What Would a Millennial-Generation Budget Look Like?
The average age of Congress is 57.4 years-old. With all the talk (from both sides of the aisle) about how our ballooning debt is stealing from today’s young people, shouldn’t they have a voice in deciding how to solve our long-term fiscal problems, considering they’ll be the ones paying for them? And yet, now that Rep. Aaron Schock (R-IL) has turned 30, not a single member of Congress is in his/her twenties.
What would a budget designed by the Millennial Generation look like? We now know thanks to a group of 18- to-26-year-olds who have released a budget proposal reflecting their priorities. It’s even been scored by the CBO. Organized by the Roosevelt Institute’s Campus Network, the group, along with a handful of think tanks, was given a $200,000 grant by the Peter G. Peterson Foundation to craft a budget proposal.
Here’s an overview of the so-called “Budget for Millennial America.” And here’s a full version. Among its highlights:
- Automated stimulus plan where the release of funds is tied to economic conditions.
- Create a state budget bank where states are able to borrow from the Federal government when national economic triggers deem it necessary.
- End some $15 billion of agriculture subsidies
- Tax carbon at $23 per ton, repeal the federal gas tax
- Increase funding for intercity highspeed rail
- Reduce combat troops in Afghanistan, Iraq, to 45K by 2015
- Implement a new income tax code based on percent of total income
Stimulus funds would be triggered after an observed 1% increase in the national unemployment rate. Once triggered, the total funding would be automatically authorized for $7.5 billion per point of national unemployment. These funds would be allocated to states based on population.
We have modeled out federal outlays and expected repayment schedule based on the amount of relief already provided in ARRA, the aggregate state deficit projections over the next 4 years, and historical state fiscal behavior in previous recessions. We estimate that demand for lending would be $198 billion over the next two fiscal years and have allocated that sum, less $6 billion in funding remaining in the pipeline from ARRA. Given that this bank will largely take the place of statewide “rainy day funds,” we expect that outlays can be repaid in full by FY 2019.
We propose phasing out the vast majority of existing agricultural subsidies. Half of the annual savings will be applied to deficit reduction while the other half will be used to promote sustainable, local agriculture and fund programs that address urgent problems such as food deserts and lack of access to fresh fruits and vegetables.
We propose the introduction of an upstream carbon tax of $23 per ton of carbon dioxide equivalent beginning in 2012. This price will increase by 5.6% each year, which is consistent with the EPA’s conservative estimates of the social cost of carbon. The CBO has projected that it will reduce emissions by 36% of projected levels by 2026, setting us on a path to responsible levels of emissions over the long term. We take the view that a tax is more efficient than a cap-and-trade system, as it confers more certainty about the future price of carbon. This certainty makes our free market system friendlier to innovators and encourages entrepreneurialism through guaranteeing the future costs and revenues from shifting to low-carbon production. Furthermore, we propose the full repeal of the federal gas tax. The double taxation that a gas and carbon tax would en-tail is unnecessary; in fact, a carbon tax is simply a broader version of a gasoline tax.
We propose supplementing existing funding for the HighSpeed Intercity Passenger Rail program with an extra $3 billion per year, indexed to inflation, through 2025. This long-term commitment will guarantee federal support for apprehensive local partners and ensure the program’s success.
Millennials overwhelmingly disapproved of the invasion of Iraq and the current large-scale occupation of Afghanistan, viewing these wars as misguided, costly endeavors that distract US resources from waging an effective war against global terrorism. Roosevelt recommends scaling down and ending the US occupations of Iraq and Afghanistan to free up our forces for potential deployment in other, future conflicts. Under this scenario, the number of military personnel deployed for war-related purposes would decline over a five-year period to an average of 180,000 in 2011, 130,000 in 2012,100,000 in 2013, 65,000 in 2014, and 45,000 in 2015 and there-after. The US would save over $1.1 trillion from 2012-2021.
We propose a new income tax code that bases bracket assignment upon share of overall American income, rather than the haphazard reforms which currently characterize the process. Brackets will be based on the percentile of total income earned in the United States.
A new bracket system amounts to a tax cut for the vast majority of working families. We combine the bottom two brackets under the current system into a single bracket with a 9.45% income tax rate instead of the existing 10 and 15% rates for the current two brackets. Our second bracket, at a rate of 15.75%, compares favorably to the 25% individuals are paying in this bracket even under the Bush-era tax cuts. Every other rate is lower than those under President Clinton, and our elimination of a wide range of income and corporate tax loopholes ensures that the system is both straightforward and friendly to foreign investors.Moreover, our system eliminates many of the problems Congress currently resolves on an annual basis. We permanently eliminate the “marriage penalty” under the Alternative Minimum Tax. Furthermore, our new income share system automatically incorporates revisions to the AMT so that it affects only the truly wealthy.