msmith@nul.org

New York, NY, October 25, 2001–The National Urban League today issued the following statement rejecting the House stimulus plan passed yesterday.

Instead of concentrating the stimulus package on Americans–many of whom work in small businesses, and who’ve lost their jobs due to the economic downturn–the major benefits will accrue to large corporations with profits, that have far greater capacity and resources to ride out the economic storm. The National Urban League believes that relief should be targeted to protecting demand.

Far from generating new investment, as those who voted for the package claimed, the measure passed by the House threatens the long-term health of the nation’s economy, and fails to ease the economic burden on America’s neediest families—low wage earners and middle class families. No provision in the bill requires that these companies use the rebate to prevent layoffs, engage in new hiring or to invest more.

The National Urban League believes that this use of the Social Security surplus is unwise. The slowdown in investment is clearly related to the uncertain times in which we now live. Firms will invest when consumers get back to buying products and spending money. But, consumption will tumble if workers, already spooked by the headlines of the day, also fear losing their paychecks.

The fifty-five year history of the Full Employment Act, that launched the modern era of American federal economic policy, have taught us that programs that keep demand from falling are crucial to economic stability.

If the rationale is to generate new investment then the most prudent approach would be to target the stimulus at those workers who are losing their jobs because of the acceleration of the economic slowdown after the events of September 11. Such a stimulus package would get income back into the hands of workers who would in turn engage in spending and thereby boost the economy.

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On October 5^th the National Urban League issued a call for the Congress and the President to pass a stimulus package targeting those workers who have been most severely impacted by the economic downtown. Today we reiterate that call.

• Target the stimulus package to those workers who will have a drop in consumption for the specific period of the economic slowdown. Do not waste the Social Security surplus in a corporate giveaway, and endanger the long run health of the economy;
• Fix the broken safety-net, including the Unemployment Insurance system (UI) so that a higher share, than the current 39 percent of unemployed workers are eligible for benefits;
• Keep workers health insurance intact;
• Stop the "clock" on families dependent on TANF benefits in a time when jobs are disappearing for everyone;
• Restore, on a temporary basis, the deduction of interest payments on non-mortgage debt for moderate income earners and those with little home equity;
• Target tax benefits to low and moderate income families, especially those who were left out of the earlier income tax rebates (and whose income taxes helped create the Social Security surplus in the first place);
• Keep public infrastructure projects on target, especially the construction of much needed school facilities;
• Remove federal matching requirements for funding public infrastructure projects, and help local governments in underwriting school construction projects.

Now is the time for the nation to pull together. The House vote was virtually along party lines, 216 to 214. Seven Republicans crossed over to vote against this stimulus package. We need a package that all Americans can stand behind. One that shows we will help all Americans. Now is not the time to be ideological and give away the Social Security surplus to a select few economic actors — hoping that it will filter to the rest of America. We should all be able to agree that the fair thing to do, is to put the money directly in the hands of the American people who are being the most affected by these times.