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Rep. Schakowsky: 'We have not had what I’ve wanted from Day 1'

By Ezra Klein

schakowskywithpapers.JPG

Rep. Jan Schakowsky (D-Ill.) is co-chairman of the House Progressive Caucus and a member of the fiscal commission. But she's not particularly happy with how the commission is playing out. In fact, participating in their process and products spurred her to release her own deficit reduction plan -- a plan, she says, that brings the budget into primary balance by 2015 with money leftover for stimulus and with policies that protect the poor and middle class. We spoke yesterday by phone, and a lightly edited transcript of our conversation follows.

Ezra Klein: You’ve released your own plan to bring the budget into balance using more progressive means. What’s the aim here?

Jan Schakowsky: I’m concerned that the people who haven’t shared in the opportunities in the last few years or in the Bush years are now the ones being asked to sacrifice. My proposal is aimed at achieving deficit reduction by 2015. That means the goal is $250 billion in cuts by 2015, which achieves primary balance (which is balance without interest on the debt), and my goal was to offer a proposal able to do it without taking from the middle class and lower-income people. And we managed to reach not only that number, but to actually raise $427 billion, with the idea that some of that money would be spent in 2011 and 2012 on more economic stimulus. I also make a recommendation for the solvency of Social Security, which in both my proposal and the Bowles-Simpson proposal is kept separate from the broader deficit, and I do it without cutting benefits.

EK: Tell me a bit more about the stimulus component. How do you use that money?

JS: I think the stimulus plan was too small to begin with, and one of the principles of Simpson-Bowles was to avoid doing anything to hurt a fragile economy, and I think they do: They start their cuts in 2012 without any acknowledgment that we may still be in a tough economy then. My plan includes money and makes suggestions for more stimulus in the next two years. We could implement the plan that George Miller introduced to send more money to states and local governments. It’s called the Local Jobs for America Act, and it funds education and infrastructure and food stamps and unemployment insurance and much more, and does it through local governments.

EK: I’m interested in your inclusion of stimulus as one of my frustrations with the deficit commission has been its narrow focus. It would seem to make more sense to have a panel focused on recovery and growth, of which one component would be short-term growth, and another would be deficit reduction, and a third would be longer-term growth.

JS: That’s the point I want to make here, which is that one can expect that these investments can help reduce the deficit, as putting more people to work brings the deficit down. There’s no real recognition of that in Simpson-Bowles.

EK: You’ve got a number of specific changes you want to make to the health-care system. The Simpson-Bowles plan has been criticized for offering relatively few of those. As you’re involved in those meetings, what’s your sense of health care’s role in the discussion? Are people just too exhausted to get back into it?

JS: That is being discussed at the meeting today, that exact observation. I think that there will be more focus on health care, though that actually worries me in this context, as I worry they’ll make cuts that will mean less access to health care for people. They could make cuts that will really hurt people and don’t leave enough time for the reform law to go into effect.

EK: Your plan also relies more on revenues than the Simpson-Bowles plan. I imagine you’re not a great fan of their spending cuts?

JS: For example, half of the cuts in the non-defense discretionary section have to do with cuts in the federal workforce. So I pointed out that over 500,000 federal employees make less than $50,000 a year. A three-year freeze on their income is a real problem for them. And then this 10 percent cut in the workforce and a major cut in contractors -- and I’m not a fan of contractors -- at the same time that they’re adding to the responsibilities of, for instance, the Social Security system, could cause pretty severe disruptions in the delivery of services. Then there are these caps on spending. I think these kind of meat ax approaches are bound to hurt things like Pell grants and food stamps and the Older Americans Act and other bills that hurt ordinary people.

EK: Your plan exists to push some of these more progressive options into the debate, but given that you’re a member of the commission, why aren’t they there already? The Bowles-Simpson report wasn’t a plan so much as various options the committee could choose from, so why weren’t the items you favor included?

JS: Having just introduced it today, we’re definitely going to be working with the staff to see which of the options I’ve suggested can be placed into the bill. But in my view, there’s a big difference in philosophy: We have not had what I’ve wanted from Day 1, which is a distributional analysis of the proposals that are being made so we would know who benefits and who pays. And it looks to me like the balance is in the wrong direction, because most of it is made of spending cuts and only a quarter is increases in revenue. And I think that’s the wrong balance to start with.

If you approach this whole exercise with green eyeshades and just look at it as a bean counter, it’s easy to make cuts. But if you really think about who gets hurt, and I do, it gets harder. I’m just not going to take this out of the hide of Medicare and Medicaid and Social Security.

Photo credit: Linda Davidson/The Washington Post.

By Ezra Klein  | November 17, 2010; 9:30 AM ET
Categories:  Budget, Interviews  
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Comments

We need to hear more voices like hers in Congress

Posted by: saratogian | November 17, 2010 10:06 AM | Report abuse

I have posted this already here before You guys should stop complaining because, one the health care we have now isnt as good as it was supposed to be. also the law has just been signed so give it some time. so if u want to say u have the right to choose tell that to ur congress men or state official. If you do not have insurance and need one You can find full medical coverage at the lowest price check http://ow.ly/3akSX If you have health insurance and do not care about cost just be happy about it and believe me you are not going to loose anything!

