Budget Problems: Bush Economics Leave Most African Americans Behind

Crisis, The, Mar/Apr 2004 by Sperling, Gene

Since he took office, President Bush has presided over the loss of nearly 3 million private-sector jobs and the most dramatic worsening of the federal budget deficit in the nation's history. We have gone from trillions in projected surpluses to deficits over the next 10 years that Goldman Sachs and others estimate will top $5 trillion. With a two-man race for the White House underway, the Bush re-election campaign will stress that the president inherited a slowing economy, presided over Sept. 11 and that, without his singular focus on cutting taxes, our economy would have suffered even more. In other words, Bush's message will be "it would have been worse without me."

Unfortunately for the president, an examination of his economic policies suggests his seven-word mantra will be a hard sell to most American families, and an extremely tough, if not impossible, sell to most African Americans. The Bush Administration's zealous focus on long-term tax cuts for the well-off has ignored job creation during the worst jobs recovery since the Great Depression, while putting a severe long-term burden on our nation's finances. The result has been a triple-burn for African Americans: They have suffered disproportionately from the failure of job creation; they have received the least from some of the most expensive tax cuts in history; and the squeeze placed on budgetary priorities has been acute in education, healthcare, public housing, job training, small business development, and other areas vital to students, working families and entrepreneurs.

THE BUSH ECONOMIC "STRATEGY"

While Bush did inherit a slowing economy, it was also one with considerable strengths: unemployment at 4 percent; near-record low unemployment for African Americans (7.6 percent in 2000) and Hispanics (5.7 percent in 2000); strong productivity growth; and widespread and sustained income gains. From 1993 to 2000, the typical family saw its income grow by 17 percent; and remarkably, the African American family's average income grew 33 percent. Bush also inherited what may have been the strongest fiscal position in the nation's history - a projected budget surplus of $5.6 trillion over the coming decade.

What the nation needed when Bush took office was an economic policy focused on jumpstarting economic demand and job creation while maintaining long-term fiscal sanity. But what he offered the country was the complete opposite.

The president's initial tax cut proposal, for example, would have provided absolutely no stimulus during 2001 -the year our economy fell into a recession. (The administration only agreed to the partial rebate checks at the insistence of progressives in Congress.) While the administration claimed a cost of only $1.35 trillion over 10 years, the International Monetary Fund rightly projected the actual costs to be closer to $2.4 trillion over 10 years, when the full costs were taken into account.

After Sept. 11, President Bush again put aside tremendous opportunity for high-impact stimulus and instead focused on corporate and individual tax changes that the Congressional Budget Office (CBO) consistently found had the lowest bang for the buck in jumpstarting the economy.

This repeated record of neglecting job creation has hit the African American community particularly hard. Since President Bush took office in January 2001, Black unemployment has risen nearly twice as much as White unemployment, hovering at around 10 percent or higher for 27 straight months. The number of African Americans employed relative to the size of the working-age population fell by 75 percent more than the number of employed Whites. Perhaps more worrisome, African Americans, once unemployed, seem to be having more difficulty finding new jobs - nearly one in three unemployed Black workers had been out of work for more than half a year, compared with 20 percent of unemployed Whites. Black college graduates are even having a hard time in the job market. Their unemployment rate rose 30 percent more than their White counterparts. Even as we have recently seen limited job gains, the share of African American workers in management positions has continued to fall.

MISGUIDED TAX POLICIES

It is no secret that the administration's tax cuts have been dramatically slanted toward the most well-off. This year alone, the combined 2001 and 2003 income tax cuts will provide a whopping $127,661 for the top one-tenth of 1 percent of earners, while the bottom 40 percent of earners will receive an average of only $123. In addition, a study by the House Government Reform Committee on the 2003 tax cut found that on average, African Americans and Hispanics would receive a 35 to 40 percent smaller tax break than Whites.

Yet the administration has at times gone out of its way to exclude modest and lower income working families - and therefore disproportionate numbers of African Americans. The proposed rebate in 2001 was designed to be non-refundable, meaning it would have offered nothing to the 33 million Americans who do not make enough money to owe income tax. The administration fought tirelessly against making even a portion of the child tax credit refundable. Fifty-five percent of African American children live in families that would have received absolutely nothing under Bush's proposal. Fortunately, partial refundability was included in 2001 after a spirited, bipartisan campaign by a few key women senators, including Republican Olympia Snowe of Maine and Democrat Blanche Lincoln of Arkansas.