What can you buy with the $3.5 trillion?
Jan. 16, 2012 — When discussing the then-impending “fiscal cliff,” most politicians in Washington described calamitous consequences were an agreement on taxes and sequestration of appropriations not to be reached.
What else would have happened? Based on the Congressional Budget Office’s comparison of what the aggregate 10-year federal debt would be in light of the agreement and what it would have been if all Bush tax cuts had been allowed to expire (that is, if rates had returned to Clinton-era levels), going over the cliff would have meant an additional $3.97 trillion in federal coffers over 10 years.
If rates returned to Clinton-era levels but a fix were put in place to prevent the alternative minimum tax from hitting middle income taxpayers, then there still would have been an additional $2.98 trillion more in the federal treasury than under the deal reached between President Obama and Senate Minority Leader Mitch McConnell.
If the law were changed to tax capital gains and dividend income at the same rate as ordinary (earned) income, then an additional $533 billion would have been netted to the federal government over a 10-year period, according to Citizens for Tax Justice.
The accompanying data visualization places these sums in context with a variety of spending needs that have widely been described as “unrealistic.”
For example, the American Society of Civil Engineers estimated that the cost of repairing the nation’s infrastructure stands at $2.2 trillion over five years, with about $1.1 trillion still unfunded.
According to Physicians for a National Health Program, extending Medicare coverage to the uninsured — combined with other expenses associated with achieving universal health coverage — would cost $326 billion.
The National Resources Defense Council’s plan to require all fossil fuel power plants to reduce CO2 emissions by 26 percent from 2005 levels by 2020 would cost approximately $32 billion over seven years.
Finally, the American Challenge Grants program, a private-public funding model for public universities proposed by a team of faculty at University of California, Berkeley, would cost $10 billion over 10 years.
It turns out that all of the expenditures would still leave a $2.04 trillion “reserve” from the revenues identified.
A positive spin from progressive groups
In the face of the passage of the Obama-McConnell agreement, many union and progressive groups issued statements praising, at least in some measure, the deal that had been reached (the AFL-CIO’s statement is here; Service Employees International Union (SEIU’s) is here; and the Progressive States Network’s (PSN’s) is here).
Remapping Debate spoke with representatives of the three organizations whose statements are linked above, asking each about the fact that approximately $3 trillion of revenue over 10 years was lost to federal coffers as a result of not allowing the Bush tax cuts to expire in their entirety.
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