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Resolutions & Amendments

Other International Executive Board Resolutions

Attacking the true causes of the federal deficit

International Executive Board, 1985


The Reagan Administration is using the prospect of enormous Federal deficits as a weapon in its campaign to eliminate or cut back domestic programs that provide for the needy and represent vital investments in the future health, productivity, and well-being of our economy and our people; and,


The current level of the deficit has provided a justification for the Federal Reserve to keep interest rates unnecessarily high. High interest rates are squeezing small businesses and farmers and, by inflating the value of the dollar, seriously damaging the international competitiveness of American industry. The long-term health of our manufacturing sector in particular is threatened by the loss of foreign markets and the import penetration of domestic ones. In the meantime, the current trade deficit is costing us an estimated 3 million jobs and bringing acute pain to many communities dependent on trade-oriented industries; and, Reasonable principles of Federal fiscal policy demand that the deficit be put on a declining growth path. But this requires that the true sources of the deficit be addressed. According to the Congressional Budget Office, cuts in domestic spending already enacted under President Reagan will contribute $63 billion toward reducing next year's deficit. It is increases in military spending and the 1981 tax cuts that have ballooned the deficit, according to the CBO; and,


The Reagan Administration is engaged in an unprecedented peacetime defense build-up in which spending levels are set as symbolic statements of "resolve" and military missions are then defined to reach these spending targets. As a result, costly and redundant weapons systems have proliferated throughout the defense budget, and the defense procurement process has been subject to extensive and widely-publicized waste and fraud; and,


The Reagan Treasury Department now acknowledges that the Administration's 1981 program of business tax incentives has seriously distorted investment decisions throughout the U.S. economy. Its tax simplification plan calls for the elimination of dozens of corporate tax loopholes as well as the Accelerated Cost Recovery System of depreciation allowances enacted in 1981. Studies by Citizens for Tax Justice and the Congressional Joint Committee on Taxation have documented that scores of profitable major corporations pay no corporate income taxes because of their ability to take advantage of these loopholes. Corporate tax breaks have become so costly that those eliminated by the Treasury tax simplification proposal would generate $22 billion in additional revenues even after a substantial lowering of the corporate tax rate.


That AFSCME, while reaffirming its support for a defense network that ensures protection for the United States from all adversaries, opposes the excessive and unwarranted defense buildup being engaged in by the Reagan Administration. In order to reduce the deficit and thereby ensure a healthy American economy (which is itself an essential contributor to national security), and to encourage the setting of priorities for an effective defense, AFSCME calls for a freeze in defense spending in FY 1986; and,


That to raise additional Federal revenues from corporations not now contributing their fair share, AFSCME calls for the passage of the corporate portion of the Treasury tax simplification plan or a similar corporate tax reform bill that eliminates the loopholes that distort business investments and allow profitable companies to pay little or no taxes — such as the Accelerated Cost Recovery System of depreciation, the capital gains exclusion, the investment tax credit, special industry loopholes for oil, insurance and banking, preferential treatment for foreign source earnings, etc.