A Fiscally Responsible Agenda: Paying for Progress
This agenda is not only a moral imperative, but a fiscally responsible one. The following measures will ensure that these investments in the American people do not increase the national debt:
Revenue Sources: Progressive Tax Reform
The revenue generated by the Tax Justice and Economic Fairness Act will be the primary source of funding for these new initiatives. The following table provides estimated annual revenue projections at full implementation:
Projected Annual Revenue (Fully Implemented)
| Revenue Source | Conservative Estimate | Moderate Estimate | Optimistic Estimate | Years to Full Effect | Key Assumptions |
|---|---|---|---|---|---|
| 70% Top Rate (>$10M income) | $90 billion | $120 billion | $150 billion | 2 years | Behavioral response: 25% reduction in reported income (conservative) to 10% (optimistic) through tax planning and reduced labor supply |
| Capital Gains Parity (tax as ordinary income) | $150 billion | $200 billion | $250 billion | 1 year | Based on ~$1 trillion in annual capital gains realizations; conservative assumes 15% reduction in realizations due to lock-in effect |
| 2% Wealth Tax (>$50M net worth) | $180 billion | $250 billion | $300 billion | 3 years | Covers ~75,000 households; conservative assumes 20% valuation disputes and 10% compliance issues; requires robust enforcement infrastructure |
| Estate Tax Reform | $30 billion | $50 billion | $70 billion | 1 year | Lower exemption to $3.5M, raise top rate to 65%; conservative accounts for increased gifting and trust usage |
| Financial Transaction Tax (0.1%) | $60 billion | $80 billion | $100 billion | 2 years | Applied to stocks, bonds, derivatives; conservative assumes 40% volume reduction (cf. UK stamp duty: minimal impact) |
| Corporate Loophole Closure | $100 billion | $150 billion | $200 billion | 1-2 years | Carried interest, offshore tax havens (GILTI strengthening), transfer pricing abuse, accelerated depreciation reforms |
| Social Security Cap Removal | $120 billion | $120 billion | $120 billion | 1 year | Apply 12.4% payroll tax to all income (currently capped at ~$168K); dedicated to Social Security solvency, not general revenue |
| TOTAL NEW ANNUAL REVENUE | $730 billion | $970 billion | $1,190 billion | 2-3 years | Estimates exclude dynamic effects (economic growth feedback); phased implementation reduces short-term impact |
Revenue Estimate Methodology and Sources
Conservative Estimates: Based on Congressional Budget Office (CBO) and Joint Committee on Taxation (JCT) scoring methodologies that assume significant behavioral responses (taxpayer avoidance, economic substitution effects) and implementation challenges. Conservative estimates account for:
- Substantial tax avoidance through legal planning
- Reduced economic activity in response to higher rates (Laffer curve considerations)
- Administrative challenges and enforcement gaps
- Legal challenges delaying full implementation
Moderate Estimates: Reflect Tax Policy Center and Center for American Progress analyses that incorporate moderate behavioral responses based on empirical evidence from historical U.S. tax policy and international comparisons. These estimates assume:
- Effective enforcement and anti-avoidance measures
- Behavioral responses consistent with academic research
- Successful legal defense of major provisions
Optimistic Estimates: Based on minimal behavioral response assumptions and highly effective enforcement, similar to Elizabeth Warren campaign proposals and economists Saez/Zucman wealth tax estimates. These assume:
- Strong compliance due to robust enforcement
- Limited capital flight due to exit taxes and international cooperation
- Economic growth benefits from reduced inequality and public investment
Addressing Behavioral Responses and Avoidance
Capital Flight Mitigation:
- Exit tax: 40% tax on unrealized capital gains for individuals renouncing citizenship
- FATCA strengthening: Enhanced reporting requirements for foreign financial institutions
- OECD coordination: Support for global minimum tax (15%+) and BEPS 2.0 initiatives
- Beneficial ownership reporting: End anonymous shell companies (Corporate Transparency Act enforcement)
Income Shifting Prevention:
- Enhanced IRS enforcement: $80 billion IRS funding (Inflation Reduction Act) enables sophisticated tax gap analysis
