Broken Bargain

NEW YORK -- As Congress debates next year's budget, alarm bells are sounding among groups that work with the poor. Every day, it seems, brings a new report about drastic cuts at the state level to health insurance, child-care, and other programs that help low-income families. Advocates predict that Republican budget proposals, with their meager aid to the states, will mean ever more pain for Americans at the bottom of the economic ladder.

But there is another casualty of the budget plans that has received less attention: the fledgling-and surprising-bipartisan consensus that had begun to emerge in recent years around policies to help low- and moderate-income families.

For years, conservative and liberal pundits traded insults and invective over the heads of the poor. Liberals accused Ronald Reagan and other conservatives of extreme coldheartedness, epitomized by the president's reclassification of ketchup as a vegetable in school lunch programs. Meanwhile, conservatives retailed anecdotes of Cadillac-driving welfare moms, and, citing texts like Charles Murray's 1984 social-policy study "Losing Ground," claimed that liberal welfare policies coddled the poor and kept them from improving their lives.

But the 1990s saw a significant thawing of the long domestic cold war over antipoverty policy. Many liberals came to see merit in conservative themes of work and responsibility, while some conservatives began to speak about helping working families and backed their words up with real spending. The Clinton administration greatly expanded the Earned Income Tax Credit (EITC), a program that enjoyed strong support from both Republicans and Democrats in the '90s. Transferring more than $30 billion a year to low-income households, the EITC now lifts 4.8 million people over the poverty line, and does more to reduce child poverty than any other government measure.

Another advancement for low-income children came when Senators Orrin Hatch and Ted Kennedy-the Utah conservative and the Massachusetts liberal-teamed up in 1997 to pass the State Children's Health Insurance Program (SCHIP), the biggest expansion of government health-care for low-income Americans since the 1960s. SCHIP reduced the number of uninsured children in near-poor working families by a little over a million.

For all the polarizing focus on welfare reform in the 1990s, the bigger story of the decade was that low-income families made important gains thanks to a booming economy and a level of new government activism unequaled in scope since the 1970s activism that enjoyed a surprising level of bipartisan support. In 2000, Amy Sherman, a researcher at the conservative Hudson Institute, summed up the political climate: "I think there is good consensus on expanding help for the working poor."

That was three years ago. These days, the consensus is fast unraveling-thanks to the budgetary priorities of President Bush and Republicans in Congress. At a February 24 forum in Washington, White House adviser Stephen Goldsmith said, "There is now a broad consensus that a work-based benefit system is where we want to be." But he acknowledged that the emerging left-right consensus on poverty policy stops at the water's edge of fiscal policy. While liberals and conservatives may increasingly agree on how to help low-income working Americans, they certainly don't agree on how much money to spend on this goal during tight fiscal times.

Of course, some of the bipartisanship of the 1990s was nothing more than the political horse-trading that always goes on in Washington. And, in many quarters, the conventional wisdom is that poverty policy over the past decade has been characterized less by the forging of common ground than by liberal capitulations.

Yet this view of a conservative sweep in the war of ideas over poverty policy doesn't square with recent history. Conservatives have certainly scored victories: They've eliminated the federal welfare entitlement and reduced in real terms the growth of many anti-poverty programs. But liberals scored big victories too, as evidenced by the sheer size of new budgetary resources committed to EITC, SCHIP, and other programs.

President Bush's 2001 tax cut may have favored the wealthy, but ironically enough, it also included one of the largest victories in years for the poor: It created a refundable child-tax credit that will provide more than $88 billion in new income support for low-income families over the next 10 years. Among the biggest champions of the measure was a Republican, Senator Olympia Snowe of Maine, who used her influence on the Senate Finance Committee to help get the tax credit passed. Another leading Republican backer was Senator Pete Domenici of New Mexico, who rounded up 14 Republican senators to sign a letter urging support for the tax credit as an "essential component" of the overall tax cut.

But things have gone sharply downhill since then. Faced with a slow-burning economy and state budget deficits totaling over $100 billion this year alone, the Bush administration's budget proposal would cut $5 billion in domestic programs, resulting in cuts to child-care, health-care and housing assistance. House Republicans want even deeper cuts, and earlier this year they put forth a slash-and-burn budget proposal that would reduce domestic programs by $15 billion.

On another front, the Bush administration wants to tighten requirements for families trying to claim the EITC, a move they say would reduce fraud, but which many advocates fear will undermine one of America's most effective and bipartisan antipoverty measures. This slap at the poor comes in the face of evidence that tax evasion by the rich is far more costly than EITC fraud, and also as the Bush administration pushes a new half-trillion-dollar tax cut that heavily favors high-income earners.

An especially unfortunate casualty of the new round of budget warfare has been the promising consensus that emerged in the 1990s on the need to help low-income working families afford health insurance. "I know of no state that wants to cut health insurance for working-poor families," said Bob Greenstein of the Center on Budget and Policy

Priorities at the Feb. 24 forum in Washington. "But a growing number of states are doing just that because they see no choice in terms of balancing their budgets in the current fiscal crisis." Budget cuts already enacted or proposed in governors' budgets could eliminate Medicaid coverage for 1.7 million people.

Even as the White House and Congress retreat from past commitments, public opinion seems to be moving in the opposite direction. In addition to demanding a stronger response to the economic downturn, the public has consistently expressed strong support for raising the minimum wage and increasing investments in child-care, healthcare, housing, and education. When the economy gets better, if not before, bipartisan public majorities just might demand that Washington finds the money to make their preferences a reality.

David Callahan is Research Director and Senior Fellow at Demos, a public policy organization in New York City. Tamara Draut directs Demos' Economic Opportunity Program.

 

As Congress debates next year's budget, alarm bells are sounding among groups that work with the poor. Every day, it seems, brings a new report about drastic cuts at the state level to health insurance, child-care, and other programs that help low-income families. Advocates predict that Republican budget proposals, with their meager aid to the states, will mean ever more pain for Americans at the bottom of the economic ladder.