President Clinton took two truly bold steps to affect poverty during his presidency, one terrific and one terrible. The good one was the big expansion of the Earned Income Tax Credit in 1993, which was a positive move of huge importance for the working poor. The other was the so-called Welfare Reform Bill in 1996, which I believe as strongly as I ever did was an awful piece of public policy. We needed welfare reform. The old system was deeply flawed. But what was put in its place was even worse. It's been cushioned in part, but only in part, by the fortuitous wave of prosperity that ensued.
This week Clinton floated another proposal that goes on the positive side of the ledger -- a much-needed further expansion of the Earned Income Tax Credit (EITC). But while the 1993 expansion was enacted with bipartisan support, I don't expect the current Republican Congress to greet Clinton's new suggestion with open arms in this election year.
Their conventional wisdom is likely to be that passing such a high-visibility Democratic initiative would hurt Republican chances in November. So they'll toss off vague allegations that the program is rife with fraud -- it is not -- and do whatever else they can to throw sand in the gears so nothing happens this year. Not that I am holding my breath for widespread Republican support in the future -- helping the poor, even the working poor, has not been of particular interest to them as a general rule, especially since they took over Congress.
Clinton's proposal is important. The kinds of jobs that most former welfare recipients get (and remember, only about 60 percent of those leaving welfare get jobs, but I'll come to that later) don't pay enough to get them out of poverty. The welfare "reform" has at least served to expose more clearly how many of the jobs in this rich country are just plain crummy. In 1998 the number of family heads with children who had full-time jobs and still couldn't get their family out of poverty was at the highest level it has been in the 24 years we have been keeping that statistic.
The EITC as it is now configured helps quite a bit, especially families with one or two children. A minimum wage job plus food stamps plus the current maximum EITC payment of a little under $4,000 will get a single mother with two children out of poverty (although she will still be far from what it really costs to survive in any large American city). But the gap is wider when there are three or more children. The poverty statistics show this, dramatically. The poverty rate among families with one or two children is 11.9 percent. Among families with three or more children it is 28.5 percent.
The president proposes to add a new category that is $500 more generous for families with three or more children. He also wants to ease the marriage penalty that is built into the EITC now, and to reduce the benefit more slowly as a family's income increases. A married couple with three children earning $15,000 annually would get an increase of $815 in its credit, from $3,577 to $4,392. Clinton's proposal will make a constructive difference for working families who are struggling so hard.
It would be so much better if our economy offered enough jobs that paid a living wage. Lacking that as we so obviously do, the EITC is a vitally important piece of public policy.
Equally obvious, it's not a three-dimensional strategy. The minimum wage needs to be raised, too. Labor unions need to redouble their organizing efforts in the low-wage world, and laws that get in the way of organizing need to be changed. And welfare reform shows that the government needs to provide more help with the cost of child care, health coverage and housing assistance.
But it will be left to the next president to address the biggest problem with Clinton's welfare reform: the fact that roughly 3 million of the 7.5 million people who have left the welfare rolls over the past five years have just plain disappeared.
The math goes like this. About 2.5 million women have left the welfare rolls. About 60 percent of those -- more in some states, less in others -- have jobs. That means that about 1.5 million of those women are employed. But it also means that 40 percent, or about a million, don't. With their children, that's 3 million people. They are America's disappeared. We don't know what has happened to them, although it is easy enough to find them one by one on a visit to any transitional shelter for homeless families in any major city.
And we know from the overall statistics that they're hurting, badly. Putting all the available numbers together, we have figured out that the poorest 10 percent of single mothers lost 14 percent of their income from 1996 through 1998. Why? Simple. Their earnings, to the extent they have any, add up to less than the welfare and food stamp benefits they have lost.
That's an outrage. And Clinton hasn't breathed a hint that he recognizes the existence of this problem, let alone propose to do anything about it.
So I greet Clinton's EITC proposal, which should be enacted, with only narrow enthusiasm. We shouldn't offer the sound of two hands clapping until we see some recognition of the damage that has been done to the literally millions of people at the very bottom. They represent a tragedy of profound dimension.
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