November 9, 2001
CHICAGO (Nov. 9)–What makes an economy grow?
Is it investors putting their surplus capital to work financing new ventures that produce new and better products?
Is it consumers spending their rising wages and salaries on more goods and services?
Is it government investing in sound public-works projects that provide the private economy with basic resources such as roads, airports, water mains, sewers and mass transit?
Or is it a mixture of all three?
Economists argue those ideas back and forth daily in classrooms and lecture halls across the land.
“But apparently there’s no argument around the Bush White House,” says UTU Illinois Legislative Director Joseph C. Szabo. “This administration has come down firmly on the side of investors and business executives, not workers or consumers.”
The president’s pro-corporate slant may not be readily apparent, Szabo said, because his handlers have skillfully used the news media–particularly television and photographs–to suggest a labor-friendly attitude that is not reflected in the administration’s actual programs and policies.
“They’ve staged some nice photo-ops with New York City firefighters and police officers, but’s that’s mostly for show,” Szabo said. “If you look at the economic legislation supported by the Bush administration, it’s clear that the president’s policies on investment and taxation definitely are slanted in favor of the big-business community and its highly paid top managers. Very little attention is being paid to the wage-earning and salary-earning families whose spending drives the economy or to the public works that make the private-sector economy possible.”
The evidence, Szabo said, is in the $100-billion economic-stimulus package introduced in the Republican-dominated House of Representatives. Instead of granting tax relief to working individuals likely to spend the money on cars, houses, vacations, home appliances and recreational equipment, the bill routes the bulk of its benefits to successful corporations.
“The House legislation would give IBM Corp. a $1.4-billion tax refund,” Szabo said. “It would give $832 million to General Motors Corp., $102 million to Kmart and $671 million to General Electric, which is probably the most successful business corporation in the entire world right now. This is corporate welfare. Seven big companies would split $3.3 billion in refunds of the alternative minimum taxes they paid dating back as far as 1986. Enron, U.S. Steel and Kroger get big payoffs too. Ford Motor could get as much as $2.3 billion, and Chevron could get up to $314 million.
“Yet this bill has nothing in it for the 150,000 airline and aviation-industry workers who just lost their jobs, or the 120,000 people who just lost their jobs in the hospitality and tourism industries,” Szabo noted.
“More than 415,000 American workers were laid off in the month of October,” Szabo said. “That’s the highest number in a single month since 1980. All that lost spending power is exerting a terrific downdraft on the economy and on the quality of life of working families, yet the administration seems uninterested in helping these people restore their incomes, either by opening up new jobs for them, or by supplementing their unemployment benefits. It’s hard to see how the Bush administration’s $3.3 billion in tax refunds to large corporations is going to help these people get through hard times or jump-start the economy.”
By contrast, Szabo said, the Democratic-controlled Senate has been working on legislation to get supplemental income into the hands of working families who will spend it immediately in ways that will stimulate business activity. He said Sen. Max Baucus of Montana has introduced a bill to extend unemployment benefits by 13 weeks, provide a 50-per-cent federal match for COBRA health-insurance policies and allow more workers to qualify for Medicaid. And Sen. Robert Byrd of West Virginia is putting together a $20-billion package that will enable the government to hire more customs inspectors, border guards, food inspectors and security personnel to guard nuclear power plants.
“These are bills that open up new jobs in critically important areas and get paychecks and benefits to those who need income most and will spend it in ways that immediately boost the economy,” Szabo said. And, he noted, there’s still more Congress can do.
“They could pass S.250, the High Speed Rail Investment Act,” he said. “That would allow Amtrak to raise $12 billion to build a modern rail infrastructure in this country,” he said. “High-speed rail would stimulate the economy in three successive stages:
“First, it would put thousands of people to work building new railroad tracks, grade separations, stations and high-tech signaling systems to bring our 19th-century rail infrastructure up to world standards.
“Next, it would open up thousands of new railroad jobs for the crews and support personnel needed to tun the new high-speed train fleet.
“And once the trains are running they would add billions of dollars in new productivity to the economy by reducing travel time and costs for business travelers, eliminating costly driving and flying, and opening up lucrative new business and real-estate opportunities around key downtown and suburban stations. Passenger trains can stimulate economic growth the same way the federal airport program and the Interstate highway program did.”
Szabo said today’s Republican administration needs to steal a page from the most successful Republican president of the 20th century, Dwight D. Eisenhower, who served from 1953 to 1961.
“Ike was terrified that a new Depression would occur on his watch,” Szabo said. “He didn’t want to be labeled another Herbert Hoover, so he had his advisors develop a big public-works program that would put people to work and at the same time build a modern transportation system capable of rejuvenating the economy over the long term. That program was the Interstate highway system. When the Korean War ended in 1953 and the economy started to slow down, Eisenhower pushed Congress to pass an Interstate bill. It was a tough sell, and it took two years, but after a lot of hourse-trading the bill was passed and construction started in 1956.
“The Interstates were a huge success,” Szabo said. “People bought more and more cars, and developers built new subdivisions, hotels, shopping centers, office parks and factories at every ramp and interchange. This is still going on. The Interstate project changed American life forever and gave us the strongest economy in the world.
“The Bush administration needs to study the Eisenhower administration’s greatest success and then start doing the same thing with a high-speed rail network,” Szabo said. “It would guarantee this country another 40 years of economic growth. That’s not something you’re likely to get out of a tax refund to General Motors.”