AFL-CIO Urges Congress to Pass Broad Economic Stimulus Package That Will "Get the Biggest Bang for the Buck"

Sweeney Says Bush Action is “Encouraging” But Does “Not Address Crucial Problems”

January 18, 2008 -- The AFL-CIO today urged Congress to pass a stimulus package that helps the economy by extending unemployment payments, increasing food stamp benefits, sending fiscal relief to state and local governments and investing in ready-to-go school, bridge and sewage construction, in addition to providing tax rebates targeted to middle- and low-income taxpayers -- while also beginning to address underlying causes of the current weakness.

“It is encouraging that President Bush has recognized the immediate need for an economic stimulus package” but “it appears that President Bush’s proposals are too heavily weighted toward tax cuts over much-needed spending, do not address crucial problems facing working families and do not target tax benefits to those families who need them most and will spend them fastest,” AFL-CIO President John Sweeney wrote today in a letter to Speaker of the House Nancy Pelosi and Senate Majority Leader Harry Reid. Saying a large short-term stimulus is clearly needed, Sweeney also noted, “this is no excuse to put our heads in the sand and do nothing about the underlying longer-term problems afflicting our economy.”

In the letter to Majority Leader Reid and Speaker Pelosi, Sweeney provided a five-point plan for short-term stimulus and urged Congress to look beyond the immediate economic problems to address underlying causes such as wage stagnation, consumer debt and skyrocketing health care costs.

The AFL-CIO stimulus recommendation includes:

* A one-year federal unemployment compensation program that provides 20 weeks of extended unemployment benefits in all states; 13 additional weeks in “high unemployment” states with an unemployment rate of 6 percent or more and a $50 per week benefit increase;
* An increase in food stamps benefits;
* A tax rebate targeted to middle- and lower-income families;
* $30 billion in fiscal relief to states in the form of revenue-sharing grants and increases in the Medicaid match;
* And a $40 billion acceleration of ready-to-go construction projects that will put Americans to work making desperately needed repairs to U.S. schools, bridges that have been declared unsafe and sewage treatment.

“We are concerned that the President’s income tax cut proposal is not 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,” Sweeney said in the letter. “We are also concerned that the President’s proposal to cut business taxes would not be sufficiently timely and, because of the linkages between federal and state tax codes, could trigger economically depressing budget cuts and tax increases by state governments.”

Congress must also address the longer-term causes of economic weakness, Sweeney wrote, attacking the root causes of wage stagnation as well as deficient regulation of the mortgage and financial services industries.

Long-term fixes include providing health care and retirement security; investing in the high-paying green jobs of the future; fixing our flawed trade policies; and reactivating successful fiscal and monetary policies that place a higher priority on full employment, Sweeney said. He also said fixing broken labor law and restoring workers freedom to form and join unions and bargain collectively with their employers is crucial to wage and productivity growth.

Source: AFL-CIO

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