Gerald Ford put it into law. Ronald Reagan extolled it as "the best anti-poverty, the best pro-family, the best job-creation measure to come out of Congress." George Bush expanded the program still more. Called the Earned Income Tax Credit, it fulfills Republican objectives in rewarding work, drawing people off welfare and raising up the working poor above the poverty level without increasing minimum wages.
So why are some of the gung-ho conservatives on Capitol Hill intent on slashing away at a popular, bipartisan federal initiative that helps 14 million low-income Americans make ends meet? Why are they raiding a program that rewards work at the same time they are out to reform welfare by making recipients work?
There are some easy but unconvincing answers. Fraud, for one. EITC has expanded so quickly in recent years, especially because of wage stagnancy at lower levels, that a government review showed a shocking 26 percent abuse rate. The drive to balance the budget, for another. GOP lawmakers are frantic to find ways to reduce the budget, and cutbacks in the Earned Income Tax Credit could save the Treasury an estimated $21 billion over seven years. A third complaint is that EITC provides as much as $3,500 a year for a family of four with income under $11,000 but its rewards diminish so much up to the $27,000 level that it becomes a disincentive to increased work effort.