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Sweeney expects bill's approval; predicts record deficits, no new jobs

Wednesday, May 14, 2003

By Ann McFeatters, Post-Gazette National Bureau

WASHINGTON -- AFL-CIO President John Sweeney yesterday called the Bush administration's tax-cut policies "obscene" for what he expects they will do to the U.S. economy, yet he conceded nonetheless that a tax cut this year is all but a done deal.

In response to a reporter's question about the inevitability of a tax cut similar to the one the House has already passed and the Senate will take up, Sweeney said, "It looks that way."

But he said any tax cut, even if it were closer to the $350 billion package the Senate is considering rather than the $550 billion one the House approved, would not create jobs and would lead to record deficits. He complained that the Bush administration came into office in a period of budget surpluses and is creating the highest annual deficit in U.S. history, projected at $300 billion this year.

Sweeney said, moreover, that the American people have no idea how large a cut in services at state level they are about to see because of President Bush's tax cuts.

Further, Sweeney argued, the tax-cut package is drafted mainly to aid millionaires. He based that contention in part on a report by the Center for Budget and Policy Priorities, which said the tax cut would give the nation's richest one-tenth of 1 percent about $139 billion in tax relief over the next decade, or roughly the same amount as the bottom 89 percent of households.

Such criticism was dismissed by Bush, who was traveling yesterday in Missouri and Indiana to promote his tax-cut proposal. He argued that those claiming that a tax cut would provide the greatest benefit to rich Americans are engaging in "the old, tired, stale class-warfare argument. A family of four making $40,000 a year would see their federal tax bill go down from $1,178 a year to $45."

But Sweeney argued that the administration's 2001 tax cut did not create jobs -- 2 million have been lost in the past three years -- and that a tax cut this year won't create jobs, either.

The AFL-CIO, the federation of 65 unions representing 13 million workers, is making the defeat of Bush its No. 1 political priority next year, according to Karen Ackerman, its political director. There is little expectation of winning back the House or the Senate for Democrats, she said.

But the AFL-CIO won't endorse a Democratic candidate for president unless that candidate gets the backing of two-thirds of the union's executive council, Sweeney said.

Today, a coalition of anti-tax-cut groups -- Fair Taxes for All, the Campaign for America's Future and MoveOn.org -- is organizing a "national call-in day" to lobby lawmakers against "the irresponsible Bush tax cuts that would lead to massive deficits and divert resources from education, health care and Social Security."

In another union protest today, United Steelworkers President Leo Gerard plans to demonstrate in front of the U.S. Department of Labor, arguing that Congress quickly must extend long-term jobless benefits that expire May 31 to prevent 2.1 million jobless workers from losing benefits this summer.

In addition to the $1.3 trillion tax cut passed in 2001, Bush at first demanded another $735 billion tax cut over 10 years, including elimination of taxes on stock dividends. Now, he says he favors the cut the House approved, 222 to 203, last week -- a $550 billion bill that reduces but does not eliminate federal taxes on corporate dividends and capital gains. The Senate Finance Committee approved a $421 billion package, but many Democrats are balking at more than $350 billion in tax cuts.

The White House has not denied reports that it plans a series of annual tax cuts if Bush is re-elected next year. Sen. Jay Rockefeller, D-W.Va., a critic of the proposed tax cuts, is waiting to see if he will be one of the few Democrats chosen for the conference committee that will hammer out a compromise between the House and Senate versions after the Senate acts on its tax-cut plan. He said he is convinced that Bush intends to offer one tax cut after another.

Rockefeller said people injured most by the slumping economy are having the most trouble meeting their personal financial obligations and insisted that Bush's proposal would not help the working poor. He said the tax cuts for the wealthy won't help the economy because they aren't the ones who will go out and buy a washing machine or more food or clothing or fix up their houses.

Democrats and unions are trying to get the Senate to include in any tax-cut package a Rockefeller proposal for $30 billion in fiscal relief for the states, which are having their worst financial crunch in 50 years. Senate Finance Committee Chairman Charles Grassley, R-Iowa, agreed to go with $20 billion in the Senate version.

Ann McFeatters can be reached at amcfeatters@nationalpress.com or 1-202-662-7071.