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February 14, 2013

Senate Democrats roll out sequester alternative

Here's a look at the Senate Democratic alternative to the sequester. If nothing is done, $85 billion in automatic spending cuts take effect March 1.

Senate Democrats, though, are proposing a plan that would reduce the deficit $110 billion, using these sources, as described by a Democrtic statement:

--New revenue from the wealthiest Americans and biggest corporations: $55 billion: The American Family Economic Protection Act includes the Buffett Rule, which reduces the deficit by $54 billion by making sure that taxpayers with a gross adjusted income above $1 million cannot pay tax at a lower effective tax rate than middle class families. Specifically, it would require these taxpayers to pay a 30 percent tax on all of their adjusted gross income (less charitable contributions), phased in between $1 million and $2 million. The proposal also eliminates a tax break that encourages companies to ship job overseas by denying tax deductions for costs associated with outsourcing, reducing the deficit by less than a billion dollars. And it eliminates a special tax loophole now enjoyed by the oil industry by including oil from tar sands among the petroleum products that are subject to taxes that support the oil spill liability trust fund, which would reduce the deficit by $2 billion.

Defense cuts: $27.5 billion: The American Family Economic Protection Act includes modest reductions in the overall level of defense spending phased in responsibly to time with the troop drawdown in Afghanistan in 2015, and continuing through 2021. The reduction would be about $3 billion in Fiscal Years 2015 and 2016, and then would rise slowly to a high of about $5 billion in Fiscal Year 2021.

Domestic cuts: $27.5 billion: The American Family Economic Protection Act saves $27.5 billion over 10 years by ending direct payments, which are currently provided regardless of yields, prices, or farm income.

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