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Resolutions & Amendments

29th International Convention - Miami, FL (1990)

Government and the Economy of the 1990s

Resolution No. 132
29th International Convention
June 25-29, 1990
Miami, FL


The country has seen continued economic expansion on an aggregate level for the last seven years, but the prosperity masks deeper, unsolved problems. The social policies of the Reagan/Bush era have created unequal access to that prosperity, with the rich getting richer and the poor getting poorer. The tax and spending policies of the Reagan years created the overhang of the federal budget and trade deficits. Preoccupation with these two deficits has led the federal government to ignore the "third" deficit, which is the social deficit. The Bush administration continues to make cuts in many social programs and, despite its rhetoric, has enacted few bold new initiatives to meet the backlog of unmet domestic needs; and


Sustained economic growth and full employment, with price stability, remain the appropriate goals for federal economic policy. Retrenchment in the name of federal budget deficit reduction is not called for and can only hurt working people; and


Federal spending for domestic social and economic development programs has dropped dramatically during the Reagan/Bush administrations. Domestic program cuts during the FY 82-FY 88 period averaged $642 for every man, woman and child in the United States. A number of programs important to the economy, such as job training, Economic Development Administration grants, and Urban Development Action Grant programs were cut more than fifty percent in the Reagan administration. President Bush has continued this trend, proposing in his FY 91 budget proposal to cut domestic programs $13 billion below FY 90's level. These years of neglect for what is important have resulted in urgent needs going unfulfilled. These needs include long-term health care, child care, nutrition, job training, housing and infrastructure, among others; and


The United States cannot afford to wait until the federal budget deficit is "solved" before needed investments are made to solve the social deficit. Lagging public investments in physical infrastructure and human capital have already begun to impede private sector productivity, growth and competitiveness. Already nearly one-third of large companies are being forced to furnish costly remedial education in basic reading, writing and math to have a competent work force. The quality of America's infrastructure is barely adequate to fulfill current requirements, and insufficient to meet the demands of future economic growth. Private investment cannot take place without public investment leading the way. Budget deficit reduction alone cannot cure the country's economic and social problems. Budget deficit reduction by itself would only make matters worse since it would absorb revenues that could otherwise be spent on the social deficit; and


An unprecedented and ineffective peacetime military buildup has taken place during the Reagan years. This buildup has been a major cause of the budget deficit and has led to the curtailment of social and economic development programs. Now, however, current world events have changed the international security picture dramatically. A result of the "thaw" in East-West relations is a "peace dividend" of federal funds that can be cut from the defense budget. These available funds would be best spent by expanding domestic programs and restoring some of the balance in priorities that was ignored while defense spending was increasing. The "peace dividend" offers the opportunity to make inroads towards solving the social deficit so that the country has the ingredients for continued economic growth; and


There remains significant potential to raise additional revenues beyond the freed-up funds of the peace dividend to address both the country's budget deficit and social deficit. While the federal Tax Reform Act of 1986 created a fairer base of taxation and shifted some of the tax burden away from individuals and onto corporations, further tax reforms could generate additional federal revenues. The personal income tax could be made more progressive and more loopholes could be closed in both the corporate and personal income tax.


As the nation moves into the 1990s and an easing in international relations, a fundamental restructuring of national priorities must take place. Government must take a more activist role in many areas, pursuing the goal of sustained economic growth and full employment, with price stability, in a manner that spreads the benefits of that growth to all segments of the population.


International Executive Board