Let's Stay Focused on the Right Kind of Economic Recovery

Posted by Andy Stern, AlterNet at 4:00 PM on January 13, 2009.

You have to tip your hat to the conservatives in Congress for one thing, at least: They know how to keep their eye on the ball.

Even after an electoral disaster. Even with their basic theory of supply side economics lying in tatters. Even with the myth of the market as the unerring answer to all economic questions exposed as nothing more than a cynical hoax, they’re still waging class warfare on the rest of us.

Their ideas for an economic recovery plan? Cut the capital gains tax (or eliminate it entirely) and cut corporate taxes (never mind that many corporations already find ways to pay little or no income taxes).  A study by the Maryland Budget and Tax Policy Institute found that 70 percent of the largest corporations there paid no state income tax in one recent year. 

“We need a balanced approach,” they say. I couldn’t agree more.

For far too long the field has been tilted heavily toward corporations and the wealthy. The tax system, regulatory controls, and the banking and investment systems were all manipulated to give big business a pass and make the top 5 percent fabulously wealthy while most of America struggled to break even; most working families saw their income fall during the last eight years.

Now, we have a president-elect and Congress that recognize the consequences of decades of uninhibited warfare against the middle class and poor. They want to bring real balance to our economic policies – by creating good jobs, passing comprehensive healthcare reform, and ensuring workers have the freedom to choose a voice at work. And it turns out that, for the most part, what’s best for working people and those who are suffering most in the current crisis is also what’s best for bolstering the overall economy.

Mark Zandi, lead economist at Moody’s Economy.com – who incidentally was an informal advisor to U.S. Sen. John McCain’s presidential campaign – did an analysis showing how much each dollar spent on the following will boost the nation’s GDP.

The best:

Temporary increase in food stamps: $1.73

Extend unemployment insurance benefits: $1.63

Increase infrastructure spending (roads, bridges, schools, etc.): $1.59 General aid to state governments: $1.38 Payroll tax holiday: $1.28

The worst:

Make dividend and capital gains tax cuts permanent: $0.38

Make Bush income tax cuts permanent: $0.31

Cut in corporate tax rate: $0.30

So, it’s clear what we have to do -- and we have to do it immediately:

•    Provide major new funding to state and local government for healthcare and other needs to shore up their finances, protect the services our communities rely on, and save critical jobs.

•    Put more money directly into the hands of working people.  

•    Invest in the social safety net – like Medicaid, healthcare for uninsured children, and unemployment insurance – to give support to people who are victims of our faltering economy (more than 2.6 million people lost their jobs last year, for example).

•    Make a major new investment in infrastructure to create good jobs and maintain the backbone of our economy, including investment in green projects and technologies that will provide the stable jobs of the 21st century. 

Fortunately, President-Elect Obama and the Democratic leaders in Congress appear to be heading exactly in that direction. They understand that the economic recovery package needs to be focused on doing what’s best for our economy overall and doing what’s best for the people in America who work for a living.

But the fight for the right kind of economic recovery package is far from over. So I would say to the members of Congress that they would do well to remember two things as they craft a package in the coming weeks:

First, don’t forget the working people who put their faith in you last November 4. Second, you know what needs to be done – so don’t take your eye off the ball.

Andy Stern is president of the Services Employees International Union (SEIU), which has launched the Change That Works campaign to engage its 2 million members in 35 states in efforts to bring economic solutions to Main Street – including the economic recovery package, comprehensive healthcare reform, and the freedom for workers to join a union.

Tagged as: america, economic crisis, working families, economic meltdown, econ-ocalypse, economic recovery