MAINE LABOR UPDATE
January 29, 2008
 
Please Forward to Working Families



FROM THE PRESIDENT'S DESK
Ed Gorham
President
Maine AFL-CIO

STIMULUS PACKAGE NEEDS IMPROVEMENT

At the top of the news now and in the immediate future is the so called “stimulus package” which passed the House in Congress and will be brought up in the Senate in late January and early February.

 

The package is not all bad – but it is badly in need of improvement.

 

This has been recognized by senators in both parties as well as some of the members of the House who voted for it but still saw the need for improvement. For instance Maine Second District Congressman Mike Michaud said, “I hope that food stamps and unemployment insurance can be increased and expanded so that those who need it most can be helped.”

 

Consider Improvements

Even Senate Republicans have pointed to the need for improvements in the multi-billion dollar effort to boost the American economy. Some of the improvements on the table include:

 

  • A bipartisan coalition of Northeastern and Midwestern senators will push to secure as much as $800 million in heating assistance for low income families.
  •  Senators will also push to restore some $12 billion in unemployment benefits and $5 billion in food stamp extensions that were eliminated in negotiations in the House.
  •  An effort will also be made in the Senate to provide checks for low-income retirees who are left out of the package entirely because they cannot show the minimum $3,000 in earned income.
  • Some senators also favor helping the financially hard-pressed states by temporarily increasing the Federal share of Medicaid financing.
  • On January 29 Senate Finance Committee Chair Max Baucus offered a program that awards rebates to seniors living off Social Security and also extends unemployment benefits for 13 weeks for those who have exhausted benefits and 26 weeks for those persons in states with over 6 percent jobless. In his package even the richest taxpayers would get a rebate.

 

This issue and the pending action in Congress is important to all Americans but particularly it is important to working families and those who are out of work. Maine Senator Snowe noted “The number of long-term unemployed is dramatically higher than during the last recession” and recognized the need to help these workers.

 

Grim Job Loss Picture

The job loss picture is growing increasingly grim in Maine and the nation.

 

It is shocking that, nationally, only 18,000 jobs were created in December, according to the monthly U.S. Department of Labor report —and the private sector actually lost 13,000 jobs. Some 150,000 jobs need to be created a month just to accommodate new entrants into the labor force, and economists had predicted around 70,000 new jobs in December.


The U.S. mortgage crisis now is hitting big time in construction jobs, with the Labor Department’s household survey finding a 49,000 drop in employment in construction. With home owners unable to tap into second mortgages and housing prices falling, consumer spending slowed this holiday season, and retailers cut 24,000 workers in the seasonally adjusted estimate. Manufacturing continues to struggle, losing 31,000 jobs last month.

Maine Workers Lose Jobs
In Maine we are currently seeing a growing pattern of job loss. Bath Iron Works has announced that 70 workers will be laid off effective February 1. At NewPage Corporation in Rumford, Maine and Fraser Timber Limited in Ashland, Maine workers received some devastating news about job loss and layoffs.  Fraser Timber Limited will layoff 70 workers between February 1 and June 1, 2008.  NewPage Corporation’s announced a shut down of a paper machine in Rumford as of February 25.   This decision could impact approximately 60-70 jobs. In mid-January Irving Forest Product’s closed Pinkham Saw Mill in Nashville Plantation, which will result in 74 workers losing their jobs.

 

The position of organized labor on the stimulus package was clearly expressed by national AFL-CIO President John Sweeney who said:

 “The latest economic stimulus proposal simply is not enough to make a real difference for America’s working families. It is up to the Senate to extend unemployment benefits and increase food stamps to get money into the hands of those who will spend it quickest and need it most. Economists agree these programs will have the most immediate impact on the economy, and the most bang for the nation’s buck. Anything less will not be sufficient to keep our economy from diving headlong into recession.”

 

On The Wrong Track

The simple fact of the matter is that President Bush is wrong to keep insisting on business tax breaks when more than 200,000 unemployed workers are running out of benefits each month. Study after study has shown clearly that if we want to stimulate the economy helping these unemployed workers provides the “best economic bang for the buck.” The reason is that any funds injected here will be spent immediately on basic living costs.

 

Lawrence Mishel, president of the Economic Policy Institute, says it’s “scandalous” that the stimulus package directs some $50 billion to business “incentives.”

 

 “It is scandalous” he said,  “to throw about $50 billion at businesses for investments that have already been made. It is common sense and established economics that businesses invest and hire when they have customers—not when they get tax subsidies for equipment to make things they can’t sell.”

States Need Help

The AFL-CIO has also called for fiscal relief for local and state governments. Because many state tax codes are linked directly to federal tax rates, economists warn the business tax cuts could lead to a reduction in state revenues resulting in economically depressing budget cuts and tax increases by state governments. The plan passed by the House ignores state relief. As a result, many states will have to enact deeper and more painful budget cuts, likely hitting areas from health care and education to aid to local governments. Those state budget cuts will also act as a drag on the economy.

New estimates from the Urban Institute-Brookings Institution Tax Policy Center show that:

 

  • One in four working households — about 30 million households— would receive no rebate under the President’s proposal.
  • An additional 16 percent of working households — 19 million households — would qualify for less than the full rebate amount.
  • In total, 42 percent of working households — close to 50 million such households— would receive a partial rebate or be shut out entirely.  That is, fewer than 60 percent of working households would qualify for the touted $800 or $1,600 rebate.

 

Many Are Left Out

The President’s proposal shuts out low- and moderate-income working families because households must have significant income tax liability to fully qualify.  Thus, even though low- and moderate-income workers pay substantial payroll taxes, they would be disqualified because they do not earn enough to have sufficient income tax liability.  For example:

* A married couple with two children would need an income of $25,000 to get the rebate at all, and an income of at least $41,000 to get the full $1,600 rebate.

 

* Parents who work but whose earnings leave them in poverty — the very people struggling the most in the weakening economy — would be ineligible for the rebate. 

 

* Meanwhile, the most affluent households would qualify for the full rebate amount.  For example, a couple with an income of $1 million would receive the full $1,600 benefit, since the first $16,000 of its taxable income would be taxed at a 0 percent instead of a 10 percent rate.


Labor Offers Plan
The AFL-CIO is proposing a stimulus package that includes:

 

  • Acceleration of ready-to-go public investment in school renovations and bridge repair.
  • Extension of unemployment benefits
  • Increased food stamp benefits
  • Tax rebates targeted at middle and low income taxpayers
  • Fiscal relief for state and local governments


In addition the nation needs to recognize the growing impact of the mortgage crisis. The Director of Research at the MIT Center for Real Estate estimates that housing prices would continue to decline for at least two more years. The AFL-CIO has called for a moratorium on foreclosures on subprime mortgages to save America’s home owners from a disaster that will further undermine the American economy.

 

The subject of the economy is complex but it is abundantly clear that the U.S. Senate can do better than merely rubber stamp the House-passed economic stimulus. Organized labor and working families can call, write or e-mail Maine’s senators to make our voice heard in support of an economic stimulus package that is fast, fair and effective.

You can use the Internet to contact your senator.

This is no time to settle for too little too late. Your senators should fight for a package that includes:

Extension of unemployment benefits.

Increased food stamp benefits.

Fiscal relief for state and local governments to avoid budget cuts to Medicaid child health, education and other critical programs—and their economically depressing effects.

Acceleration of ready-to-go public investment in school renovations and bridge repairs.

 
Click here to urge your senators to pass a real stimulus package for working families.

In solidarity,

Ed Gorham

President

Maine AFL-CIO

 

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