AFL-CIO leader set to press deficit commission to continue with stimulus spending

By Michael O'Brien - 06/29/10 05:22 PM ET

AFL-CIO President Richard Trumka will press President Barack Obama's deficit commission to continue with spending to stimulate the U.S. economy.

The labor leader will tell the bipartisan panel, which the president established earlier this year to generate recommendations on how to reduce long-term deficits and debt, that more spending to create jobs is needed.

"Without a significant reduction in the trade deficit, only economic stimulus in the form of deficit spending can make up for the remaining shortfall of aggregate demand until private sector demand regains its footing," Trumka will tell the commission, according to excerpts of prepared remarks released by the AFL-CIO.

"But instead, we are heading in the opposite direction," he'll say. "We are prematurely withdrawing economic stimulus, allowing the Recovery Act to phase out and standing by passively as state and local governments plan to lay off 900,000 workers."

Republicans have long decried stimulus spending in Congress as contributing to the record deficits that spurred Obama toward establishing the commission. But the administration and many Democrats in Congress have argued that spending to rejuvenate the economy is critical to generating the kind of growth necessary to pay down the deficits.

Still, some centrist Democrats in the House and Senate have balked more and more at spending on unemployment insurance and job creation measures that aren't paid-for with spending cuts elsewhere in the budget.

Trumka will tell the commission, on which former SEIU chief Andy Stern serves, that withdrawing the stimulus would risk a "double-dip" recession.