- Partnership audit rules: Close valuation and basis-shifting loopholes
- Anti-inversion rules: Prevent corporate expatriation to low-tax jurisdictions
- Transfer pricing: Strengthen formulary apportionment for multinational corporations
Wealth Tax Administration:
- Annual wealth reporting: Comprehensive asset declarations for households >$50M
- Third-party verification: Financial institutions report asset values
- Valuation standards: IRS guidelines for non-traded assets (real estate, private equity, art)
- Enforcement resources: Dedicated IRS wealth tax division with forensic accounting capabilities
Revenue Phase-In Timeline
Year 1: $200-300 billion
- Capital gains parity (immediate effect)
- Estate tax reform (immediate effect)
- Corporate loophole closure begins (partial implementation)
- Social Security cap removal (immediate effect: $120B dedicated to Social Security)
Year 2: $450-650 billion
- Top marginal rate increase fully implemented
- Financial transaction tax operational
- Corporate loophole closure expanded
Year 3+: $730 billion - $1.19 trillion
- Wealth tax fully operational with enforcement infrastructure
- All reforms at steady state
Expenditure Analysis: Costs and Savings
New Program Costs (Annual, Fully Implemented)
| Program | Year 1 Cost | Steady-State Annual Cost | Implementation Timeline | Notes |
|---|---|---|---|---|
| Public Health Insurance Option | $50-75 billion | $150-250 billion | Years 1-3 | Net cost after premiums and savings; assumes 15-25 million enrollees at steady state; cost depends on generosity of benefits and provider payment rates |
| Federal Job Guarantee | $100-150 billion | $340-680 billion | Years 2-5 (pilot → national) | Assumes $25/hour + 30% benefits = ~$52K/year; 5M enrollees = $340B, 10M enrollees = $680B; varies inversely with unemployment rate |
| Paid Family & Medical Leave | $30 billion | $40 billion | Year 2 | Universal 12-week paid leave program; partially offset by state programs (where they exist); comparable to Social Security Disability Insurance administration |
| U.S. Digital Service 2.0 | $5 billion | $8 billion | Years 1-2 | Major expansion from current ~$100M budget; includes personnel (5,000+ digital experts), infrastructure modernization across all agencies |
| Digital Front Door Platform | $15 billion (one-time) | $3 billion | Years 1-3 | One-time buildout cost; ongoing maintenance and upgrades; consolidated login.gov and usa.gov expansion |
| Expanded Whistleblower Protection Agency | $500 million | $750 million | Year 1 | Independent agency modeled on OGE; investigative staff, legal support, protection programs |
| Antitrust Enforcement Expansion | $1 billion | $2 billion | Years 1-2 | Triple DOJ Antitrust Division and FTC budgets; expert economists, technologists, litigators |
| Enhanced IRS Enforcement | Funded by IRA | Funded by IRA | Ongoing | $80B over 10 years already appropriated (Inflation Reduction Act); generates net revenue |
| Universal Pre-K | $50-60 billion | $75-100 billion | Years 1-3 | Free pre-kindergarten for all 3-4 year olds; proven $7 return per $1 invested; Oklahoma/Georgia models |
| Free Public College | $50-60 billion | $75-100 billion | Years 1-2 | Tuition elimination at public universities; does not cover private institutions; restores California Master Plan model |
| K-12 Funding Equalization | $75 billion | $150 billion | Years 2-4 | Federal grants to states adopting equitable funding formulas; addresses “separate and unequal” disparities |
| Media Literacy Education | $3 billion | $5-10 billion | Years 1-2 | State grants for critical thinking and source evaluation curricula; non-partisan skills focus |
| Student Debt Relief | Variable* | Variable* | Year 1 (if authorized) | *Depends on scope of relief authorized; not included in cost totals pending legal/legislative resolution |
| Universal Broadband Infrastructure | $150B (one-time)** | $25 billion | Years 1-3 | **One-time infrastructure buildout funded by bonds; annual cost is operations/maintenance/debt service |
| Public Media Expansion | $3 billion | $5 billion | Year 1 | 10x increase in PBS/NPR funding; local journalism grants; constitutionally protected government speech |
| TOTAL NEW ANNUAL COSTS | $340-515 billion | $965-1,467 billion | Years 3-5 | Range reflects uncertainty in enrollment/uptake and full implementation timing; excludes one-time infrastructure ($150B) and student debt relief (TBD) |
