A recent report by the Economic Policy Institute (EPI) has warned that, the “proposed federal budget places extra burdens on state and local budgets already cash-strapped by a recession economy.” The report predicted these burdens would grow even greater if the tax cuts scheduled for 2004 are allowed to take place.

According to the Bush administration, predicted federal budget surpluses that had grown in the “booming” 1990s were supposed to be able to handle an economic downturn, and, at the same time allow for a $1.6 trillion ($1 trillion when interest and other costs are taken into account) tax cut for the rich. The EPI cites 15 states that once had large reserves, but have now, “fallen below generally accepted prudent levels.” These states include New York, California, Illinois and Wisconsin.

The continuing recession has resulted in a rapidly increasing unemployment rate that is the highest in two decades – 150 thousand of them in New York City. The World Trade Center crisis accelerated an already bad situation. Almost daily the mass media report another plant closing or production cutback that adds more thousands to the ranks of the unemployed. Since U.S. workers only gain health benefits through their employers, losing their jobs means losing their health benefits for themselves and their families.

War and Enron
Before Sept. 10, the Bush administration was in big trouble on any number of fronts. And since the Sept. 11 attacks, Bush has continually hidden himself from economic decisions, preferring to focus on war and terrorism. The Reagan/Bush economic disasters of the early 1980s used the same formula. The script had been written and the Son of Bush is following it closely.

It is the standard Republican formula: radically increase the military budget and force the reduction in domestic spending, relying on the market to solve health problems. The Cold War served Reagan/Bush; now, terrorism is doing the same for Bush the Appointed.

The AFL-CIO and people’s organizations have made it abundantly clear that this formula will not fly. In addition, the anti-democratic, corporate criminals of Enron have shown the results of the marketplace. In this case, Bush has been forced to use the military budget and terrorism cards to keep the Enron issues off the front pages. Here again, this is not working.

People’s needs: there is a way
There are ways out of this abyss. The first is to demonstrate against the military budget, as we do today. And then elect a pro-peace, cut-military-spending Congress in the 2002 elections.

The second step is to begin a “tax the rich” agenda in each state that will begin to fill depleted budgets in state and local governments. This money is absolutely necessary to keep our hospitals and community health facilities running with adequate staff to make sure the quality of health care is not lessened.

The New York State-based Fiscal Policy Institute (FPI) has proposed a sensible tax increase that would raise New York State, where the top income tax is 6.85 percent, to North Carolina levels where the rate is 7.75 percent to 8.2 percent.

FPI is recommending a seven-tenths of 1 percent increase for all incomes over $100,000 and a second increase on incomes over $200,000. If these modest increases were implemented, the net increase in New York budgets would be at least $3 billion.

The author can be reached at pww@pww.org