Federal Budget & Tax
IN FOCUS: Competing Visions for the Federal Budget - Murray vs. Ryan
Over the past two weeks, the House and the Senate have pursued two radically different visions for the federal budget. The Senate budget, proposed by Budget Committee Chairwoman Patty Murray and adopted by the Senate on March 23, represents a balanced approach that includes new revenues, while the second plan—proposed by House Budget Committee Chairman Paul Ryan and passed by the House on March 21—represents an irresponsible approach that gives tax cuts to the wealthiest Americans while enacting deep cuts to those public investments that help children, seniors, and the most vulnerable.
As the House and Senate attempt to reconcile these two different approaches in negotiations over a final plan, it is critical that the final budget take Murray’s approach and not Ryan’s. Here are some of the key differences:
The Murray Plan takes a balanced approach to addressing our nation’s budget deficit by including new revenues, targeted spending cuts, and additional investments in jobs creation and economic growth. The plan reduces the federal deficit by $1.85 trillion over the next decade, building on $2.5 trillion in previous deficit reduction since 2011 to put the federal debt on a sustainable path as a share of the nation’s economy. Most importantly, the Senate-passed plan includes $975 billion in new revenues raised through future tax reform efforts that close corporate loopholes and cap personal deductions for the wealthy, paired with $975 billion in targeted spending cuts that protect critical investments in our economy and spare children, seniors, and the needy additional hardship. It also includes efforts to protect the nation’s economy with $100 billion in new infrastructure spending and a slower pace of deficit reduction.
On the other hand, the Ryan Budget takes an unbalanced approach that does not include new revenues and which experts predict would result in the largest increase in inequality in our nation’s history. It irresponsibly attempts to balance the federal budget in ten years entirely through $4.6 trillion in irresponsible spending cuts to programs like Medicaid, Medicare, Pell Grants, and SNAP, while simultaneously including $4.6 trillion in reductions in tax rates for corporations and the wealthy. Additionally, it abolishes the Affordable Care Act, converts Medicaid into a block-grant run by the states, and ends the Medicare guarantee by converting the current program into a premium support program. Experts have estimated that these changes would result in between 40-50 million people—mostly low-income families and seniors—losing their health insurance.
Now the House and the Senate must negotiate a final agreement over the federal budget. During this process, the Budget and Tax Center is working to ensure that the final budget takes the Senate-passed Murray approach and includes new revenues.
State level decisions are often impacted by what is going on at the federal level. Particularly important in the current federal debate with significant implications for North Carolina are discussions of deficit reduction and tax policy, most specifically the Bush Tax Breaks.
Federal Tax Policy – The country, like the state, is in need of revenue reform that can improve the alignment of the tax system with ability to pay and ensure that investments can be made to support the economic recovery and a strong economy moving forward. Key to progressive federal revenue reform will be eliminating the Bush-era tax cuts for those earning more than $250,000. The Budget and Tax Center analyzes the federal tax system, its progressivity and adequacy, and how it impacts North Carolinians.
Deficit Reduction – Deficit reduction has been a significant part of the public debate in recent years. The Budget and Tax Center analyzes deficit reduction proposals with an eye to their impact on North Carolina and communicates with and informs partners and North Carolinians about the importance of these federal discussions to their everyday lives.