While President Obama tries this week to make a case for government action against poverty, the clock will be running out on two of his most successful anti-poverty programs.
Obama is scheduled to speak Tuesday morning at a Georgetown University event on poverty, following a White House push Monday to highlight research supporting the president’s agenda of creating new programs to alleviate poverty and have the government intervene early in children’s lives.
The forum will be an opportunity for Obama “to talk about what more we can do in this country to ensure that everybody’s getting a fair shot,” White House press secretary Josh Earnest said Monday, mentioning specifically the administration’s proposals to raise the minimum wage, implement universal pre-K and increase subsidies for students struggling to attend college.
Yet of all the anti-poverty policies that the Obama administration is touting this week, there is only one that is highly regarded by many Republicans and is part of current law. That is the expansion of low-income tax credits that was included in his 2009 stimulus bill, which is set to expire in 2017 unless Congress re-ups it.
“If you look at the next couple of years, it seems that the improvements to the [Earned Income Tax Credit and the Child Tax Credit] are kind of the low-hanging fruit of anti-poverty policy,” said Chuck Marr, a tax expert at the Center on Budget and Policy Priorities, a left-of-center think tank in Washington.
The Earned Income Tax Credit gives low-income workers a tax break or money back for earnings, effectively subsidizing work. It was expanded by presidents Ronald Reagan and George W. Bush, and then boosted again in President Obama’s 2009 stimulus bill to increase the credit for families with more than two children and offset a tax penalty for married couples.
After food stamps, the credit is the biggest cash-like anti-poverty program the federal government offers, and will account for roughly $70 billion in tax breaks and refunds in fiscal 2015, according to the Joint Committee on Taxation.
The Child Tax Credit, which gives parents a $1,000 refundable credit per child, is only slightly smaller, at an expected $57 billion.
On Monday, the White House Council of Economic Advisers cited studies using the latest research methods that found that the Earned Income Tax Credit boosts work rates among single mothers.
Writing in the New York Times, the director of the council, Jason Furman, wrote that the Earned Income Tax Credit is one of several programs that can increase mobility in the long run. Studies show that it “may also reduce the incidence of low birth weight, raise math and reading scores, and boost college enrollment rates for the children who benefited,” Furman wrote.
In an essay in the journal Democracy in spring 2014, Furman noted that “the federal tax rate for a married couple with two children and with income just at the poverty line has gone from 10 percent in 1967 to -16 percent in 2012” thanks to the Earned Income Tax Credit.
More than 16 million people will fall below the poverty line or further below the poverty line if the two credit expansions are not re-upped, according to an estimate from the Center on Budget and Policy Priorities. Those families would lose an average of $840 in tax credits, according to the liberal group Citizens for Tax Justice.
Although conservatives are not likely to agree with the Obama administration’s claims about the efficacy of other programs Furman recommended, such as universal pre-K or raising the minimum wage, there is notable support on the Right for the pro-work tax credits.
The conservative panelist who will appear onstage with Obama at Georgetown, American Enterprise Institute President Arthur Brooks, is a supporter of expanding the Earned Income Tax Credit.
So is House Ways and Means Committee Chairman Paul Ryan of Wisconsin, who is perhaps the most influential lawmaker on domestic policy issues among congressional Republicans.
Last year, as part of a report on the 50th anniversary of the War on Poverty, Ryan noted the evidence in favor of the Earned Income Tax Credit and the Child Tax Credit, and came out in support of an Obama proposal to expand the Earned Income Tax Credit for childless workers, a measure that goes well beyond the current enhancements and would nearly double the size of the program.
“What’s exciting there is there are not many policy proposals now where the president and House Republicans have exactly the same proposal,” Marr said.
Yet there’s no guarantee that congressional negotiations over a range of tax and spending matters will result in the tax breaks being extended. Last year, as Congress moved toward a deal to make certain business tax breaks permanent, the White House demanded late in the negotiations that the Earned Income Tax Credit and Child Tax Credit provisions be included. That demand effectively scuttled the deal.
In March, a group of House Democrats demanded that the two expansions be included if Congress re-ups any other expiring tax credits, such as breaks for small businesses or wind energy.
