by Jonah Shepp
Earlier this week, Ramesh Ponnuru urged Republicans to embrace alternatives to the minimum wage that he believes would better help low-wage workers and the middle class, such as raising the Earned Income Tax Credit and addressing rising costs of living:
Republicans should attack both ends of the problem. Rising health-insurance premiums are a big reason wages have stagnated. Scaling back the tax break for the most expensive policies, as part of a market-based reform of health care, could help wages rise again. And wages would stretch further if costs were lower. Higher education seems ripe for reforms that make financing easier and create lower-cost alternatives to a traditional four-year degree. Energy costs could be restrained through increased exploration and decreased regulatory mandates. The cost of raising children would fall if the tax code did more to recognize it as an investment in the future.
Chait responds that the Republicans of Ponnuru’s idyll are not the ones who actually sit in Congress:
One problem with this plan to get Republicans to increase the Earned Income Tax Credit is that, as Ezra Klein points out, they’re currently fighting extremely hard to cut the Earned Income Tax Credit. Ponnuru’s column doesn’t mention this highly relevant detail.
What’s more, one of the main reasons the Earned Income Tax Credit exists is to cushion the impact of state taxes, which often force workers on the bottom half of the income spectrum to pay higher rates than the rich. And why are state taxes so regressive? Well, a main reason is that Republicans want it this way. The states that raise the highest proportion of their taxes from the poor are Republican states. The EITC is in large part a way of using the federal tax code to cancel out Republican-led policies of taking money from poor people, so naturally Republicans at the national level oppose it, too.
Ramesh fires back, and Ross Douthat comes to his aid with an argument that Republican tax policy has helped the poor:
If you look at this table, for instance, you’ll see that federal income tax liability for the poorest 10 percent declined pretty steadily from the 1986 tax reform onward — quite often thanks to policy changes that Republicans either accepted or actively endorsed. Or again, if you look at this chart, you’ll see that we cut taxes on low-wage workers three times (relying on the EITC and child tax credits) in the twenty years before the Obama era: first in the ’86 tax reform, under Reagan; then in 1997, in a Clinton-Gingrich deal, and finally in 2001, in the Bush tax cuts. Those were not policies supported by all Republicans and conservatives by any means — hence the internal party debate, which swung in more Randian direction in 2009-2012 — but they were ideas that many Republican leaders embraced, pushed for, and signed into law.
And of course they were accompanied, as in many of today’s reformist proposals, by changes and cuts to existing welfare programs, with the overall goal of changing the incentive structures facing the poor, so that work would become more rewarding and attractive and idleness less so. Reasonable people can disagree about the consequences of these reforms, but there’s a pretty plausible case that this combination of increased take-home pay and lower guaranteed benefits, rather than punishing the poor, tended to help them: At the very least, we seemed to make more progress reducing child poverty from the 1990s onward, as Scott Winship argued earlier this year in Politico, then we did in the years before the EITC/welfare reform/child tax credit combination became federal policy.
Chait remains convinced that “the reformers are massively understating the obstacles before them”:
There are reasons Republicans have fought so hard to claw back subsidies for the least fortunate. Active philosophical opposition to redistribution is one. A general detachment from the poor is another. The unforgiving zero-sum math of budgets, which means a dollar spent on helping a Walmart mom is a dollar in higher taxes or lower defense or politically painful cuts in retirement benefits, is a third. I do think the Republican reformers can nudge their party to a better, or at least less terrible, place. But I don’t think they’re being very straight about it.
The Dish 