Newt Gingrich and the GOP Welfare Dupe

The GOP liked tax credits, until they lost welfare as a political issue.

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By John Aloysius Farrell, Thomas Jefferson Street blog.

Preparing for the coming big debate about taxes, conservatives are scheming to redefine President-elect Barack Obama's proposed tax cuts as...welfare!

The murmur began toward the end of the 2008 campaign, when John McCain's supporters started whispering that Obama's tax plan was nothing but a big government giveaway to the loafing masses because it included refundable tax credits.

Now Newt Gingrich has picked up the charge, in a column in today's Wall Street Journal. Refundable income tax credits are naught but a federal dole in disguise, he says:

Mr. Obama's tax plan includes creating or expanding nine or more federal income tax credits mostly focused on low- and moderate-income earners, with an estimated cost of $1.3 trillion over 10 years. These tax credits are provided for certain social purposes, such as child care, health care, education, housing and retirement. Buried amid these is Mr. Obama's purported tax cut for the middle class.

For the bottom 40% of income earners, who pay no federal income taxes on net today, these refundable income tax credits will not reduce tax liability but instead result in new checks from the federal government for the targeted social purposes. That's not a tax cut. It's welfare.

In classifying tax credits as "welfare," Gingrich oh-so-conveniently forgets 40 years of conservative economic theory, dating back to the Nixon days, which has promoted earned income credits as a preferable alternative to welfare.

The key word here is "earned." It used to make all the difference to conservatives. No more, I guess.

Sixties-era welfare, if you recall, was paid to folks in Appalachia and decaying cities who did not work and—according to Ronald Reagan, Gingrich, and other conservative heroes—drove to the supermarket in Cadillacs, where they bought sirloin steaks with food stamps.

Well, the welfare queen stories were exaggerated, but they made the point. Even Franklin D. Roosevelt had warned Americans that welfare payments discouraged people from working, eroded their dignity, and made them dependent on the state.

And so conservative theorists embraced the notion of a negative income tax or, as it finally came to be called, an Earned Income Tax Credit. Get a job, any job, they told the poor, and we'll encourage your conversion to the virtues of hard labor by adding a few bucks every April 15. We'll refund what taxes you overpaid, and give you back a little bit more.

Indeed, it was during the Reagan administration that the EITC really blossomed. And, in part because of an expanded EITC, Democrats in the Clinton years joined then House Speaker Gingrich in a landmark, historic welfare reform bill, ending the awful welfare system as we knew it.

It was Gingrich's greatest accomplishment, and it's sad to see him tarnish it by reviving the bogeyman of "welfare" now.

The problem for Republicans was that, once they had actually reformed welfare, they lost a juicy political issue. It was such an easy sell, and so rewarding at the polls, to convince working- and middle-class families that while they were slaving away and paying taxes, there were shiftless minorities and poor white trash having babies, using drugs, and watching television on their dime.

So, voil à! In 2008, a Democratic presidential candidate proposes, as part of his tax cuts for 90 percent of American families, to increase refundable tax credits for the working poor.

And suddenly, but perhaps not surprisingly, his foes decide that tax credits are "welfare."

Now, we can have a debate about whether it is smarter to cut taxes on working families or rich folks, or about how much we need to give back to the hard-pressed middle class.

We can ask single moms, or working mothers, or construction laborers, or teachers who leave school at 3 o'clock to report to their second jobs whether they think that a federal tax break that helps them pay for day care, or education, or healthcare is unwisely feeding their dependence on the state.

We can weigh the alternatives that Gingrich offers, with Peter Ferrara, in his Journal article, some of which seem innovative and intriguing.

But, hey, Newt! Lay off the "welfare" shtick. It is demeaning for you to stoop like that. It's out of tune in times that call for American unity. And sad for us to watch you slither.

The checkers at the supermarket, the cleaning ladies who wax the floors at night, the factory workers, the cab drivers, the laborers, the single moms—they're working hard.

What are you doing that is as hard, and contributes to America, that we shouldn't call your tax cut "welfare"?

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