In the News

Laying the Foundation for Inclusive Prosperity

Harry Stein and Alexandra Thornton offer a fiscally responsible and progressive economic and budget plan.

This plan was developed as part of the Solutions Initiative III and funded by the Peter G. Peterson Foundation. The Peterson Foundation convened researchers from organizations with a variety of perspectives to develop plans addressing our nation’s fiscal and economic challenges. The American Action Forum, American Enterprise Institute, Bipartisan Policy Center, Center for American Progress, and the Economic Policy Institute each received grants. All participants had discretion and independence to develop their own goals and propose comprehensive solutions. The Peterson Foundation’s involvement with this project does not represent endorsement of any plan.

Read the introductory memo (Peter G. Peterson Foundation)

There are three tests that any budget plan must pass to be taken seriously: it must contain measures to grow the economy by strengthening and expanding the middle class, slow the growth of health care costs for both American families and the federal government, and increase federal revenues over the long term.

Read the plan summary (Peter G. Peterson Foundation)

The central challenge of our time is building an economy that works for everyone, not just the wealthy few. The economy is growing, corporate profits have soared, and unemployment is falling. But wages have remained stagnant as the benefits of the recovery have flowed mostly to those at the very top. This is not a new challenge—productivity growth has not translated into consistent wage growth since the 1970s. But while wages remain stagnant, the pillars of middle-class economic security—such as higher education, child care, retirement, health care, and housing—have grown disproportionately expensive and out of reach for American families. The Center for American Progress quantified this phenomenon in a report titled “The Middle-Class Squeeze.”

Fortunately, this is a challenge that the United States can solve. The Center for American Progress recently released the “Report from the Commission on Inclusive Prosperity,” which convened progressive policymakers from the United States, the United Kingdom, and other industrial democracies. This report identified a set of policies to grow the economy by strengthening the middle class and helping more working families achieve middle-class economic security.

Our plan implements an agenda based on the recommendations of the Inclusive Prosperity Commission and other CAP policy development. These policies would create jobs and raise wages, help families afford the pillars of middle-class security, and level the playing field for American workers and businesses. However, this agenda cannot be implemented as long as lawmakers continue to insist on fiscal austerity—a misguided and premature effort to hit arbitrary budget targets that has caused unnecessary economic harm in both the United States and Europe in recent years. A budget that works for all Americans cannot be sustained as long as lawmakers continue to make arbitrary spending cuts and reject any proposal to increase revenue even through reforms that would make the tax code more fair and efficient.

The above excerpt was originally published in Peter G. Peterson Foundation. Click here to view the full article.

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Harry Stein

Director, Fiscal Policy

Alexandra Thornton

Senior Director, Financial Regulation