Unemployment is climbing. The stock market is dropping. The housing boom is bust. Corporate earnings are tanking. The nation’s economy is in the worst shape it’s been in years. Maybe even headed toward recession. Working families are worried.
The Bush administration today proposed a growth package of as much as $150 billion, which insiders familiar with the details say may include $800 tax rebates for individuals and $1,600 for households, along with business incentives. Although it is “encouraging” that President Bush recognizes the need to act quickly to stimulate the economy, Bush focuses too much emphasis on tax cuts—both business and personal, according to AFL-CIO President John Sweeney. Bush’s plan does not address crucial problems facing working families or target tax benefits to those families who need them the most and will spend them the fastest.
In a letter to Senate Majority Leader Harry Reid (D-Nev.) and House Speaker Nancy Pelosi (D-Calif.), Sweeney wrote:
In particular, we are concerned that the President’s income tax cut proposal would not be sufficiently stimulative because it fails to target lower-income and middle-income households who, as the Congressional Budget Office (CBO) wrote last week, are likely to spend a larger share of any tax benefit they receive.
Today, the AFL-CIO outlined several proposals to develop a short-term stimulus package that “offers the biggest bang for the buck” and began to address the underlying causes of today’s economic anxiety.
In addition, with many state tax codes linked directly to federal tax rates, Sweeney warns the business tax cuts could lead to a reduction in state revenues, resulting in economically depressing budget cuts and tax increases by state governments.
Noting that compromise will be needed to quickly enact a stimulus package, Sweeney urges Reid and Pelosi to “insist on legislative measures” that will deliver the biggest boost to the economy and protect state and local budgets.
The five points the leaders are urged to include are:
- Extension of unemployment benefits.
- Increased food stamp benefits.
- Tax rebates targeted to middle-income and lower-income taxpayers.
- Fiscal relief for state and local governments to avoid the economically depressing effect of tax increases and budget cuts.
- Acceleration of ready-to-go public investment in school renovations and bridge repair.
For the long term, Congress also must address the deep and serious underlying causes of today’s economic woes. Says Sweeney:
While it is appropriate for Congress to focus on measures that have an immediate economic impact as it crafts a short-term stimulus package, this is no excuse to put our heads in the sand and do nothing about the underlying longer-term problems afflicting our economy.
Wage stagnation is at the heart of the economic problems facing today’s ordinary working families.
Wage stagnation, which began in the 1970s, has led to longer working hours, higher consumer debt, and increasing reliance on home equities. But today home values are plummeting, home foreclosures are on the rise, consumer debt is reaching unsustainable levels, and prices for energy, health care, and education are soaring out of reach for many working families.
Sweeney’s letter points to several solutions to solving the wage stagnation, including:
- Ensuring transparency and effective regulation of our housing and financial markets.
- Reactivating the historically successful fiscal and monetary policies that place a higher priority on full employment.
- Fixing our flawed trade policies.
- Investing in the high-paying green jobs of the future.
- Fixing our broken labor laws so that workers who want to form a union can bargain with their employers for better wages and benefits.
- Ensuring affordable health care and retirement security.
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