A little over 25 years ago, a
Democrat President and a Republican Congress came together, to quote former
President Clinton, “end welfare as we know it.” On a bipartisan basis Congress
passed, and President Clinton signed into law, the Personal Responsibility and Work Opportunity Reconciliation Act.
Amongst other things, this landmark law established the
Temporary Assistance for Needy Family (TANF) program to replace the previous
family assistance program. TANF was specifically designed to promote work and help
struggling parents back onto their own two feet. It did this by creating work
requirements and promoting skill development through education and job
training.
While critics at the time
contended dire consequences would result, particularly for single mothers, they
were proven fantastically wrong. Welfare reform immediately led to a
precipitous decline in welfare caseloads and usage. At the same time, the
single mother labor force participation rate rose and their incomes climbed.
Recent research shows the gains
were not only short term, but led to an improvement in the material well-being
of single mothers throughout the following decades. Additional studies show
welfare reform has contributed to higher education attainment and improved food
security for the following generation.
The 1996 welfare reforms helped
families enjoy the dignity of self-sufficiency. It helped end the cycle of
poverty. It gave parents the hope of seeing their children grow-up to be better
off than they had been. Exactly what every parent dreams of for their child.
This was achieved thanks to a
Democrat President and Republican Congress working together for the benefit of those
they were elected to serve. Now, President Biden and Senate Democrats want to
effectively end welfare reform as we know it and reinstitute failed policies of
the past.
However, they don’t want to
tell the American people that’s what they’re doing. They know trying to sell
their proposal as the largest expansion of welfare in history won’t fly. As an
end -run around welfare reform – and in an attempt to garner broad public
support – they want to co-opt a popular tax program for their own ends.
That program is the child tax
credit. This credit was established on a bipartisan basis in 1997 as a complement
to welfare reform to assist parents as they left the welfare rolls for work. Since
then, Republicans have taken the lead in improving the credit as an
anti-poverty tool that partially offsets the burden of payroll taxes on the
working poor.
In 2001, as then-Chairman of
the Senate Finance Committee, I worked with fellow Republicans to increase the
credit amount from $500 to $1,000. Moreover, the credit was made partially
refundable for the first time. This made low-income working families eligible to
receive a tax refund even if they had paid no income tax – though they paid
payroll taxes.
In 2017, Republicans again
doubled the credit and increased the amount that those who pay no federal income
tax can receive a tax refund.
But, a key feature of the child
tax credit has always been that it’s a work incentive. In order to benefit, a
tax filer must have at least a minimal amount of “earned income” – which
basically means wages from employment. As you earn more, a larger share of the
credit becomes refundable – partially offsetting payroll taxes.
Now, Democrats want to turn
this broadly popular, bipartisan, pro-work tax incentive into a government
assistance program akin to the old, pre-Clinton welfare program. What Democrats
propose can no longer be considered a tax credit in any traditional sense of
the word. The benefit is entirely divorced from the tax system in every way
except for how it’s delivered. To qualify, no one in the household needs to
work, have income or pay any sort of federal tax at all.
Even more alarming, there are
no job search requirements, no job skill development assistance and no
educational assistance. All the requirements that apply to those receiving TANF
under 1996’s welfare reforms would be gone.
In other words, their proposal
provides no help to get struggling parents back on their feet or to tackle the
root causes of generational poverty.
I fear the Democrats proposal
will be a poverty trap for far too many needy families – reversing the gains made
since bipartisan welfare reform.
That’s exactly what a recent University
of Chicago analysis of the Democrats proposal suggests will occur. According
to this study, the Democrats child tax credit proposal would result in 1.5 million
parents leaving the workforce.
This analysis directly
contradicts Democrat claims that their proposal will cut child poverty in half.
In fact, according to the authors, “deep child poverty would not fall at
all.” It might even be made worse.
This is exactly why Democrats
and Republicans came together to reform welfare in 1996. It became self-evident
that child poverty could not be solved simply through money alone.
If money alone is the solution,
why are my Democrat colleagues willing to settle for only reducing child
poverty by half? Why don’t they simply dedicate more of their $4.2 trillion
reckless tax and spending spree to completely end child poverty?
Is it that they believe
subsidizing individuals to buy electric bicycles – as their bill does – is more
important than eradicating child poverty?
I fully support lending a hand
to families in need of support. But our policies must be focused on providing a
hand-up, not just a hand-out.
Providing assistance untethered
from any work or job promotion requirement isn’t compassionate. It’s just the
opposite. It sets up generations of Americans to be trapped in soul-crushing
government dependency.
I urge my colleagues to abandon
their ill-conceived, no-strings attached child tax credit proposal. Do not yank
away the ladder of opportunity for struggling Americans. Take a page out of
former President Clinton’s playbook. Work with Republicans to find a bipartisan
solution that will actually help low-income families today, and for generations
to come.
