March 2003

Views expressed are those of the authors, not necessarily of the AFSC.

Out of Touch with America's Needs

Jan Richter works with Connect for Kids <www.connectforkids.org> and serves as a central liaison between the TANF advocates in the Coalition for Human needs and a public relations firm funded by the Benton Foundation to help guide media and lobbying work around reauthorization.

President Bush: "We must have an economy that grows fast enough to employ every man and woman who seeks a job."

If this line sounds familiar, it's because the President made a similar pledge during last year's State of the Union address: "My economic security plan can be summed up in one word--jobs." Since then, a round of tax cuts have gone into effect. The result--the private sector lost hundreds of thousands of jobs.

This year, the President has promised even more sweeping tax cuts with the same promise of new jobs. But according to the Administration's own estimates, the $670 billion tax plan would only create 2.1 million jobs over the next three years--barely enough to replace the 1.9 million jobs lost since Bush took office two years ago.

President Bush: "Lower taxes and greater investment will help this economy expand."

The President is right when he says Americans need more new jobs, but wrong when he argues that expensive tax giveaways are the best way to promote job growth. The problem with our sluggish economy is not a lack of capacity--inventories are full--but a lack of demand. That's why we need short-term tax relief targeted to those who will spend it.

"This is Democracy? Nobody Asked Me!" New York, Feb. 15 © Ellen Shub

We need to boost the sluggish economy with short-term spending and time-limited tax relief that won't mortgage the economy's long-term fiscal health. This means extending unemployment benefits for the over one million American workers who have already exhausted their benefits and investing in families by helping workers gain access to education and training. It means helping with fiscal relief to the states so they can maintain spending on vital services like good schools, higher education, and health care. It means targeting tax relief to families who will spend the money to boost demand and get the economy moving.

The real debate should be about how to spur economic growth in a way that doesn't leave us bankrupt in the future. The president's tax cuts would cost at least $674 billion over the next decade. We shouldn't spend hundreds of billions of dollars on a package that fails to help the economy and families most in need, while making it harder to save Social Security and invest in health care and education.

President Bush: "If tax relief is good for Americans three, or five, or seven years from now, it is even better today."

The world is a dramatically different place now than it was when the President pushed his first round of tax cuts through Congress. The Office of Management and Budget says the deficit is the largest in history (though not the largest percentage of GDP). The new tax cuts jeopardize the nation's ability to meet its domestic and foreign responsibilities, threaten national and state fiscal stability and security both now and in future years.

Tax cuts enacted when we had a surplus are not a good idea now that we have a deepening deficit and an increasingly uncertain world. Now is the time to gather our resources to protect our national security and strengthen families and communities.

President Bush: "This tax relief is for everyone who pays income taxes and it will help our economy immediately."

The President's plan to accelerate tax reductions set for 2004 and 2006 this year would do little for the typical family. President Bush's proposals to accelerate some of his previously-enacted tax cuts and exempt dividends from personal income taxes would give no tax cut to almost a third of America's couples and singles, according to Citizens for Tax Justice.

In contrast to the Bush plan, any economic package must provide temporary, short-term stimulus that is fiscally responsible and equitable. Any such package should include aid to states to help respond to their fiscal crises, and should focus on people who will spend the money now, including those hard hit by the economic downturn.

President Bush: "We achieved historic education reform which must be carried out in every school and every classroom, so that every child in America can read and learn and succeed in life."

The President's refusal to support cash-strapped states makes a real commitment to education impossible. While state budget shortfalls threaten funding for education, health care, and other basic services, the President's proposal refuses new financial assistance to the states. Adding insult to injury, the President's dividend tax cut will cost states $4 billion a year, according to the Center on Budget and Policy Priorities. The proposal robs states of the resources they need to invest in better schools, health care, security, and other social services.

Without federal assistance, states will inevitably be forced to increase taxes or reduce spending, or both. This could offset any potential benefit to families and the economy from the President's tax cut package.

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