STATEMENT BY THE NATIONAL URBAN LEAGUE URGING THE SENATE TO REJECT THE FY2002 BUDGET RESOLUTION

New York, April 3, 2001– Hugh Price, president of the National Urban League, today called upon the U.S. Senate to reject the proposed FY2002 Budget Resolution that includes a proposed tax cut of $2 trillion and counting. Mr. Price issued the following statement:

"The National Urban League urges the Senate to defeat the Budget Resolution that incorporates the $2 trillion-plus tax cut because it will place this nation at fiscal risk for years to come, undercut required investments in priority areas like education, and deny tax relief to those who need it the most.

By absorbing most or all of the tentative budget surplus, the massive tax cut would drain our national coffers and endanger the following: undertaking a concerted federal effort to improve the education and development of our children; bringing economic security to low and moderate-income families; protecting Medicare and Social Security; and securing enforcement of our civil rights laws.

The National Urban League is troubled that the proposed Budget Resolution contemplates massive and unbalanced tax cuts, yet includes no line item details on funds allocation. From what we do know about the Bush administration’s Budget Blueprint, including its Tax Cut plan, it would require a 16.6% cut in the Department of Commerce; an 11.3% cut at HUD; an 8.8% cut at Justice; a 7.4% cut at Labor; and a whopping 46.4% cut at the Small Business Administration. These federal agencies include programs that will affect millions of Americans, including African Americans served in our local Urban League communities.

A key question in assessing any tax cut proposal is the fairness of its distribution. If we adhere to the principle that no one who works should be taxed into poverty, then those at the lowest end of the income scale should receive the greatest benefit. A Budget Resolution that includes a $2 trillion-plus tax cut would move America in precisely the opposite direction.

First, it fails to return the money to all taxpayers by returning money only to people who pay income taxes. While families and individuals at the lower end of the income scale may not make enough money to pay federal income taxes, they still must pay payroll taxes, and since it is the payroll tax that feeds our Social Security system and provides a large share of the national surplus, such families end up contributing a higher share of their income toward the Social Security surplus given the flat rate structure of the payroll tax. Yet 12 million families with children, and 24 million children would not benefit from the plan, and more than half of African American and Hispanic children will not receive any tax relief.

Second, according to the Citizens for Tax Justice, under the $2 trillion tax cut plan, the richest 1% of Americans — those with average income of $1,117,000 annually — will receive 45% of the benefits of the Bush tax plan, even though they pay only 20% of all federal taxes. This means that the top one percent get a combined tax cut of $774 billion over ten years, more than ten times the government will spend in 2001 on all education, training, employment and social service programs combined!

Third, the gradual repeal of the estate tax currently affecting only 2% of all estates will end up costing our nation $266 billion. That is more than will be spent in the next ten years on Title I Disadvantaged Education (ESEA) plus all Pell Grants, plus all Federal Civil Rights Enforcement, plus all Dislocated Worker Assistance, plus Job Corps!

The projected surplus is far from guaranteed, which is added reason to question whether America can afford a massive tax cut at this time. The Congressional Budget Office says the available budget surplus is $2.7 trillion. To fund the government to keep our public investments constant would shrink the budget surplus to $1.7 trillion. Likely additions to the proposed tax cut bill, such as addressing the alternative minimum tax (AMT) problem and maintaining aid to farmers, etc. leave $1.3 trillion. Should Congress really want to gamble on the surplus when the fine print in the Bush budget estimates that there is a 10 % chance that the surplus will be within plus, or minus, 16% of the projection, and a 50% chance that the surplus will be within plus, or minus, 80% of the projection? Common sense says no, and requires a more prudent approach to fiscal policy.

The National Urban League supports fiscally responsible tax cuts that preserve the federal government’s ability to invest in critical areas like education and community development and that provides relief to those who need it the most. Any tax cut proposal must be part of an overall balanced approach to meeting our national priorities. The 2002 Budget Resolution currently before the U.S. Senate violates these core principles and therefore should be rejected."

Hugh B. Price is President of the National Urban League. He was appointed on July 1, 1994.

The Urban League is the nation’s oldest and largest community-based movement devoted to 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.