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Reform Jewish Leader Reacts to President Bush's Economic Stimulus Plan

Saperstein: The President's plan does little to stimulate our economy now, when it is most needed, and little to help American families who have been hardest hit by the poor economy and who are engaged in a daily struggle to make ends meet.

Alexis Rice or Rachel Wainer 202-387-2800

WASHINGTON, January 7, 2003 - In response to President Bush's proposed economic stimulus plan, Rabbi David Saperstein, Director of the Religious Action Center of Reform Judaism, issued the following statement:

Today President Bush announced an economic stimulus plan that does little to stimulate the economy in the near term and largely ignores the millions of Americans who are in need. In a speech to the Economic Club of Chicago, the President said that he is worried about people who are unable to find work and vowed not to "forget the men and women who are struggling today." However, of the President's $674 billion dollar plan, only $98 billion would be spent to stimulate the economy this year, and more than half of the total cost would be spent ending the dividend tax, for which a majority of the benefits would go to the very rich.

President Bush is correct that an economic stimulus plan is needed. But the President's plan does little to simulate our economy now, when it is most needed, and little to help American families who have been hardest hit by the poor economy and who are engaged in a daily struggle to make ends meet.

President Bush's plan does include a number of measures designed to help middle and low-income families. We welcome President Bush's proposals to reduce the "marriage penalty," increase the child tax credit from $600 to $1000 per child, and move the lowest income taxpayers down to the 10% tax bracket. We also enthusiastically support the President's $3,000 re-employment accounts, which would provide 1.2 million unemployed Americans with money to spend on job training, childcare, transportation, or relocation during their job search.

However, these measures comprise less than one third of the cost of President Bush's plan. The centerpiece, and most expensive element, of the Bush plan is the elimination of taxes on corporate dividends. Although couched as a stimulus for the weak economy, this is actually an expensive, permanent change to the tax code that would put money into the hands of the richest Americas. Those with incomes over $1 million dollars would receive the same tax benefits as the bottom 90% of all tax filers combined. Additionally, because its benefits would mostly go to the wealthy, who are more likely to save rather than spend tax rebates, the Congressional Research Service found that "using dividend tax reductions to stimulate the economy is unlikely to be very effective."

The President also proposes accelerating the 2001 tax cuts that were scheduled to be phased in over the next several years. Accelerating these tax cuts would give approximately seventy percent of the benefit to the wealthiest five percent of taxpayers, and the bottom eighty percent of tax payers would receive approximately seven percent of the benefit. Instead of tax breaks for the wealthy, a growing number of political and business leaders, including the influential Business Roundtable, have argued for directing money to lower- and middle-income taxpayers to generate more demand for goods and services.

Eliminating the dividend tax and accelerating the 2001 tax cut rates ignores those American workers who are in desperate need of help. In November, the national unemployment rate reached 6.0%: the highest level since April 1994. Since January 2001, our economy has lost more than two million private sector jobs. Many of those two million Americans have been unable to find work. With long term unemployment at its worst in thirty years, an alarming, and unacceptable, number of American families have been living without the means to provide basic necessities for their families.

Any economic stimulus plan should effectively and immediately generate economic growth and jobs, target unmet needs, and be fair. However, President Bush's plan largely fails on all three of these counts. The enormous price of these tax cuts in terms of permanent lost revenue could threaten long-term growth and the health and integrity of a wide variety of federal programs that support Americans during times of economic crisis.

In his speech, the President called for "spending discipline in Washington D.C." He has set ceilings for this year's spending on domestic programs other than homeland security at the same level as last year's spending, a major policy shift that administration officials defend as necessary in light of the need to combat security threats abroad and at home. Under the President's plan, fifty-seven education programs would be cut or eliminated, as well as $300 million cut from the program that helps low-income families pay heating and air conditioning bills. This funding cut could force more than 500,000 families to be dropped from the program. These proposals, and the Administration's insistence that we must accept such measures as necessary so that we do not "make the mistakes of trying to have guns and butter," make indefensible a tax cut plan that favors the wealthy and would cost hundreds of billions of dollars.

From the Torah's commandment that we shall "open our hands to the poor and the needy among us," (Deuteronomy 15:7) Judaism has developed a rich tradition of communal social services. The United States' community is in need, and the federal government has the responsibility to open its hands to the needy among us. The President's plan, which does not do enough to stimulate the economy or address the needs of low and middle-income workers, is not the answer.


The Religious Action Center of Reform Judaism is the Washington office of the Union of American Hebrew Congregations (UAHC) , whose over 900 congregations across North America encompass 1.5 million Reform Jews , and the Central Conference of American Rabbis(CCAR) whose membership includes over 1800 Reform rabbis .

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