Healthcare Cost Savings
The cost-control measures in the American Health Security Act will generate substantial savings:
Drug Price Negotiation Savings:
- Medicare negotiation expansion: $150-200 billion annually (based on CBO estimates if applied to all Part D drugs)
- Medicaid and public option negotiation leverage: Additional $50-100 billion
- Total prescription drug savings: $200-300 billion annually
Administrative Efficiency Savings:
- Reduced administrative costs through public option (2% overhead vs. 12-18% private): $50-100 billion
- Simplified billing and claims processing: $30-50 billion
- Reduced medical billing complexity for providers: $20-30 billion
- Total administrative savings: $100-180 billion annually
Preventive Care and Chronic Disease Management:
- Universal coverage reduces emergency room usage: $20-40 billion
- Early intervention and preventive care: $30-50 billion
- Total preventive care savings: $50-90 billion annually
Total Healthcare Savings: $350-570 billion annually at full implementation
Net Healthcare Impact: Healthcare savings ($350-570B) significantly offset or exceed public option costs ($150-250B), resulting in potential net savings of $100-320 billion annually while expanding coverage to all Americans.
- Reforming Social Security: To ensure the long-term solvency of Social Security and to generate additional revenue, the cap on income subject to the Social Security tax will be removed. This will make the system more progressive and ensure that the wealthy pay their fair share. (Note: The $120 billion in annual revenue from cap removal is dedicated to the Social Security Trust Fund and extends solvency by approximately 75 years. This revenue is not available for general program spending.)
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Reducing Defense Spending: The defense budget will be reduced by 25% through a phased, strategic approach focused on eliminating waste and modernizing force structure.
Baseline and Savings:
- Current defense budget baseline (FY 2028 projected): ~$900 billion
- Target 25% reduction: $225 billion in annual savings at full implementation
- Savings will be redirected to investments in healthcare, education, and infrastructure
Specific Reduction Areas:
- Procurement Reform ($80-100B): Cancel or restructure weapon systems with chronic cost overruns and performance failures; increase competitive bidding; reduce sole-source contracts
- Contractor Oversight ($40-60B): Comprehensive audit of defense contractors; eliminate cost-plus contracts where feasible; reduce contractor workforce performing inherently governmental functions
- Base Closures and Overseas Deployments ($50-70B): New Base Realignment and Closure (BRAC) round to close excess domestic installations; reduce overseas troop presence in Europe and Asia where allies can assume greater burden; consolidate logistics infrastructure
- Force Structure Modernization ($30-50B): Reduce legacy platforms (aging aircraft, ships) in favor of modern capabilities; eliminate redundant capabilities across service branches
- Administrative Efficiency ($15-25B): Reduce Pentagon bureaucracy; streamline acquisition processes; consolidate defense agencies
Phased Implementation Timeline:
- Year 1: 5% reduction (~$45 billion) - Begin audits, cancel worst-performing programs, initiate BRAC process
- Year 2: 15% reduction (~$135 billion cumulative) - Implement contractor reforms, begin base closures, restructure overseas presence
- Year 3: 25% reduction (~$225 billion annually) - Full implementation of force structure changes and administrative reforms
Political Challenges and Mitigation:
- Congressional districts with defense contractors and military bases will resist cuts
- Mitigation: Transition support for affected workers and communities (see Workers’ Bill of Rights federal job guarantee); demonstrate that reductions enhance readiness by eliminating waste
- Address military readiness concerns: Frame as modernization rather than weakening; consult with military leadership on strategic priorities
- Build bipartisan support: Emphasize fiscal responsibility and cite precedent of successful post-Cold War reductions
Accountability Measures:
- Annual public reporting on defense spending by program and contractor
- Independent IG audits of all major weapon systems
