Labor against extending tax cuts for top earners

WASHINGTON – The AFL-CIO is “strongly against” extending the Bush tax cuts for the top 2 percent of the nation’s earners, but fears congressional Democrats may blink on the issue, Legislative Director Bill Samuel says.

In a recent interview, Samuel said he sees the Obama White House “holding firm” against extending those cuts and even envisions the president sending a tax revision package up to Capitol Hill when the new 113^th Congress enters on Jan. 3.

But before that, Samuel adds, the two major political parties are engaging in a game of chicken over the nation’s fiscal and economic future. And labor fears the Democrats may cave in to GOP demands to let the tax cuts be extended for a year.

The pressure on the two parties to do something about the looming fiscal train wreck – expiration of the tax cuts, ending of extended jobless benefits and billions in cuts in government spending – grew on August 22: The director of the non-partisan Congressional Budget Office testified that if Congress does nothing before the end of the year crunch, the tepid recovery will become part #2 of a double-dip recession.

CBO also forecast that official joblessness would stay above 8 percent through 2012.

“Sequestration ought to be postponed or cancelled altogether,” Samuel says, referring to the budget cuts in both defense and domestic spending. But that should occur only if lawmakers do one of two things, he said: Be “willing to add to the federal deficit for a year” to help continue to haul the nation out of its recessionary hole of 2007-09, or “package this with tax increases” on the rich.

Cutting spending would cut demand for goods and services, and the jobs that providing those goods and services create, he explained.

But accomplishing those goals require congressional leaders to move off their ideology-induced positions, especially the Republicans’ absolute demand that the tax cuts for the rich be made permanent and no new taxes – not even anti-loophole provisions – be enacted.

“”Someone’s going to have to give in and it shouldn’t be the Democrats,” Samuel says. “It’s a high-stakes gamble included in these decisions” to stand firm, he adds.

“The responsible thing would be to let the tax cuts expire and them close the loopholes” with a comprehensive tax overhaul next year.

“But I don’t put a lot of faith in the leadership of this Congress being responsible,” he concluded.

Photo: Demonstrators march through the streets of Tampa, Fla., in protest against the platform of the Republican National Convention, Aug. 27. Dave Martin/AP