Federal Budget and Taxes

During the past eight years, the Bush administration consistently pushed tax cuts that mostly benefited wealthy individuals and corporations. This included the massive tax giveaways that were enacted in 2001, 2003, and 2006, as well as efforts to extend some of these tax cuts past 2010. The most irresponsible giveaways lowered the marginal rates paid by high-income taxpayers and the tax rates on capital gains and dividends. According to Citizens for Tax Justice, millionaires received 62 percent of the gains from the tax cut on income from dividends and capital gains. In addition, the Bush administration and congressional Republicans advanced proposals to eliminate or drastically reduce the estate tax, which would benefit only a tiny number of the wealthiest families in America.

Besides benefiting corporations and the rich, the Bush administration's tax policies also helped to create massive federal budget deficits. The Bush administration and GOP-controlled Congresses created enormous deficits in 2003, 2004, 2005 and 2006. With the downturn in the economy and need for emergency spending, the federal deficit has ballooned even further in 2008.

Pointing to these deficits, the Bush administration repeatedly sought to slash spending on health care, education, veterans and a wide range of other vital domestic programs. Along with their GOP allies in Congress, the Bush administration pushed budget reconciliation measures that would have cut spending on Medicare and Medicaid. They also backed appropriations bills that did not provide adequate funding for vital domestic programs.

After the Democrats regained control of Congress following the 2006 elections, they were able to stop attempts by the Bush administration to enact more tax cuts for the rich, and to slash spending on domestic programs. But the threat of GOP filibusters in the Senate and vetoes by President Bush effectively stymied Democratic efforts to provide greater funding for social programs, and to pay for these investments by eliminating some of the Bush tax breaks for corporations and the rich.

With the election of President Obama and the expansion of Democratic majorities in the House and Senate in the 2008 elections, we now have an historic opportunity to chart a new course on tax and budget policy. The UAW and our progressive allies will be working closely with the Obama administration and Democratic congressional leaders to enact measures to bring about this fundamental change.

President Obama has pledged to cut taxes for the 95 percent of working families that make less than $250,000 a year. It is likely that this tax relief measure will be included in the economic stimulus package that will be taken up at the very beginning of the 111th Congress. The UAW strongly supports this initiative, which will provide urgently needed relief for working families while helping to stimulate the economy.

President Obama has also pledged to let the Bush tax cuts for the rich expire in 2010, and to eliminate tax breaks for multinational corporations that ship jobs overseas. The UAW supports both of these positions. In addition to raising needed revenues, these initiatives can restore greater fairness to the tax code and ensure that the federal government is not subsidizing the export of jobs to other countries.

At the same time, President Obama lived up to his promise to increase funding for health care, education, veterans, infrastructure, homeland security and other key domestic programs. This additional spending can provide a powerful boost to our economy to help lift our country out of the current recession. Furthermore, this spending can provide important investments that will strengthen our nation in the future.

Action: