Labor & Employment Law

Trumka Tells Deficit Commission Job Growth Best Answer to Debt

By Mike Hall

Social Security is not the cause of the nation?s budget deficit, and stronger economic and job growth spurred by stimulus spending now is the best path to reducing and stabilizing the national debt, AFL-CIO President Richard Trumka told the federal budget deficit commission today.

We must have a job-centered approach to stabilizing the national debt, which would bring us closer to our goal of sustainable, broadly shared prosperity.

To a great extent, the size of the deficit depends on employment and growth.  When employment and growth are weak, tax revenues are low and social assistance expenditures are high.  When employment and growth are strong, the reverse is true.

He also warned the panel that ending stimulus spending that creates jobs and growth?as many Republican lawmakers are promoting?could send the U.S. and global economy into a double-dip recession, or worse. The Economic Recovery Act, said Trumka:

did exactly what it was supposed to do.  It increased the number of people employed by up to 2.8 million, increased the number of full-time jobs by up to 4.1 million and increased real GDP by up to 4.2 percent in the first quarter of 2010.  But it wasn?t big enough.

Without a significant reduction in the trade deficit, only economic stimulus in the form of deficit spending can make up for the remaining shortfall of aggregate demand until private sector demand regains its footing.

Trumka said, ?We believe it is only fitting?:

To ask Wall Street to pay to rebuild the economy it helped destroy. For example with a financial speculation tax that would raise $100 [billion] to $300 billion per year and help curb harmful speculation. Wall Street should pay to build a 21st century infrastructure that will lead to long-term economic growth….Failure to invest in rebuilding our infrastructure for the 21st century will result in lower rates of economic growth?and therefore lower tax revenues.

He also said the commission should look to history for answers to reviving the economy.

The example of the postwar boom?when an economic strategy of broadly shared prosperity with strong unions and shrinking inequality paid off enormous dividends?shows us the way forward.

Click here to read Trumka?s entire testimony.

Many observers believe the Republican members and those with close corporate ties on the bipartisan commission created by President Obama in February are using the panel as smoke screen to cut Social Security or even privatize it.

Just this week, House Minority Leader John Boehner (R-Ohio) called for raising the retirement age to 70 and cutting benefits.  Shortly before appearing before the deficit panel, Edward F. Coyle, executive director of the Alliance for Retired Americans, said:

Raising the retirement age to 70 would be devastating to American workers, particularly those who work in physically demanding construction and service sector jobs.  Americans in their late 50s and 60s are bearing the brunt of layoffs and benefit cuts from the recession.  John Boehner wants to inflict further hardship among those who are already struggling to keep or find jobs.

Coyle told the commission, ?Retirees are deeply disturbed by talk coming out of this Commission about cutting Social Security benefits and raising the retirement age.?

The Alliance for Retired Americans strongly rejects the gloom-and-doom, sky-is-falling predictions that Social Security is going bankrupt.  Not only is this factually untrue, but it is a malicious scare tactic to divert attention away from the root causes of our deficit?unwise tax and spending decisions by Washington over the past decade.

He also pointed out that the government does not fund Social Security and the program currently has a $2.6 trillion surplus:

Social Security is one of America?s greatest success stories.  It has kept generations of seniors out of poverty.  It did not, I repeat, did not cause these deficits.

The 18-member commission will meet throughout the year and then present its recommendations to Obama after the fall elections.

Full post as published by AFL-CIO NOW BLOG on June 30, 2010 (boomark / email).