National Urban League Responds to President Bush's State of the Union Address.

Business Editors

NEW YORK--(BUSINESS WIRE)--Jan. 29, 2003

In his State of the Union Address, President Bush endeavored to reach out more aggressively to the African-American community by calling for an accelerated campaign to combat AIDS in Africa, provide funding for those addicted

The goals of these initiatives are highly commendable, yet compared to the cornerstone of his economic message -- a huge new tax break for the individual owners of stock and accelerated tax breaks for the richest Americans -- these new programs are disappointingly modest. If the President's challenge in an era of scarce resources and economic stagnation to fund only the nation's most pressing priorities is to be taken literally, then we question the wisdom and massive size of his proposed tax cut which would disproportionately benefit the wealthiest Americans while running up huge federal deficits.

The child tax credit the President wants to accelerate will be of little help to millions of needy American children. Poor children have already received their modest benefit from the 2001 tax cut. Now, only the children of high-income families will stand to be the primary beneficiaries of the accelerated cuts. Almost two-thirds of the benefits would go to children in the top 40% of the income distribution, with one-third of the benefits going to those families in the top 20% alone. While less than one percent of children in the bottom 20% would get any new benefit. In fact, almost one-third of American families and single households will receive no tax benefits from the President's proposals, and almost half of families and singles will receive less than $100 in tax relief.

Further, the President said that neither he, nor Congress, should leave a burden for a future president or Congress. Yet, his call to make the 2001 tax cuts permanent, coupled with the new tax break for corporate dividends, would create a gaping hole in the federal budget for years to come. These mounting deficits will force massive cuts in important federal programs to be made by a future Congress and president.

The President justifiably deserves credit for forging a bi-partisan Congressional consensus to get the federal government to prod local education officials. However, his budget does not live up to his promise to fund education reforms at the level authorized by that sweeping legislation.

Additionally, the President renewed his call for privatizing Social Security for future generations of workers. Yet the tax cuts he proposes leave no money in the treasury to fund the privatization of Social Security that his commission on Social Security called for. Without additional funding, his commission reported deep cuts ahead for people who receive disability and survivors benefits -- namely for those who make up the bulk of African-American Social Security beneficiaries. Without those additional funds these income supports that lift millions of children out of poverty would be placed at grave risk.

The National Urban League's bottom line is that any economic stimulus plan should primarily address the urgent needs of poor, working class and middle-income families that are being battered by the sustained recession gripping America. The President's plan principally benefits the wealthiest five percent while undercutting the federal government's financial capacity to address the very domestic and international challenges cited by Mr. Bush, such as boosting academic achievement in this country and combating AIDS overseas.

The Urban League is the nation's oldest and largest community-based movement empowering African Americans to enter the economic and social mainstream. The National Urban League, headquartered in New York City, spearheads the nonprofit, nonpartisan movement, while Urban League affiliates operate in more than 100 cities in 34 states and the District of Columbia.