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Paycheck program

"Paycheck program" Continued...

Issue: "Tick, tick, tick ...," May 7, 2011

The EITC has its flaws. In 2005 the U.S. Government Accountability Office expressed concern about fraud. Former Rep. Ernest Istook, R-Okla., in 2008 complained that "one-fourth to one-third of these EITC returns are based on illegal multiple returns, phony Social Security numbers, and claims of nonexistent children or even make-believe spouses." A study in 2009 by Edwin Rubinstein, president of ESR Research, an economics consulting firm, also reported on fraud and inaccuracy within the program.

But the EITC is clearly superior to welfare programs that typically penalize work effort: The EITC rewards work. While many of the recipients are single parents, the credit is available to two-parent families when one parent works and the other takes care of the children. Expansion of the EITC during the 1990s encouraged hundreds of thousands of men and women to leave welfare and take low-paying jobs that helped them develop skills and work habits.

Those appeals to conservatives indicate why the program that began in 1975 gained expansion through the Reagan Tax Reform Act of 1986 (and further expansion in 1990, 1993, and 2001). EITC recipients who claim credits wrongly can be made ineligible for two years if the IRS determines the error stems from "reckless and intentional disregard" of the rules, and for 10 years in the case of a fraudulent claim. Conservatives are calling for improved enforcement.
-Christina Darnell is a North Carolina journalist

Reforming welfare reform

Lawmakers seek to extend the successes of the 1996 law

By Emily Belz

WASHINGTON-The 1996 welfare reforms, passed by a Republican Congress and signed by Democratic President Bill Clinton, have cut welfare caseloads by more than half. The reforms, designed to reduce incentives to be on welfare and move able-bodied people into work, have been generally successful, but some aspects of the program still need reforming: Welfare-related spending is one of the highest categories of government spending, according to Robert Rector of the Heritage Foundation, rising precipitously since 1996. States maintain lax work requirements. Also, many measures in the bill to promote marriage have been undermined-Rector has said that nearly all of the states have ignored those measures.

Rep. Jim Jordan, R-Ohio, the head of the Republican Study Committee, introduced a new measure to reform welfare reform in March. Jordan's proposal caps total welfare spending to pre-recession levels, adjusted for inflation, once the unemployment rate returns to 6.5 percent. The bill would hold the now-40 million Americans on food stamps to work requirements. (The 1996 reforms raised work requirements only for recipients of the Temporary Assistance for Needy Families program.) States would have to ensure that a small percentage of recipients spend at least 15 hours a week either working, searching for a job under a supervisor, doing community service, receiving education or job training, or completing drug or alcohol treatment.

If states reduce their food-stamp caseloads, they receive a quarter of the money saved back as a grant that they can use for programs for the poor. The bill also includes a "self-sufficiency incentive" that would set aside $300 million in grants for up to three states that have the highest rate of families moving above the poverty line in the previous fiscal year. Finally, the reform bans welfare funds from being used to pay for abortions, except for cases of rape, incest, or to preserve the life of the mother.

The debt ceiling and the 2012 budget are chief on the minds of legislators, so Jordan's reform may not move forward as a stand-alone bill, at least not anytime before appropriations are completed later this year. Elements of it are more likely to be integrated into other legislation. For example, House Budget Committee Chairman Paul Ryan incorporated the food-stamp work requirements into his 2012 budget that debuted in April.

Christina Darnell
Christina Darnell

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