- Congressional oversight with regular hearings on implementation progress
Fiscal Summary: The Math Works
Total Annual Revenue (Steady State):
- Progressive tax reform: $730 billion - $1.19 trillion
- Defense spending reduction: $225 billion
- Healthcare system savings: $100-320 billion (net, after public option costs)
- TOTAL REVENUE/SAVINGS: $1.055 trillion - $1.735 trillion
Total Annual Costs (Steady State):
- New programs (excluding public option, already counted above): $725 billion - $1.175 trillion
- Federal Job Guarantee: $340-680 billion (varies with unemployment)
- Education programs: $305-415 billion (Pre-K $75-100B, Free college $75-100B, K-12 equalization $150B, Media literacy $5-10B)
- Communication infrastructure operations: $25 billion (annual operations; $150B one-time buildout funded by bonds)
- Paid Family & Medical Leave: $40 billion
- Digital modernization: $11 billion
- Public media expansion: $5 billion
- Other programs: $4 billion
- TOTAL NEW COSTS: $725 billion - $1.175 trillion
Note on one-time infrastructure costs:
- Universal broadband buildout: $150 billion (one-time investment)
- Funded through 20-year infrastructure bonds, repaid by user fees and spectrum auctions
- Annual debt service: ~$10 billion (included in $25B operations above)
- Student debt relief: Not included in totals pending legal/legislative resolution
Net Fiscal Impact at Steady State:
- Conservative scenario: $1.055T revenue - $1.175T costs = -$120 billion annual deficit*
- Moderate scenario: $1.395T revenue - $950B costs = +$445 billion annual surplus
- Optimistic scenario: $1.735T revenue - $730B costs = +$1.005 trillion annual surplus
*Conservative scenario note: The conservative scenario assumes maximum enrollment in Federal Job Guarantee (10M participants = $680B), maximum education costs, and minimum revenue. In practice, Job Guarantee enrollment varies counter-cyclically (lower during economic expansions). With moderate Job Guarantee enrollment (6-7M), conservative scenario still produces surplus. Additionally, conservative revenue estimates may be overly pessimistic given proven international precedents for wealth taxation and high marginal rates.
Key Findings:
- Moderate and optimistic scenarios fiscally sustainable: Progressive tax reform and efficiency measures more than cover new program costs in moderate and optimistic projections, generating $445B-$1.0T annual surplus
- Conservative scenario manageable: Even worst-case assumptions (-$120B deficit) represent 93% improvement over current $1.7T deficit; counter-cyclical Job Guarantee design means conservative scenario unlikely during healthy economy
- Deficit reduction in most scenarios: Moderate and optimistic scenarios generate surpluses of $445B-$1.0T annually for debt reduction or additional investment
- Economic growth potential: Not modeled above, but reduced inequality, universal healthcare, education investment, and infrastructure historically generate positive GDP effects that increase tax revenue further (could shift conservative scenario to surplus)
- Risk mitigation: Three-scenario modeling accounts for uncertainty; phased implementation allows course correction based on actual revenue and enrollment
Implementation Notes:
- Phased rollout means Years 1-2 will have lower costs (pilot programs) and lower revenue (tax measures ramping up)
- Federal Job Guarantee costs are counter-cyclical: higher during recessions (when needed most), lower during economic expansions—conservative scenario assumes peak recession enrollment, unlikely during steady state
- Healthcare savings may take 3-5 years to fully materialize as administrative efficiencies scale
- Education investments have proven long-term ROI (universal pre-K returns $7 per $1 invested; free college increases tax base)
- Social Security cap removal ($120B) is dedicated to Social Security Trust Fund, not included in general revenue above
- Communication infrastructure funded primarily through bonds (user fees repay principal), minimizing general fund impact
Comparison to Status Quo:
- Current deficit: ~$1.7 trillion annually (FY 2023)
- This agenda: -$120B (worst case) to +$1.0T annual surplus (moderate/optimistic cases)
- Net improvement: $1.6 - $2.7 trillion annually compared to current trajectory
- Even conservative scenario represents massive deficit reduction ($1.58T improvement)