin Won’t Solve Our National Debt

Posted on by Max Sherrill

By Ben Ritz

At a Bitcoin conference last weekend, Senator Cynthia Lummis (R-Wyo.) announced forthcoming legislation that would direct the Treasury to buy 1 million Bitcoin, or roughly 5% of the global stock, over five years (which would cost between $60 billion and $70 billion at today’s prices). Lummis claimed that the federal government would be “debt-free because of Bitcoin” if her proposal is enacted, because these Bitcoin could be sold by the federal government at a profit after 20 years. Unfortunately, there are both mathematical and conceptual problems that prevent such an approach from solving the federal government’s budget problems.

Let’s start with the math: The U.S. national debt today stands at nearly $28 trillion (or $35 trillion, if one includes “intragovernmental debt” the general fund owes to other internal government accounting entities such as the Social Security and Medicare trust funds). This year alone, the federal government spent roughly $2 trillion more than it raised in revenue, which had to be covered by borrowing that gets added to our national debt.

Keep reading in Forbes.

Ritz for Forbes: A New Economic Blueprint For The New Democratic Nominee

Posted on by Alyssa Brown

By Ben Ritz

President Joe Biden’s historic decision to withdraw from the 2024 presidential election has left Democrats beginning to debate what the future of the party should look like. While coming to voters with a new candidate at the top of the ticket, Democrats should also come to them with new ideas.

Vice President Kamala Harris — now the party’s presumptive nominee — should take the opportunity to not only embrace the president’s many accomplishments but also craft a governing agenda that improves on some areas where he could have done better. A new report published Tuesday by my colleagues at the Progressive Policy Institute (PPI) and I, titled Paying for Progress: A Pragmatic Blueprint to Cut Costs, Boost Growth, and Expand American Opportunity, offers one possible framework for that agenda.

Keep reading in Forbes.

New PPI Report Offers Democrats a ‘Radically Pragmatic’ Post-Biden Economic Blueprint

Posted on by Alyssa Brown

Washington, D.C. — As the Democratic Party begins to chart its path forward following President Joe Biden’s historic decision to end his re-election campaign, a new report from the Progressive Policy Institute (PPI) argues Democrats must adopt new ideas in addition to a new candidate at the top of the ticket.

The report, titled “Paying for Progress: A Pragmatic Blueprint to Cut Costs, Boost Growth, and Expand American Opportunity,” was compiled by PPI’s Center for Funding America’s Future with contributions from more than a dozen PPI experts covering a wide variety of policy areas. The report argues that, although President Biden successfully led the country in revitalizing major public investments and bringing unemployment to historic lows, failure to tackle the federal government’s $2 trillion annual budget deficit and the inflationary pressures it creates puts those successes in jeopardy.

“Voters are unlikely to support expanding the role of any government that they believe can’t even pay for the promises it’s already making,” said Ben Ritz, PPI’s Vice President of Policy Development and lead author of the report. “Demonstrating to the American people that we have an ambitious vision to cut costs, boost growth, and expand American opportunity — along with an economically pragmatic plan to pay for it — would help progressives restore confidence in the government’s ability to tackle big problems and build a more prosperous society for all.”

PPI’s report proposes a comprehensive blueprint for achieving many of the uncompleted goals from the Biden administration’s Build Back Better agenda while simultaneously putting the federal budget on a path to balance within 20 years. The report also offers the next administration a series of ideas to address major upcoming fiscal deadlines, including the reinstatement of the federal debt limit, the expiration of the Tax Cuts and Jobs Act, and the impending exhaustion of the Social Security and Medicare trust funds.

The roughly six dozen federal policy recommendations in the report are organized into 12 overarching priorities:

I. Replace Taxes on Work with Taxes on Consumption and Unearned Income
II. Make the Individual Income Tax Code Simpler and More Progressive
III. Reform the Business Tax Code to Promote Growth and International Competitiveness
IV. Secure America’s Global Leadership
V. Strengthen Social Security’s Intergenerational Compact
VI. Modernize Medicare
VII. Cut Health-Care Costs and Improve Outcomes
VIII. Support Working Families and Economic Opportunity
IX. Make Housing Affordable for All
X. Rationalize Safety-Net Programs
XI. Improve Public Administration
XII. Manage Public Debt Responsibly

An abridged version of PPI’s blueprint was featured this morning by the Peter G. Peterson Foundation’s 2024 Solutions Initiative alongside comprehensive budget plans by six other think tanks from across the political spectrum. Of all the proposals, PPI’s would achieve the most deficit reduction while maintaining the highest level of discretionary spending, demonstrating that fiscal responsibility and robust public investment can be complementary rather than contradictory policy objectives.

