(The following press release was issued by the AFL-CIO on January 6.)
WASHINGTON, D.C. — The AFL-CIO today called on Congress and President George W. Bush to “put more money in the hands and pockets of families who need it and will spend it now” with an economic recovery program combining more investment in schools, roads and bridges, and financial aid to states with tax rebates targeted to low and middle-income families, extended unemployment compensation and an increase in the minimum wage.
The labor federation – which is made up of 65 national unions representing some 13 million members – issued an Agenda to Create Jobs and Lift the Economy that will cost about $260 billion dollars at most, less than half what President Bush reportedly wants to spend.
“Instead of using our economic crisis as a cover to reward his corporate supporters and wealthy donors, President Bush needs to address the urgent needs of workers and their families,” said AFL-CIO President John J. Sweeney. Quoting the agenda itself, he said, “We cannot afford the approach advocated by President Bush and Republican leaders in Congress, who are pushing for more hefty tax giveaways to upper-income taxpayers instead of a program that benefits all Americans.”
Instead of jump starting the economy, the president’s recommendations will “choke off resources needed to meet the needs of American families, saddle our children with crippling debt in the future and worsen income inequalities between the very rich and the rest of us,” he said.
The AFL-CIO argues that what is needed to boost an economy that shows few signs of rebounding on its own is a stimulus package that kicks in immediately, is fiscally responsible because it is “temporary, rather than permanent,” creates jobs by increasing consumer spending, and “meets the needs and serves the interests of all Americans, rather than promoting the narrow special interests of just a few.”
The labor federation is calling for a stimulus plan that includes:
— A 26-week retroactive extension of emergency unemployment benefits and provision of health care coverage for the unemployed;
— More financial aid to help states with health care, homeland security and education and to maintain services vital to working families;
— Creation of jobs with accelerated federal investment in schools, roads, bridges, transportation and transit, clean water and rebuilding the nation’s industrial base;
— Tax rebates for all workers, with benefits concentrated toward low and moderate income taxpayers;
— An increase in the federal minimum wage to “correct gross underpayment of low-wage workers, many of whom work full-time, but remain poor.”
Relying on an earlier analysis by the Economic Policy Institute, the AFL-CIO plan says that a program that provides a 3.5 percent tax rebate on the first $15,000 each worker earned in 2002 would pump $65 billion into the economy and benefit 149 million workers, each of whom would get as much as $525. A plan that gives onetime $1000 rebates to the same workers would put $150 billion into the economy. According to EPI, a $175 billion stimulus package, with $110 billion in spending and $65 billion in tax rebates to low and moderate payroll taxpayers, will boost growth by two percentage points and create 1.5 million new jobs in 2003.
The AFL-CIO proposes to pay for its plan by modifying President Bush’s 2001 tax cuts, saying, “Saving some of the resources currently slated to be spent in the future on tax cuts for the wealthy and investing them now in ways that help all Americans is the most responsible and affordable way to spur economic growth.” The labor federation says it opposes cutting taxes on dividends, making the Bush tax cuts permanent, or adding new tax breaks for business.
The labor federation says, “The benefits from President Bush’s dividends tax cut would flow to the very same individuals who already won big under the Administration’s 2001 tax plan …three quarters of the benefit will go to tax filers with incomes exceeding $100,000 …for taxpayers with incomes below $50,000 …the average tax break is $76 or less.”
The solution, instead, is to create more demand. As the chief economist for the U.S. Chamber of Commerce recently put it, “Two-thirds of the economy is consumption, and that’s what we’re betting on to improve growth next year.”
The AFL-CIO says urgent steps are needed to jumpstart the economy. Unemployment is at six percent, an eight-year high, while 10 million unemployed workers want jobs and can’t find them and the number of workers unemployed for more than six months – 1.7 million in November, 2002 – is at its highest level in a year. Instead of adding thousands of jobs in November as some forecasters predicted, the economy shed a net 40,000 jobs, while the manufacturing sector lost 45,000 jobs in its 28th straight month of decline. Compounding the crisis, according to the Business Roundtable, 60 percent of CEOs say they are going to cut payrolls in 2003. More Americans are losing health insurance coverage, erasing the gains of the late 1990s. And states are struggling to fill record budget gaps – a startling two-year turnaround in their fortunes.
The labor federation plan concludes, “The fairest and most effective way to reverse 22 months of lay-offs and decline and restore vitality to the American economy is with an economic recovery program designed to help those hit hardest by the downturn, create good jobs and improve wages and benefits for all working families.”