Revised, November 2, 2001

Ways and Means Proposal Departs from Bipartisan Principles
for Effective Stimulus, and Offers Little Help to the Unemployed
by John Springer

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On October 17, the Center on Budget and Policy Priorities released an analysis of the economic stimulus legislation the House Ways and Means Committee approved on October 12. The legislation consists overwhelmingly of tax cuts — most of which are for corporations or would disproportionately benefit upper-income families — and provides scant assistance to unemployed workers. Over 95 percent of the legislation consists of tax cuts; over 85 percent of it is composed of tax cuts for corporations and businesses and upper-income people. Essentially, this legislation is a vehicle for tax cuts that have little to do with boosting the economy now or assisting unemployed workers but that have long been sought by powerful interest groups and favored by some in Congress for ideological reasons. Furthermore, because some of the corporate tax cuts in the legislation are permanent and others may be politically difficult to let expire, the package poses a threat to long-term fiscal discipline. The report's findings include:

Percentage Share of the Costs in 2002 and
Over Ten Years of the Provisions in the Ways and Means Package*
  2002 10 years
Corporate and business tax cuts 68.6% 42.5%
Tax cuts primarily for upper-income taxpayers 14.5% 43.2%
Tax cuts primarily for low- and moderate-income taxpayers 13.3% 8.2%
Provisions for unemployed workers 3.2% 4.0%
Extension of expiring tax provisions 0.4% 2.0%
Total 100.0% 100.0%
* Excludes technical amendments and revenue effects of unemployment trust fund changes.