Use tax surplus for schools, health & social programs

By Tim Wheeler

"Support Social Security, Medicare and Education - Not the rich and Big Business! Vote NO on the irresponsible tax cut."

That is the headline on a leaflet the AFL-CIO is handing out urging people to contact their senators to demand they defeat the Republican's tax cut bill.

The House already approved by a narrow 223-to-208 vote a bill to slash taxes by $792 billion over the next decade with the lion's share going to the wealthy and big banks and corporations. The Senate is now debating alternative measures that differ in detail but still give hundreds of billions of the surplus to the rich.

The reason for this orgy of tax cutting is projections by the Congressional Budget Office of $2.9 trillion in surplus tax revenues in the next decade. Republican lawmakers see the giveaway of that bonanza to their wealthy backers as the key to preserving GOP majority control of the House and Senate and capture of the White House in the 2000 elections.

But the labor movement and grassroots tax reform groups warn that the GOP tax cut measures are a huge transfer of wealth from the pockets of working people to the bank accounts of the rich.

The AFL-CIO leaflet warns that the measure reserves virtually none of the surplus is earmarked for Medicare and Social Security. Bankrupting these vital benefit programs is consistent with the GOP drive to destroy or privatize Social Security and Medicare.

More than 75 percent of the tax cut "will go to the richest 20 percent" of taxpayers and a whopping 30 percent will go to the "wealthiest one percent who already pocket $301,000 in annual income," the labor federation charged. These high-rollers would each receive an extra $54,000 in reduced taxes annually, 310 times as much as the average tax cut going to the bottom three-fifths of taxpayers. The bottom 60 percent of taxpayers would receive an average tax cut of only $139 per year. Those in the lowest income bracket, earning less than $13,300 would receive a tax cut of $22.

The labor union urged people to telephone their senators, toll-free, at 1-877-722-7494 to urge them to reject the GOP giveaway to the rich. "Tell your senators that working families are watching this vote," the leaflet states. "Urge them to support Social Security, Medicare and education rather than give a big present to the rich and Big Business."

Robert S. McIntyre, executive director of Citizens for Tax Justice (CTJ) said the Republicans "apparently have no doubts about who they think should get tax cuts. And if it means bankrupting the government to make the rich even richer, well, they don't seem to mind."

CTJ debunked the Senate GOP leadership's attempts to peddle their version as less "irresponsible, reckless and heavily tilted toward the best taxpayers. Both plans, he said, give the hog's share of the tax cut to the rich.

In an op-ed article, McIntyre charges that the vaunted budget surplus is based on assumptions of 15 percent reductions in discretionary federal spending programs including housing assistance, protection, law enforcement, and defense.

"If defense keeps up with inflation and domestic appropriations keep up with the economy, as they have since the end of Ronald Reagan's first term, then the supposed surplus turns into a cumulative deficit of $76 billion over the next 10 years ... The projected surpluses are a pipe dream."

The GOP plan includes a 10 percent across-the-board cut in the income tax. It also includes cuts that disproportionately benefit the wealthy including a cut in the capital gains tax and the elimination of the estate tax.

Hidden in the fine print of the GOP tax bills is $123 billion in new "corporate welfare" tax cuts over the next 10 years, including $48.1 billion in tax breaks for multinational corporations, $23.4 in capital gains tax cuts for financial corporations and timber corporations, $16 billion in tax cuts through the repeal of the corporate minimum tax, $13 billion in tax cuts for the so-called "three martini lunch" loophole and $21.9 billion in "miscellaneous extensions, offsets" and other loopholes.

The Clinton administration warned that the president will veto the GOP plan if it is adopted by the Senate. The administration also announced Clinton will veto a so-called "compromise" by a group of Democratic senators that would reduce the tax cut to $500 billion. Sen. John Breaux, (D-La.) a member of the Senate Finance Committee, claimed his bill would satisfy GOP demands for a tax cut while providing funds for Medicare, prescription drugs and other discretionary spending programs.

Breaux recalled the government shutdowns of 1995 and warned that the nation is "headed for a major train wreck, which I think would be terrible for the American people. Here we have a trillion-dollar surplus and the two parties in Washington can't figure out what to do with it."

But in his radio address July 24, Clinton denounced the GOP plan as "reckless," charging that it would require "dramatic cuts in vital areas such as education, the environment, biomedical research, defense and crime fighting."