Read and download the full report here.

See how PPI’s plan compares to those of six other think tanks here.

Launched in 2018, the Progressive Policy Institute’s Center for Funding America’s Future works to promote a fiscally responsible public investment agenda that fosters robust and inclusive economic growth. To that end, the Center develops fiscally responsible policy proposals to strengthen public investments in the foundation of our economy, modernize health and retirement programs to reflect an aging society, transform our tax code to reward work over wealth, and put the national debt on a downward trajectory.

The Progressive Policy Institute (PPI) is a catalyst for policy innovation and political reform based in Washington, D.C. Its mission is to create radically pragmatic ideas for moving America beyond ideological and partisan deadlock. Learn more about PPI by visiting progressivepolicy.org. Find an expert at PPI and follow us on Twitter.

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Media Contact: Ian O’Keefe — iokeefe@ppionline.org

Paying for Progress: A Blueprint to Cut Costs, Boost Growth, and Expand American Opportunity

Posted on by The Progressive Policy Institute

The next administration must confront the consequences that the American people are finally facing from more than two decades of fiscal mismanagement in Washington. Annual deficits in excess of $2 trillion during a time when the unemployment rate hovers near a historically low 4% have put upward pressure on prices and strained family budgets. Annual interest payments on the national debt, now the highest they’ve ever been in history, are crowding out public investments into our collective future, which have fallen near historic lows. Working families face a future with lower incomes and diminished opportunities if we continue on our current path.

The Progressive Policy Institute (PPI) believes that the best way to promote opportunity for all Americans and tackle the nation’s many problems is to reorient our public budgets away from subsidizing short-term consumption and towards investments that lay the foundation for long-term economic abundance. Rather than eviscerating government in the name of fiscal probity, as many on the right seek to do, our “Paying for Progress” Blueprint offers a visionary framework for a fairer and more prosperous society.

Our blueprint would raise enough revenue to fund our government through a tax code that is simpler, more progressive, and more pro-growth than current policy. We offer innovative ideas to modernize our nation’s health-care and retirement programs so they better reflect the needs of our aging population. We would invest in the engines of American innovation and expand access to affordable housing, education, and child care to cut the cost of living for working families. And we propose changes to rationalize federal programs and institutions so that our government spends smarter rather than merely spending more.

Many of these transformative policies are politically popular — the kind of bold, aspirational ideas a presidential candidate could build a campaign around — while others are more controversial because they would require some sacrifice from politically influential constituencies. But the reality is that both kinds of policies must be on the table, because public programs can only work if the vast majority of Americans that benefit from them are willing to contribute to them. Unlike many on the left, we recognize that progressive policies must be fiscally sound and grounded in economic pragmatism to make government work for working Americans now and in the future.

If fully enacted during the first year of the next president’s administration, the recommendations in this report would put the federal budget on a path to balance within 20 years. But we do not see actually balancing the budget as a necessary end. Rather, PPI seeks to put the budget on a healthy trajectory so that future policymakers have the fiscal freedom to address emergencies and other unforeseen needs. Moreover, because PPI’s blueprint meets such an ambitious fiscal target, we ensure that adopting even half of our recommended savings would be enough to stabilize the debt as a percent of GDP. Thus, our proposals to cut costs, boost growth, and expand American opportunity will remain a strong menu of options for policymakers to draw upon for years to come, even if they are unlikely to be enacted in their entirety any time soon.

