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News from EPI ALEC’s Economic Agenda Will Weaken State Economies and Harm Working Families, Leading Experts Find

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For Immediate Release: Wednesday, February 13, 2013
Contact: Phoebe Silag or Donte Donald, news@epi.org 202-775-8810

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ALEC’s Economic Agenda Will Weaken State Economies and Harm Working Families, Leading Experts Find

Washington, DC — Leading state policy experts revealed today how the economic policy agenda of the American Legislative Exchange Council (ALEC) would weaken state economies, hurt working families, and put the interests of corporations and the wealthiest households before the common good. Governors and legislatures in numerous states are considering, or have recently enacted, sweeping tax changes and privatization plans that mirror ALEC’s proposals.

The experts — Erica Williams of the Center on Budget and Policy Priorities, Dr. Peter S. Fisher of the Iowa Policy Project, and Shar Habibi of In the Public Interest — shared the findings of their respective reports during a media conference call briefing hosted by the Economic Policy Institute.

Williams discussed her new report, ALEC Tax and Budget Proposals Would Slash Public Services and Jeopardize Economic Growth, which outlines the key elements of ALEC’s tax and budget proposals, including deep tax cuts for corporations, investors, and the wealthy, and a corresponding shift of taxes to middle- and low-income households.  The report explains how ALEC’s proposals would hurt state budgets, families, and communities, and it exposes the faulty analysis on which the proposals rest.

“ALEC’s state tax and budget agenda is grounded in flawed research and based on unfounded assumptions,” said Williams, senior policy analyst at the Center. “Its policy prescriptions would lead to deep cuts in education, infrastructure, and other important state services, benefit corporations and the wealthiest Americans at the expense of the broad public, and would likely damage state economic growth.”

Fisher shared his findings that the less a state’s economic policies conform to ALEC’s policy proposals, the better the state does economically, as demonstrated in his report, Selling Snake Oil to the States: The American Legislative Exchange Council’s Flawed Prescriptions for Prosperity, co-authored with Greg Leroy and Philip Mattera of Good Jobs First.  The report examines ALEC’s claims that its proposals to cut state and local taxes particularly for the wealthy and to pass wage suppression policies promote economic growth. Instead, ALEC-endorsed policies actually lead to worse state outcomes for both job creation and wage growth, the report finds.

“We dissected ALEC’s Rich States, Poor States studies and found their state policy prescriptions do not lead to growth and prosperity as claimed,” said Fisher, research director at the Iowa Policy Project. “We actually found the opposite: the more a state has adhered to ALEC’s advice, the slower its residents’ incomes grew and the faster its poverty rate grew. ALEC’s policies are a recipe for declining prosperity.”

Habibi explained how ALEC brings together state lawmakers, corporations, and conservative think tanks to develop and pass legislation to privatize public services in ways that serve corporations rather than the public interest. In Profiting from Public Dollars: How ALEC and Its Members Promote Privatization of Government Services and Assets, Habibi identifies ALEC model bills that promote privatization, matches the bills with related state legislation, and discusses the benefits that ALEC’s corporate members received from the passage of the laws.

“Corporations are using ALEC to push for legislation that directly benefits their bottom lines,” said Habibi, resource center director with In the Public Interest. “These privatization-related bills allow for corporate interests and goals to trump the public interest.”

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The Economic Policy Institute (EPI) is an independent, nonprofit think tank that researches the impact of economic trends and policies on working people in the United States.

The Center on Budget and Policy Priorities is a nonprofit, nonpartisan research organization and policy institute that conducts research and analysis on a range of government policies and programs.  It is supported primarily by foundation grants.

The Iowa Policy Project is a nonpartisan, nonprofit organization promoting public policy that fosters economic opportunity while safeguarding the health and well-being of Iowa’s people and the environment.

Good Jobs First is a nonprofit, nonpartisan resource center promoting accountability in economic development and smart growth for working families.

In The Public Interest is a national resource center on privatization and responsible contracting.