Posted by: crawiford | November 17, 2010 11:11 AM | Report abuse

At first glance, this looks like a more serious proposal than what we received from Simpson-Bowles. I hope that I see comparisons and equal attention.

One interesting difference is in the treatment of tax expenditures. Simpson-Bowles focuses on deductions for individual taxpayers, Schakowsky focuses on deductions for companies.

Posted by: pjro | November 17, 2010 11:17 AM | Report abuse

"Raise $132.2 billion by closing tax subsidies for companies that ship American jobs overseas."


Wow, what a stupid woman.

Posted by: krazen1211 | November 17, 2010 11:49 AM | Report abuse

"I also make a recommendation for the solvency of Social Security, which in both my proposal and the Bowles-Simpson proposal is kept separate from the broader deficit, and I do it without cutting benefits."

Yup, via increasing marginal rates by a whopping 16.2% on everyone who makes more than the Social Security earnings cap.

All in, her plan pushes marginal rates to Nordic levels in areas with high state and local income taxes. We might as well call it the Robin Hood plan.

"That’s the point I want to make here, which is that one can expect that these investments can help reduce the deficit, as putting more people to work brings the deficit down."

The Keynesian version of 'tax cuts pay for themselves' I see.

Posted by: justin84 | November 17, 2010 11:54 AM | Report abuse

is this a deficit reduction plan or a plan to ship not only jobs but entire corporations overseas?

The fact that you didn't call her on that Ezra is really bad. Why not ask her what the implications are of a $132 Billion increase in corporate tax rates? Do they think corporations will say "Oh, you got me, we should pay a lot more."

It would really help if she thought things through and the implications of her plans and its consequences instead of just throwing crap onto a page.

Posted by: visionbrkr | November 17, 2010 12:10 PM | Report abuse

"co-chairman of the House Progressive Caucus"

Cite? The only reference I've been able to find for this is Ezra Klein!

Posted by: bdell555 | November 17, 2010 12:43 PM | Report abuse

justin84 if you insist on including SS taxes in "marginal rates" then Jan "Robin Hood" Schakowsky would seem to want to stop the practice of imposing significantly lower marginal rates on 6-figure salaries (33-35 percent) than on medium/high 5-figure salaries (37.4-40.4 percent). Of course, most people don't look at marginal rates this way.

Posted by: pjro | November 17, 2010 1:14 PM | Report abuse

Want to throw any more softballs up at her Ezra? How about the obvious glaring selection of 2015 as her timeframe? Let me guess, because looking at 2030 and 2050 for a plan that "protects" Medicare and Social Security shows the budget deficit blowing out again.

I was hoping your superficial electioneering would stop after the midterms but it appears to continue as the posts reflect little critical analysis and thought and parroting the most recent talking points.

Is it too much to ask for a good faith effort at intellectual integrity or must the Weigel-ization of the blog continue unabated?

Posted by: cdosquared5 | November 17, 2010 1:36 PM | Report abuse

justin84 if you insist on including SS taxes in "marginal rates"

That would only be proper.

If your gross paycheck increases by $1,000 and your net paycheck increases by $600, your marginal tax rate is 40%. It doesn't matter what the particular tax is called, or if the government might (or might not) sprinkle some of that money back on you half a century in the future.

"then Jan "Robin Hood" Schakowsky would seem to want to stop the practice of imposing significantly lower marginal rates on 6-figure salaries (33-35 percent) than on medium/high 5-figure salaries (37.4-40.4 percent)."

I would like the same outcome, though unlike representative Robin Hood it should be done by lowering tax rates for those with 5-figure salaries, not sending the top rate through the roof.

Posted by: justin84 | November 17, 2010 1:51 PM | Report abuse

glad to hear someone's there fighting for the middle class. if we're just slashing government spending we're going to end up like Ireland.

Posted by: SnowleopardNZ | November 17, 2010 10:02 PM | Report abuse

4) Reductions in tax expenditures

Raise $132.2 billion by closing tax subsidies for companies that ship American jobs overseas.
*******************************************
Every proposal out of a democrats mouth closes this loophole. The government has closed this loophole four different times this year as quote "AN OFFSET" for some other spending they want to do. There is simply no way to find 132 billion dollars left in it.

It also raise the amount the employer and employee must pay into social security. Then they plan to turn it into a WELFARE program. So you will have people who pay into their entire working life then they will be told they cant collect because they were responsible and saved money or get an employer pension. So in effect they can add 6.26% to their federal tax rate
because they will never collect.

I never realized how fortunate I was when I took a job where I dont have to pay social security. At least I didnt waste 12.5 % of my lifetime earnings on what will now be WELFARE by a different name.

Posted by: bjeagle784 | November 18, 2010 12:28 AM | Report abuse

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