The ‘Better Off Budget’

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http://www.epi.org/publication/budget-analysis-congressional-progressive/

Executive summary
The Congressional Progressive Caucus (CPC) has unveiled its fiscal year 2015 (FY2015) budget, titled the “Better Off Budget.” It builds on recent CPC budget alternatives in prioritizing near-term job creation, financing public investments, strengthening the middle and working classes, raising adequate revenue to meet budgetary needs while restoring fairness to the tax code, protecting social insurance programs, and ensuring fiscal sustainability.

The Better Off Budget aims to improve the economic well-being of the working and middle classes by focusing on ending the ongoing jobs crisis, and it provides substantial upfront economic stimulus for that purpose. This paper details the budget baseline assumptions, policy changes, and budgetary modeling used in developing and scoring the Better Off Budget, and it analyzes the budget’s cumulative fiscal and economic impacts, notably its near-term impacts on economic recovery and employment.1

Refer to the PDF of this paper for Figures A–C, visualizing the Better Off Budget ’s impacts on deficits, debt, and nondefense discretionary funding; Tables 1 and 2 detailing the policy changes within the budget; and summary tables 1 through 4 depicting budget totals as well as comparisons with the current law baseline.
We find that the Better Off Budget would have significant, positive impacts. Specifically, it would:

Accelerate the economic recovery. The Better Off Budget would sharply accelerate economic and employment growth; it would boost gross domestic product (GDP) by 3.8 percent and employment by 4.6 million jobs at its peak level of effectiveness (within one year of implementation), while ensuring that fiscal support lasts long enough to avoid future fiscal cliffs that could throw recovery into reverse.2

Promote job growth and achieve full employment. The budget’s near-term economic stimulus measures would rapidly restore the unemployment rate near to prerecession levels of 5 percent. The unemployment rate would be expected to range between 4.9 and 5.3 percent when these provisions are fully implemented, in line with what the Congressional Budget Office (CBO) regards as full employment (CBO 2014c).

Close the economic “output gap.” U.S. economic output is currently $790 billion (4.6 percent) below potential (CBO 2014a), and the economy is projected to remain at least 3.3 percent below potential throughout 2014 under current law. The Better Off Budget would effectively use fiscal stimulus to restore actual GDP to potential GDP—a necessary condition for achieving full employment in the economy.

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