Billionaire Mark Cuban weighed in on what he would do in response to the Occupy Wall Street protests. It addresses the anger at the Wall Street bailouts, contains an education cost containment proposal (that, in my opinion, would not work), and discusses CEO pay. I believe we are in need of a more comprehensive New New Deal that protects the security of our entitlement and social welfare programs, invests in job creation, fully addresses the education cost problem and invests in closing the achievement gap, and safeguards the security of the financial sector; all while doing more to reduce the long-term deficit than even the most ambitious plans that were floated during the debt ceiling debate. Sounds impossible (and may be a practical impossibility given Republican obstructionism) but it is at least theoretically possible. The Republicans have floated their plans and I think the Democrats should float a competing plan like the one below.
The New New Deal
No changes in benefits for either Medicaire or Social Security!
Pass the FULL American Jobs Act, the one-time $447B stimulus program proposed by Barack Obama.
Invest in closing the achievement gap by increasing spending on primary and secondary education by $20B/year, to be allocated to underperforming school districts. Also, create a new $20B/year university grant program to provide full tuition scholarships (up to $50,000/year) to at least the 100,000 highest performing high-school seniors each year, whose parents have a net worth of less than $2.5M, to attend a college of their choice.
Create a new insurance program similar to the FDIC that is funded by a “risk tax” on “too big to fail” financial institutions, which could be drawn down to ensure the financial sector does not ever become a drain on the taxpayer again. Mark Cuban recommended a “transaction tax,” which is overly simplistic and could be gamed, as “systemically risky” transactions would incur the same tax as benign ones. I would propose that, each year, a government risk management office would be responsible for setting the risk formula using the best practices that financial institutions use internally to measure their own risk, and a tax rate designed to allow the insurance fund to remain solvent even in a “worst-case” scenario.
Raising Revenue and Cutting Costs (>$690B/year in revenue increases and spending cuts)
1) Bring back the cap and trade proposal. It can raise an estimated $79B/year in additional revenue!
NET INCREASE IN FEDERAL REVENUE OF $79B/YEAR
2) Create a new progressive estate tax with no exemptions, but structural protections to prevent loss of voting control of family, small, and other privately held businesses (the key Republican objection to the estate tax). Raising estate tax rates so that estate tax accounts for 1.25% of total tax revenues (the actual level from 1999) could be responsible for ~$28B of revenue (using $2.16T of total receipts, the actual number from 2010) relative to $15.4B of actual estate and gift tax revenue in 2010.
NET INCREASE IN FEDERAL REVENUE OF AT LEAST $13B/YEAR
2) Allow Medicaire to negotiate pharmaceutical prices. According to a 2006 study, this would have saved Medicare well over $60B/year and as much as $101B in 2010, according to their low-cost case.
NET DECREASE IN FEDERAL SPENDING OF AT LEAST $60B/YEAR
3) Winding down the wars in Iraq and Afghanistan. Both Democrats and the GOP believe that between $1T and $1.1T in deficit reduction over ten years will result from winding down the wars.
NET DECREASE IN FEDERAL SPENDING OF AT LEAST ~$100B/YEAR
4) Roll back the Bush tax cuts for everybody. I know Democrats and Daily Kos readers would very much prefer to limit the tax cuts to those making >$250k but the fact is that would still leave the bulk of the potential revenue on the table. In order to be able to afford the government programs that we want, we need to be willing to go back to the tax rates under Clinton—a prolonged period of economic expansion. Please indulge me until the end of the article and then decide whether this is a sacrifice you can live with to realize the other benefits of this plan. This can raise revenues by ~$390B/year.
NET INCREASE IN FEDERAL REVENUES OF ~$390B/YEAR
5) Suspend all foreign aid to Pakistan. We gave them $1.5B in 2010.
NET DECREASE IN FEDERAL SPENDING OF $1.5B/YEAR
6) Eliminate oil, gas, and coal company subsidies. Given that commodities prices are near record highs, these subsidies are no longer required. They can save $40B over 10 years, or ~$4B/year.
NET INCREASE IN FEDERAL REVENUES OF $4B/YEAR
7) End agricultural subsidies to save $23B/year. Again, Democrats and Daily Kos readers, you may not like this but given what you would be getting, this is a relatively modest sacrifice. Given high commodity prices, we should probably not be subsidizing farming anyways.
NET DECREASE IN FEDERAL SPENDING OF $23B/YEAR
8) Reduce foreign economic aid to 2008 levels, dropping it from >$40B/year to sub $20B/year (http://www.usgovernmentspending.com/...).
NET DECREASE IN FEDERAL SPENDING OF $20B/YEAR
There you have it: a viable economic plan that does more to reduce the deficit than any of the Republican proposals, and even the most ambitious attempts at a "grand bargain," while investing in job creation, infrastructure, and education. In addition, it safeguards our entitlement programs and reforms the financial system to protect the taxpayers from another bailout situation.