Child Tax Credit Cuts Aren't Compassionate, Conservative

by Bruce G. Iwasaki

The now-stalled debate on whether 6.5 million low-income working families should receive the increased child tax credit Congress recently bestowed on families earning more than $200,000 a year demonstrates that the Bush administration is neither compassionate nor conservative.

Congress is at loggerheads over how to extend child tax credits to families with annual incomes between $10,500 and $26,625. A bill passed June 12 by the House would do so only by adding another $72 billion in tax cuts for middle- and upper-income taxpayers.

This bill would magnify the deficit in such an irresponsible way that it makes true conservatives gasp. Senate Republicans refused to go along with it, instead voting to restore child credits for the working poor without adding to the deficit.

The two Houses are so far apart that they announced that there would be no agreement on child tax credits until they completed changes to Medicare. But this is not a debate between the political parties. Democrats are so marginalized that all Senator Tom Daschle and Rep. Nancy Pelosi could do was send a letter of complaint to the White House.

Rather, the dispute is between a conservative Senate and a radical wing of the Republican Party in the House. By not pressing for a resolution, and in effect letting fellow Texan Tom DeLay and Bakersfield Ways and Means Committee Chairman Bill Thomas have their way, President Bush puts the lie to his avowed compassionate conservatism.

How did we get here? Recall that the tax bill President Bush signed May 28 dropped a child tax credit provision that would have assisted 12 million children in low-income working families. The expanded credit for low-income working families, while originally in the Senate version, was removed by Thomas, ostensibly to bring the price tag down to $350 billion.

This explanation never made sense, because the cost of the provision was only 1 percent of the final bill. In any case, as was reported widely after final passage, no one expects that any of the "sunset" provisions in the tax-cut law will endure, and so the final 10-year cost probably will fall between $800 billion and $1 trillion.

On June 5, the Senate passed, by a 94-2 margin, a bill that would increase the child tax credit provision for low-income working families. The bill accelerates a provision of law under which the tax credit, originally scheduled for 2005, would occur this year. For the affected families, the average annual increase in their child tax credit would be $150 per child in 2003 and 2004.

While the Senate bill did not make any low-income families eligible for the credit who were not already eligible, it did make more high-income families eligible. Working families earning less than $10,500 are ineligible and would remain so. In contrast, the bill makes newly eligible many families with incomes above $150,000 to $209,000.

Heaping scorn on the bipartisan Senate bill, the House leadership jammed through, on a 224-201 vote, an $82 billion package that would benefit themselves more than working-poor families.

Under the House bill a member of Congress with a salary of $154,700 and two children will receive a child tax credit of $1,750. A married couple with a salary of $15,000 and two children will receive a benefit of $225. The House version provides six times as much in new tax cuts to higher-income families than it does to low-income working families.

And whereas middle-class families would get their credit checks immediately, families earning between $10,500 and $26,625 would have to wait until next year and claim a refund when filing their tax returns.

Finally, the $82 billion package comes with no revenue offsets. simply adds to the ballooning deficit.
      Real lives are affected by these decisions. These are people who wash our cars, clean offices and make clothes at piece rates. In Los Angeles County, where 23 percent of households have annual incomes under $20,000, half the families living below the poverty line have a full-time worker in the household.

In California, those families represent two million people, one million of whom are children.

The unfairness to these families is only one aspect of the House's in-your-face approach. What is stunning is the complete abrogation of conservative principles: pursuing major tax cuts without finding ways to pay for them. In the long term, this will hurt not only poor children but also all children, who will inherit these deficits years from now.

If the president were faithful to his campaign pledges, the choice would be clear. Yet the White House has taken no action to break the impasse. When a White House spokesman urged the House to pass the Senate bill, the request, according to the New York Times, was "dismissed with a sneer" by House Majority leader Tom DeLay. The administration backed off. When the House passed its version, the Bush administration said it supported the House bill and urged the House and Senate to resolve their differences.

This past June, several of the nation's religious leaders urged the president to press the House to accept the Senate's version of the tax-credit bill. They invoked his call that faith-based groups be "soldiers in the armies of compassion."

Without Bush's intervention, the increase in the tax credit for minimum-wage families will die. So far, the White House seems content to let that happen while issuing solemn statements in support of the tax credits. The buck, it seems, stops somewhere else.

If President Bush truly wanted a measure that reflected the label he has claimed for himself, he could force his party to deliver. He has not. There is no compassion in countenancing such inequity and nothing conservative about further increasing budget deficits.

Bruce G. Iwasaki is the executive director of the Legal Aid Foundation of Los Angeles

This commentary originally ran in the Tuesday, July 29, 2003 edition of the Daily Journal.

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