Corporate tax giveaways won't rev up economy
In the days and weeks — now months — following the Sept. 11 attacks, Americans have slowly gone back to their regular routine, trying to get back to that comfortable feeling of "business as usual." In Washington, recovery seems to have taken place more rapidly. Even with the anthrax threat, politicians went back to their old ways within days of the attacks.
In a matter of days, Congress had approved a $15 billion bailout for the airlines, an industry that donated millions to congressional candidates in the last election. That money would have been better spent improving passenger rail service. We are the only major-developed nation without a viable passenger railroad industry.
President Bush was among the first to use the tragedy to promote his political agenda. He began telling audiences that giving him fast-track trade authority would help defeat terrorism. He did not explain how trade agreements could help him find bin Laden, but his strategy seems to have succeeded.
By wrapping fast track in the American flag, Bush cowed just enough congressmen to get fast track approved by a single vote: 215 to 214. Now U.S. Trade Representative Robert Zoellick can negotiate NAFTA-style agreements with no input from Congress or the people. All Congress can do is accept them or reject them.
We've been here before. In 1993, Bill Clinton used fast-track authority to strong-arm the North American Free Trade Agreement (NAFTA) through Congress. NAFTA was supposed to promote world peace, too, by creating millions of jobs. Instead, Canada and the U.S. lost hundreds of thousands of jobs, and Mexico plunged into a major financial crisis. They are still recovering from the "benefits" Clinton's fast track won them.
Now we have the "economic stimulus" package, which Bush and Congress claim will not only stimulate the economy but — you guessed it — help us win the war on terrorism.
Unfortunately for all working Americans, it will do neither. It is a $100 billion cornucopia of tax giveaways to corporations that will put a lot of money into a very few pockets.
And they are the wrong pockets. To stimulate demand, you need to put money into the hands of people who will spend it — the middle class and the poor. Working-class families.
President Bush made that very point himself in November: "The best way to stimulate demand is give people some money so they can spend it."
But even as he was speaking those words, his staff was lobbying Congress to make sure the stimulus package contained corporate tax cuts, most importantly, repeal of the alternative minimum tax (AMT).
The AMT was created in the late 1980s to make sure that no matter how many tax loopholes a corporation used, it would have to pay at least a minimum tax on its profits. The AMT is not foolproof, but it does account for some tax revenue. The stimulus plan not only does away with the AMT, but it refunds all the money these corporations have paid because of it.
Many of the nation's largest and most profitable corporations will get checks for hundreds of millions of dollars.
What is most telling, though, is that a small group of medium-sized companies will reap windfalls far out of proportion to their sizes. For example, General Motors, with 380,000 employees will get $800 million; TXU (formerly Dallas Power and Light), with only 16,000 employees, will get $600 million. Other medium-sized companies standing to rake in huge checks are Chevron Texaco, Enron, Phillips Petroleum, IMC Global, and CMS Energy.
What do all these lucky companies have in common? They are all in the energy or mining business, and they are all based in or near Texas.
In an editorial in the New York Times (Oct. 31), Paul Krugman said that to really understand legislation, you need to look for the part that gives something special to one-eyed bearded men with a limp. That is, you should look for special favors to select groups. In the stimulus package language, the one-eyed bearded man with a limp looks a lot like Dick Cheney or George W. Bush.
Bill Moyers, press secretary to former President Lyndon Johnson, said, "The predators of Washington are up to their old tricks in pursuit of private plunder at public expense. In the wake of this awful tragedy wrought by terrorists, they are cashing in."
Using a national tragedy to promote tax breaks for your campaign contributors requires a ruthless cynicism we can't fathom. But the one part of their plan that might actually stimulate the economy requires even more cynicism. It asks workers to spend their pensions.
This provision would give workers a "holiday" from Social Security and Medicare taxes, temporarily increasing workers' paychecks by 7.65 percent. Workers are likely to spend this money on consumer items, putting the money in circulation and increasing demand.
But that money comes from the workers' own retirement funds, while corporate refund checks come from the general treasury. Congress would have you rob your savings while they give corporations checks written on the taxes you pay. All in the name of fighting terrorism.
Attorney General John Ashcroft told the Senate that anyone who questions the Bush administration's policies is "giving aid to the enemy." We disagree. We are 100 percent behind the war effort and the men and women putting their lives at risk overseas.
But when the White House and Congress take actions that will bring hardship to the lives of working families, it is our duty to oppose those actions.
Anything less is un-American.