On Wednesday, President Obama spoke in eloquent language of our social contract, of a progressive patriotism, and of a role for government that helps us “do together what we cannot do as well for ourselves.” It was a clear rebuke to the GOP’s Robin Hood in Reverse agenda—taking from the poor and middle-class in order to preserve tax breaks for corporations and the wealthiest Americans.

Obama made the right choice in defending Social Security, Medicare and Medicaid, and pushing instead for healthcare reform—even putting negotiating drug prices on the table. He again refused to renew the Bush tax cuts for the wealthy—a pledge he has made and broken in the past. He also called for cuts in a defense budget that has contributed two out of three dollars in increased discretionary spending since 2001.

Yet in many ways his approach continues to legitimize the inside-the-Beltway consensus that spending cuts must lead the way toward achieving fiscal responsibility. Just as the Simpson-Bowles Commission proposes, for every $1 raised by closing tax loopholes on wealthy Americans, the President proposes $2 in spending cuts. Two-thirds of those cuts would come from education, health and other social programs, while only one-third comes from the military budget. While the president speaks eloquently of his vision of “shared sacrifice,” in reality it is still a budget that hits the poor and the middle-class hardest while wealthy Americans and the military are asked to sacrifice far less.

An alternative approach that deserves more attention is the “People’s Budget” offered by the Congressional Progressive Caucus (CPC). It will be introduced in the House on Thursday and it is the strongest rebuke—in the form of an amendment—to the unconscionable “Ryan Budget” for FY 2012. It’s a budget that gives the people—according to poll after poll—exactly what they want (something which shouldn’t be a rarity in a healthy, vibrant democracy).

The People’s Budget lays out what a robust progressive agenda looks like. It protects an already frayed social net and promotes a progressive tax policy that makes millionaires, billionaires and big corporations pay their fair share. It doesn’t stop at cutting the low-hanging fruit at the Pentagon, instead it brings our troops home from two wars that cost trillions of dollars and do nothing to make the US safer, and resets and rethinks what real security means in the twenty-first century.

“The People’s Budget generates a government surplus by 2021 by closing tax loopholes, ending corporate giveaways to oil, gas and nuclear entities, bringing our troops home, and creating jobs that expand the American tax base,” said Representative Raúl Grijalva, co-chair of the CPC. “This is a sensible solution that listens to what the American people have said about where our budget priorities should be.”

A range of smart groups and allies are pursuing an inside-outside strategy to push these kinds of wiser solutions on the table in our skewed debate. On Thursday, a bipartisan group of Members of Congress and veterans will hold a press conference to discuss Rethink Afghanistan’s War Tax I.O.U. campaign. The campaign features an online tool that calculates the amount of income tax an individual is paying towards the war, and users then receive an “IOU” for that amount. Over 54,000 constituents have forwarded those IOUs to their representatives, urging them to rethink the excessive levels of war spending that are wreaking havoc on the federal budget.

While President Obama broke the silence about revenue in the current deficit debate, a new report from the Institute for Policy Studies—“Unnecessary Austerity”—outlines a bold plan for how Congress could raise more than $4 trillion over the next decade by reversing years of tax giveaways to the richest Americans and largest corporations. The eight new potential revenue sources, include: closing overseas tax havens; adding new tax brackets for households with more than $1 million in annual income; and instituting a modest financial transaction tax.

“Congress has prioritized tax cuts for the wealthy and failed to crack down on corporate tax dodgers, fueling a budget crisis,” said report co-author and Nation contributor Chuck Collins.

Joining the fight for a more sane approach to tax policy is a group of 700 business leaders and individuals in the top 5 percent of wealth and income who make up the Responsible Wealth network. Along with United for a Fair Economy, Responsible Wealth’s new Tax Wealth Like Work Campaign focuses attention on the discrepancies in the tax system that reward income from wealth over income from work. Capital gains and dividend income are taxed at a top rate of only 15 percent, while income earned from work is taxed at a top rate of 35 percent.

As Congress and cash-strapped states struggle to balance budgets, these wealthy people are urging that the income from their investment portfolios be taxed at the same rate as work income. That was done in the late 1980s under Presidents Reagan and Bush, and restoring the rates would raise $84 billion in 2011. The campaign is also building support for Congresswoman Jan Schakowsky’s Fairness in Taxation Act, which would tax capital gains and dividend income as ordinary income for taxpayers with income over $1 million, and create higher income tax brackets for millionaires and billionaires.

Finally, this weekend and on Tax Day, US Uncut and MoveOn will provide some street heat, hitting the pavement in actions coast-to-coast, demanding that corporations making billions in profits but pay nothing in taxes pay their fair share.

President Obama’s speech this week starts to move the budget debate in the right direction. But it’s up to the people and allies inside Congress to take the struggle to the next level, turning the tide on our democracy deficit which has produced—as Nobel Prize–winning economist Joseph Stiglitz recently put it—a country “of the one percent, for the one percent, and by the one percent.”