Millions Out of Work, Bush Gives Tax Cuts to Rich

By Adam Price

San Jose, CA - In May, the unemployment rate rose to 6.1%, the highest level in nine years. Businesses have cut more than two and a half million jobs since the recession began in March of 2001. This drop in jobs is the longest since the Great Depression of the 1930s. With so many of us out of work, it is taking longer and longer for the unemployed to find jobs. It now takes an average of almost five months to find work, the longest period of time in almost twenty years.

This means that more and more workers who lose their jobs are seeing their state unemployment benefits run out before they find work. The latest figures from April showed that this so-called 'exhaustion rate' had risen to more than 43%, the highest since government began reporting in 1972. Many of these workers can file for extended unemployment benefits from the federal government. But these benefits last for only three months, and more than two-thirds don't find new jobs before they lose benefits entirely.

And then what? Workers are forced to deplete their savings and most have to borrow money to get by. Unless there are others in the family who can cover their health insurance, the unemployed for the most part have to do without and put off needed medical care. Even worse, many social services, which are largely funded by state and local governments as well as charitable organizations, are being cut back due to budget crises and the drop-off in donations.

Even those of us who still have jobs are being hurt by rising unemployment, as companies cut wages. In the first three months of this year, average wages, adjusted for inflation, fell 1.5%. While this may not sound like a lot, it is the biggest drop since 1991. Many unions and workers feel that they have to take these cuts in order to save their jobs.

But why should workers pay when the top bosses are doing better than ever? Pay for corporate CEOs rose by 15% in 2002, and now is 200 times the pay of the average worker. Even as companies cut medical benefits and pensions for retired workers, executive pensions are being boosted.

The Bush administration has taken advantage of growing economic insecurity to push through a new round of tax cuts. The biggest winners are the rich, who receive most of benefit from the cut in taxes on stock dividends and on high incomes. Many lower-income families were excluded from a temporary tax cut for families with children, since the Republicans consider tax cuts for the poor to be a kind of 'welfare.'

The Republicans claim that taxing stock dividends is 'double taxation,' since corporate profits are taxed, and then the share of profits that they pay out as dividends to owners of stock are also taxed. But, in fact, many corporations pay no corporate income tax, and they don't pay sales taxes on their purchases. The Republicans' goal is to end all taxes on dividends, which means corporate profits would not be taxed at all!

But working people actually pay triple taxes! We have to pay payroll taxes (or FICA), which goes to Social Security and Medicare, and then income taxes on our paychecks. And then, when we spend what we've earned, we have to pay sales taxes.

Lower taxes for working people and higher taxes on the wealthy would not only be more fair, but it also help the economy more, since we are more likely to spend the extra income than the rich. That said, no changes in tax policy would change the fact that there is an ongoing crisis of overproduction on a world scale. While working people need everything from clothes to cars, factories are standing idle because their owners cannot find a market for the goods they produce at the rate of profit they desire.

The Bush tax cuts are not just another 'trickle-down' scheme that promises to help the economy by giving handouts to the rich. There is a much more sinister goal. The Bush tax cuts are causing huge budget deficits. The federal government will have to borrow about $400 billion this year alone because of the tax cuts, greater military spending and the ongoing recession. The Republicans plan to use these deficits to make even more cuts in social programs. In particular, they are plotting to do away with Social Security and replace it with private pensions that would benefit the well-to-do and leave the poor with little or nothing.

Hey, Mr. Bush, if you really wanted to cut taxes to help the unemployed, why don't you eliminate the federal income tax on unemployment benefits?