Union-backed deficit proposal ramps up stimulus spending

“Most of labor endorses and is totally committed to pushing this report,” Larry Cohen, president of the Communications Workers of America told reporters.

“There will be a lot of pressure from the Democratic base to draw a clear line around Social Security and Medicare and to make sure that the president stays focused on creating jobs and not on austerity,” Borosage added.

In contrast to the draft proposal by the chairmen of the president’s deficit commission, which aims to reduce the total national debt to 34 percent of gross domestic product, the Citizens’ Commission proposal would only reduce debt to 70 percent of GDP by 2050, coalition member Robert Kuttner of The American Prospect told reporters.

To reach a “sustainable” deficit of 3 percent of GDP, the coalition assumes that short-term spending will create steady GDP growth of 4.3 percent per year. It also relies heavily on reducing healthcare costs by creating a “public option” for health insurance, a proposal that went down in flames during last year’s healthcare reform debate.

The coalition says Social Security cuts should not be part of the deficit conversation, and it is opposed to any caps on Medicare.

In contrast to the deficit commission, the coalition aims for spending levels at 24 percent of GDP. The deficit commission chairs proposed spending at 21 percent of GDP.

The Citizens’ Commission proposal contains larger stimulus spending than another liberal groups’ proposal released Monday. The Economic Policy Institute, Century Foundation and Demos proposed only $450 billion in stimulus spending in the next two years.