Dear Editor:
Our economy needs a boost. Over the past two years, more than two million Americans have lost their jobs. Today, the unemployment rate stands at 6 percent, the highest rate in eight years.
Mortgage foreclosures are at a record high. The stock market has lost about $5 trillion in value. Consumer confidence is low. Demand has declined to such an extent that American businesses are now operating at only 75 percent of capacity. Our projected federal deficit is running at $300 billion-plus leaving state governments across the country about $90 billion in the red. Here in New Jersey, Governor McGreevey faces a deficit of $5 billion.
Now is the time for an economic stimulus package that will immediately boost growth through targeted tax cuts, aid for the states and assistance to the long-term unemployed. Unfortunately, the President’s plan to stimulate the economy rejects these approaches, and it won’t work. In fact, it is a reckless plan that abandons fiscal discipline and puts us on a dangerous path toward large deficits and mounting federal debt.
To get our economy moving again we need a plan that delivers short-term stimulus and long-term fiscal discipline.
The goal of any stimulus package should be to prime the pump that drives the economy by getting money into the hands of lower and middle-income families — families that will pour money into the economy. States also need help balancing their budgets, otherwise the impact of cuts in federal taxes will simply be canceled by higher state or local property taxes, which would depress the economy even further.
I support those parts of the President’s program that were targeted at working-class families, including an increase in the child credit and a reduction in the marriage penalty. But now is not the time to accelerate planned tax rate reductions for high-income earners. This is a time of potential war, a time of high unemployment and a time for tough choices. It is not a time to reward the wealthy.
One measure that should be considered to help stimulate the sagging economy is a tax cut that would reduce the burden on all workers and businesses. Louisiana Senator Mary Landrieu and I have introduced the Wage Tax Cut Act of 2003, which would give every working American a refund of payroll taxes paid on the first $10,000 of income earned. That would mean a tax rebate of up to $765 for individuals, and as much as $1,530 for a working couple.
Compare that to the tax cuts proposed by the President, which are disproportionatel aimed at the wealthy, like eliminating the tax on dividend income. That idea would not stimulate the economy. Instead, it would encourage corporations to shift money away from investment and employment and into dividends. It also would reduce state income tax revenues and increase capital costs for states and municipalities by creating a financial instrument that would compete with tax-free municipal bonds issued to pay for important public projects. In addition, the high costs of the President’s proposal would impair the federal government’s ability to make needed investments in homeland security, education, health care and transportation.
The President’s proposal would create deep deficits for years to come, which would harm our economy. Instead of catering to the weathiest among us, we need to put more money into the hands of working-class families who will help stimulate economic growth by putting money into the American market.That’s what the Wage Tax Cut Act of 2003 is designed to do. And I’m hopeful that we can win bipartisan support for this approach.
Jon S. Corzine
United States Senator
New Jersey