Obama Tax Deal Gives In to Moneyed Interests, AFL-CIO Chief Says

Dec. 7 (Bloomberg) -- The leader of the largest U.S. labor federation portrayed the deal President Barack Obama cut with Republicans to extend all of the Bush-era tax cuts as caving in “to Wall Street and moneyed interests.”

“Two years ago, working Americans had high hopes that we would ultimately emerge from the deep, punishing financial debacle,” AFL-CIO President Richard Trumka said today in an e-mailed statement. “Today, that vision has dimmed.”

The tax-cut deal announced by Obama yesterday rewards Republican obstructionism by giving rich people tax breaks they don’t need, Trumka said.

“It throws away precious resources needed for investments in jobs,” said Trumka, who has called on the Obama administration to spend hundreds of billions of dollars on a second economic-stimulus measure.

Unions spent a record $450 million in 2008 to help elect Obama to the White House and Democrats to Congress and have remained close allies with the administration. Union members have expressed frustration that Democrats haven’t delivered on organized labor’s full policy agenda. They continued to hold back from criticizing the president by name.

Mary Kay Henry, president of the Service Employees International Union, said Republicans have “held our country hostage until we give in to another bailout for the rich.”

Obama said today his compromise with Republicans, who gained in the Nov. 2 election, was necessary to meet his top priorities of helping middle-income Americans and spurring job creation. The proposal faces resistance from some Democrats in Congress.

“Because of this agreement, middle-class Americans won’t see their taxes go up on Jan. 1,” Obama said at a White House news conference. “It’s a good deal for the American people.”

Two-Year Extension

The agreement calls for a two-year extension of current tax rates -- including those for high-income taxpayers -- in exchange for adding 13 months of federal unemployment insurance for the long-term jobless and cutting the payroll tax by $120 billion for one year.

Obama ran for president pledging not to extend the cuts for the wealthiest Americans. Labor unions, while focusing the bulk of their criticism today on Republicans, also suggested that Obama and Democrats didn’t need to compromise.

“The issue we face today is not the lack of power or opportunity,” Trumka said. “The question we have to answer is this: How do we use our power to escape caving in to Wall Street and moneyed interests?”

To contact the reporter on this story: Holly Rosenkrantz in Washington at hrosenkrantz@bloomberg.net.

To contact the editor responsible for this story: Larry Liebert at LLiebert@bloomberg.net.