Democrats Propose Alternative to Republican Fiscal Policy

Chuck Schumer at 2014 Senate press conference. (Unmodified Creative Commons photo by the Senate Democrats. (https://bit.ly/1ryPA8o)

In early March, Senate Democrats unveiled their $1 trillion infrastructure investment plan in an attempt to counteract a Republican plan unveiled earlier this year.

At a press conference Sens. Leahy, D-Vt., Sanders, I-Vt., Nelson, D-Fla., and Wyden, D-Ore., joined Senate minority leader Chuck Schumer, D-N.Y.,  for the announcement.

Schumer emphasized the contrast between key points of their proposal and the Trump administration’s infrastructure plan.

His line of argument mirrors much of the Democratic Party’s messaging on the administration’s plan, knocking it for its heavy reliance on local government and private sector investment and lack of adequate federal appropriations.

The Democrats propose to offset their large investment in infrastructure by rolling back some of the tax cuts recently passed in the GOP tax reform bill, The Tax Cuts and Jobs Act.

According to the Tax Policy Center, the law reduced marginal tax rates, raised deduction limits, and cut corporate taxes. The center estimates, however, that most of the savings went to higher earning households, while dropping federal tax revenue by $3.1 trillion.

The University of Chicago’s IGM Forum polled leading economists, finding that 52% of 42 economists thought that the plan would not result in a higher GDP in a decade from now, with 36% being uncertain, and 2% agreeing. The economists generally agreed that the law would increase GDP in the short term, but that the economic bump would taper off as the loss of revenue and increase in debt become more pronounced.

Despite the less than stellar analyses of the plan, Congressional Republicans backed the bill and President Trump signed it into law on December 22, marking a major legislative win for a party that had struggled to govern from both executive and legislative branches since 2016.

Since passing the law, Republicans and conservative groups have lead a media campaign to ‘sell’ the law to the middle class.

Ad buys and corporate support touting job creation, increases in wages and bonuses, and lower taxes across all income-earning levels may have increased public support for the law. The New York Times reports public support for the law at just over 51 percent with 46 percent disapproval last month. The poll also shows increased support from Democrats for the law jumping from 8-to-19 percent in a matter of two months.

The plan seeks to appropriate $1 trillion into traditional infrastructure, like roads, waterways, airports, etc., and nontraditional infrastructure ambitions, like expanding the TIGER program, increasing broadband internet access to underserved rural areas, and updating the U.S energy grid.

It also breaks down how much money would be allocated to each project under the plan and enumerates the predicted job creation from successful implementation.

The Democrats’ plan takes aim at the Republican tax law to pay for most of the costs of the plan. Among the rollbacks proposed, the plan would reinstate the alternative minimum tax, return the top marginal income tax rate to 39.6 percent, and repeal the exemption increase for the estate tax.

In their announcement, senior Senate Democrats began their messaging of the plan with Schumer stating, “We want to roll back the Republican tax giveaways to big corporations and the wealthy and invest that money instead in job-creating infrastructure.”

With Republicans in control of the entirety of the federal government, the plan will hardly pass muster in either house. However, Democrats have positioned themselves with a substantive economic plan to campaign on for midterm elections that offers an alternative to Trump’s policies.

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