Bush Stimulus Plan Unfair to Middle and Working Class Families.

Business Editors

NEW YORK--(BUSINESS WIRE)--Jan. 6, 2003

National Urban League Institute for Opportunity and Equality

National Urban League Institute for Opportunity and Equality Calls for

Extension of Unemployment Insurance Benefits and Debt Restructuring

for Middle and Working Class Families

The National Urban League Institute for Opportunity and Equality today charged that the Bush stimulus package is likely to be ineffective and is unfair in that it provides relief mostly for wealthy Americans while ignoring lower-income and middle-class families.

The Institute called for a meaningful stimulus alternative that speaks to the needs of the vast majority of middle and working class Americans hardest hit by the economic recession.

"National unemployment figures and other data illustrate that middle and low-income Americans have shouldered the burden of the recession through lay offs and program cuts," said Dr. William E. Spriggs, Executive Director of the Institute for Opportunity and Equality.

"Consequently it makes the most sense to provide a stimulus package that gives economic relief to those who have been hurt the most," Spriggs added.

According to Spriggs the President's proposal--which accelerates the rate cut for those in the highest income brackets and proposes tax cuts to individuals who receive corporate dividends--not only favors the wealthy but also fails to generate the demand that is needed to spur the economy.

"For instance, Federal Reserve actions to lower interest rates reduced home mortgage interest rates but those actions largely benefited individuals in upper income brackets and have not benefited middle-income, working class and, or black and Latino families that do not own homes" said Spriggs.

"Seventy-five percent of white Americans own homes versus 45% of African Americans and 45% of Hispanics. The gap in homeownership means that the most effective form of relief has largely bypassed disadvantaged populations who are left unable to restructure their debt except by cutting spending and thereby hurting the economy."

According to Spriggs the 2001 Bush tax cuts which provided relief for wealthy individuals and corporations, exacerbated the effects of the recession on middle and lower-income families by putting pressure on the federal budget and making job training and other programs less accessible.

The National Urban League Institute for Opportunity and Equality therefore urges the President to revise his economic stimulus plan to include the following alternative forms of relief that will assist American families most in need and help stimulate an economy still reeling from recession.

- Provide debt relief for low-income families by reinstating income tax deductions on non-mortgage debts like automobile and appliance loans.

- Fully protect those who receive health insurance through Medicaid. A blanket bailing out of the states may not help lower income families. Instead of blanket block grants, states should receive help directly for programs. Remove the requirement for states to match federal funding for Medicaid. 20% of state expenditures go to Medicaid.

- Provide an income tax rebate equivalent to what many Americans would pay on payroll taxes up to $18,000 in income.

- Accelerate the 2001 tax provisions only for adjustments to the Earned Income Tax Credit.

- Stop the clock on the five-year time limit for families receiving Temporary Assistance to Needy Families (TANF) benefits.

- Extend unemployment benefits for those who have lost their jobs and implement the following reforms to the Unemployment Insurance (UI) system:

- Follow the example set by 12 states that have changed their UI eligibility requirements to include alternate earnings base periods. Those changes have resulted in increased UI eligibility for low-wage and part-time workers--precisely the workers who have been hurt most by recent events.

- Maintain eligibility for workers who cannot work full-time. Many states require people getting benefits to be available for full-time work, but many women are only available for part-time work because of the care they give to children or elderly relatives.

- Eliminate benefit wait period. Currently only 12 states cover workers for the first week of unemployment, though a growing number of states are eliminating the wait period. For example, in the wake of 9/11 Virginia and New York's Republican governors have waived their states "waiting" period.

- Institute a federal unemployment insurance benefit supplement to insure that the benefits can keep families intact. In Mississippi the average benefit is $157 a week. For a worker earning the minimum wage that amount would replace less than two-thirds of their earnings. The supplement should be weighted toward the bottom scale of benefits to insure that those at the bottom are raised to at least $200 a week--approximately the earnings of a minimum wage worker.

- Repeal the taxation of unemployment insurance benefits. The benefits are funded by a tax already paid for by workers. To tax the benefits again is cruel and based on a misguided belief about workers deliberately extending their unemployment periods.

"America's middle-income and working class families should not have to bear the brunt of the economic recession," said Spriggs.

"These basic recommendations would go a long way to providing much needed relief for the vast majority of American families."

The National Urban League Institute for Opportunity and Equality conducts research, policy analysis and advocacy focused on issues of critical importance to the African-American community and the nation as a whole.

The Urban League is the nation's oldest and largest community-based movement empowering African Americans to enter the economic and social mainstream. The National Urban League, headquartered in New York City, spearheads the nonprofit, nonpartisan movement, while Urban League affiliates operate in more than 100 cities in 34 states and the District of Columbia.