The roughly six dozen federal policy recommendations in this report are organized into 12 overarching priorities:

I. Replace Taxes on Work with Taxes on Consumption and Unearned Income
II. Make the Individual Income Tax Code Simpler and More Progressive
III. Reform the Business Tax Code to Promote Growth and International Competitiveness
IV. Secure America’s Global Leadership
V. Strengthen Social Security’s Intergenerational Compact
VI. Modernize Medicare
VII. Cut Health-Care Costs and Improve Outcomes
VIII. Support Working Families and Economic Opportunity
IX. Make Housing Affordable for All
X. Rationalize Safety-Net Programs
XI. Improve Public Administration
XII. Manage Public Debt Responsibly

Read the full Blueprint. 

Read the Summary of Recommendations.

Read the PPI press release.

See how PPI’s Blueprint compares to six alternatives. 

Media Mentions:

Ritz for Forbes: The RNC Platform Would Make Inflation Worse

Posted on by Max Sherrill

By Ben Ritz

The theme of the Republican National Convention’s opening night in Milwaukee was “Make America Wealthy Again.” Speakers one after the other blamed the Biden administration and Democratic policies for the high inflation rates that plagued the country for much of the last three years. But at the same time, delegates approved a new party platform crafted by former President Donald Trump that would actually make inflation worse.

One of the first planks of the GOP’s new platform is “End Inflation and Make America Affordable Again.” Although Republicans want to place the blame for rising prices on President Biden, much of the inflation experienced over the past three years was due to factors entirely outside the president’s control, such as supply-chain bottlenecks and the residual effects of the COVID-19 pandemic.

The primary mechanism by which the president can worsen inflation is by adding to the federal budget deficit: if the federal government pumps more money into the economy through spending than it removes in taxes, those extra dollars help bid up the prices of goods and services. And on this measure, Republicans could make a decent argument: policies enacted during the Biden administration added more than $4 trillion to deficits over the 10-year window conventionally used for fiscal estimates by the Congressional Budget Office.

Keep reading in Forbes.

Building Financial Futures: Empowering Underserved Communities Through Savings and Retirement Planning

Thursday, June 27
12:00 to 1:30 p.m.Rayburn House Office Building

Room 2060
45 Independence Ave SW, Washington, DC 20515

 

Please join the Progressive Policy Institute (PPI) and the Alliance for Prosperity & a Secure Retirement (APSR) for a lunch briefing about empowering underserved communities through savings and retirement planning on Thursday, June 27, from 12:00 to 1:30 p.m. in Rayburn 2060. The event will feature opening remarks from Rep. Joyce Beatty (D-OH), co-chair of the House Financial Literacy and Wealth Creation caucus, followed by a panel of experts:

Featured speakers include:

  • Ben Ritz, Vice President of Policy Development at the Progressive Policy Institute
  • Lettie Nocera, Director of the American Savings Education Council for Bipartisan Policy Center’s Economic Policy Program
  • Yanira Cruz, President & CEO of the National Hispanic Council on Aging
  • Tim Hill, President of the Alliance for Prosperity & a Secure Retirement
Additional speakers to be announced. 

This expert panel will discuss the challenges that prevent underserved communities from building wealth, new financial tools that have been successful in empowering individuals to make informed financial decisions, and policy recommendations to promote retirement security in the United States. Lunch will be served.

We look forward to seeing you there!

 

RSVP here.

GOP’s Budget-Busting Defense and Tax Proposals Are Incompatible

Posted on by Alyssa Brown

Last week, Senator Roger Wicker, the GOP ranking member on the Senate Armed Services Committee, called for increasing U.S. defense spending from roughly 3% to 5% of gross domestic product (GDP) over the next five to seven years to prepare for increased geopolitical tensions with Russia, China, and Iran. That would require at least $5 trillion in new federal spending over the next decade, for which Senator Wicker offers no offsets.

Meanwhile, Senate Republicans also want to spend an additional $4 trillion over the next decade to extend the Trump 2017 tax cuts, most of which are currently set to expire in 2026. Even if there were national security merits to Senator Wicker’s proposal, Republicans have offered the country no explanation for how they intend to finance $9 trillion in spending, which would reverse the $1.5 trillion of savings they secured in last year’s Fiscal Responsibility Act several times over. By comparison, the most recent Biden budget proposed $4.1 trillion in new spending over the next decade, and much of that was offset by proposed tax increases.

Wicker’s plans for a dramatic ramp-up of defense spending were swiftly endorsed by Mitch McConnell and several other prominent Republicans. However, the proposal does not spell out a clear strategic rationale for such a high defense target. In an op-ed defending the proposal, Wicker cites the unfunded priorities lists annually requested by the Pentagon as one justification for this increase. However, the spending increase that would be required to fully fund all these priorities is less than one-tenth of what Wicker is calling for. Moreover, there is clearly some room for the Pentagon to pay for these priorities by spending smarter rather than spending more. The Inspector General’s Office, the Government Accountability Office, and the Defense Business Board have all suggested that smarter procurement and personnel decisions could save money with few negative consequences for military readiness.

But if our country faces threats dire enough to justify this new spending, you’d expect a party that has repeatedly threatened to crash the economy in the name of “fiscal discipline” to come up with ways to pay for it. Yet Republicans have instead chosen to do the opposite, calling for even more tax cuts for affluent Americans by making their 2017 tax bill, the Tax Cuts and Jobs Act (TCJA), permanent. Although TCJA made some positive changes to simplify the individual tax code that are worth extending, it also lavished almost two-thirds of the overall benefits on the top fifth of income earners. And contrary to GOP claims that the law would pay for itself, even sympathetic estimates say only about 14% of the total cost is estimated to be recouped through faster economic growth.

America cannot afford the GOP’s reckless spending proposals. The federal government spent $2 trillion more than it raised in revenue last year — a deficit that cannot be justified at a time of strong economic growth and record-low unemployment rates. Interest costs as a percent of GDP are now higher than at any other point in American history, and they are projected to more than double over the next 30 years even if current law remains unchanged. If this growth continues unchecked, interest costs will begin to crowd out other important priorities, including national defense. This scenario is hardly hypothetical, as interest payments on the debt eclipsed defense spending for the first time last year. If the GOP truly wanted to ensure military readiness, they would ensure that defense spending is sustainable rather than pitch unrealistic spending surges.

Ultimately, these GOP proposals highlight how unserious their party is on improving the nation’s fiscal outlook. Despite their routine demonization of fiscal proposals from the other side of the aisle, they fail to recognize the complete incompatibility and hypocrisy of their own $9 trillion priorities. Republicans want to spend now and pay later — by sticking young Americans with the bill. Policymakers in Congress and the Administration should be having a serious dialogue about what is necessary to correct the nation’s fiscal trajectory, not making it worse.

Ryan for Newsweek: To Avoid Danger, U.S. Must Lead on Crypto and Blockchain

Posted on by Max Sherrill

By Tim Ryan

“Those who came before us made certain that this country rode the first waves of the industrial revolution, the first waves of modern invention, and the first wave of nuclear power, and this generation does not intend to founder in the backwash of the coming age of space. We mean to be a part of it—we mean to lead it.”

That was President Kennedy more than a half-century ago. Even then, he understood better than most that America’s place in the world was bound up with our determination to be at the cutting edge of progress. We were a beacon of hope because the world knew that we would use our technological prowess to expand the rule of law and the basic human rights of all people. America’s promise was to ensure that breakthroughs would be used for the good of humanity.

Today, that same spirit still animates certain elements of progressive thinking. My fellow Democrats aren’t trying to smother the emerging industry being born from artificial intelligence—they’re trying to establish wise and fair rules that ensure both that its deployed safely and that it benefits everyone, and not just the very well off. They’re refusing to cede the advanced semiconductor industry to businesses overseas—helping instead to induce the industry to construct “fabs” domestically in places like my home state of Ohio. On a whole range of issues, Democrats are determined to keep America at the cutting edge.

But when it comes to blockchain, namely the new technology promising to power a new, secure, decentralized, and transparent set of applications across a whole range of industries, many Democrats seem to have lost sight of Kennedy’s admonition. Having convinced themselves that various misuses of blockchain obviate its underlying value, Sen. Elizabeth Warren and her allies seem more interested in smothering innovation than harnessing its potential for the public benefit. While their concerns are understandable, their approach is fundamentally misguided.

Keep reading in Newsweek.