Many Proposals to Achieve 1 Goal: Sharing Wealth With Working Poor

So many voters in New Hampshire are doing well economically that it sometimes seemed the presidential candidates recruited their audiences from the lobbies of stockbrokers’ offices. But in South Carolina, even amid a generally rising tide, many families live paycheck to paycheck. When John McCain spoke at a town meeting here late last week, almost half the questions, in one form or another, evoked the struggle of making ends meet with low-wage jobs.

These are good questions for the candidates to hear. Indeed, with the stock markets booming and workers on the income ladder’s upper rungs thriving, no issue deserves more priority than supporting families who are working hard but not getting very far ahead.

Even in an era of affluence, that condition still describes the lives of millions of Americans on the periphery of poverty and the lowest steps of the middle class. According to the latest Census Bureau figures, about 25 million families live below the poverty line (about $16,400 for a family of four), with an unprecedented number of them including at least one member who worked full time. An additional 39 million families get by with incomes less than twice the poverty line, or almost $33,000.

The good news is that, in both parties, there’s growing interest in bolstering these families. For years the debate about the needy was stuck in a polarized argument about whether people on welfare should work. But now welfare reform has established the principle that all who can work should work. And that’s allowed the debate to move on to a question on which most Americans can find common ground: how to make work pay.

No single political leader has devised the ideal answer. But, as if assembling a mosaic, President Clinton, the leading presidential contenders in both parties and private groups such as the business-oriented Committee on Economic Development are all forwarding attractive ideas. From their combined efforts, the image of a comprehensive response is emerging.

One key element is subsidizing day care--an expense that can consume as much as one-quarter of the paycheck of low-income working families. One place to start (as Clinton has urged for years and McCain is now discussing) is to offer employers tax incentives to provide day care at work. Another is to increase the federal grant that helps states both subsidize child care costs and upgrade child care facilities.

The best idea, though, is one originally proposed by Democratic contender Bill Bradley (and later embraced by Clinton in his budget). Washington’s principal source of support for day care is a dependent care tax credit for working families. But, perversely, this credit does nothing for those who need it most.

Families now can use the day care credit only to offset income taxes they owe; they can’t receive a refund if the value of the credit exceeds their tax liability. But families of four that earn less than $25,000 a year already pay little, if any, income tax (though they still face hefty payroll tax bills). That means those families can’t use the credit--while more affluent families do. Bradley’s eminently sensible solution: if the credit exceeds taxes owed, allow families to receive the difference in the form of a refund check.

Some of the candidates’ education proposals could also serve double duty in easing the day care crunch. Clinton, Bradley and Vice President Al Gore are all proposing major increases in Head Start, preschool and after-school programs that can provide not only instruction but a safe place for working parents to leave young children. George W. Bush adds an important element the Democrats have neglected by insisting that Washington fortify the educational component of Head Start.

After day care, the list moves on to health care. In 1997, Congress and Clinton took a major step by creating the Children’s Health Insurance Program, which provides coverage for children in working-poor families. Now, Clinton and Gore want to extend the program to the parents in those families. Bradley wants to give low-income workers government subsidies to purchase private insurance. Bush has started talking about a hybrid of the two: expanding the Children’s Health Insurance Program to cover uninsured adults, in part by using the funds to help workers buy private coverage for their entire families. The details of these differing approaches matter; but what may matter more is a widening commitment to cover uninsured workers.

Cutting taxes paid by low-income families comes next. With his incessant promise to “take down the tollgate on the road to the middle class,” Bush has shined the most concentrated light on this problem. But his solution--centered on cutting the lowest tax rate from 15% to 10%--is oddly unfocused. It could help many lower-middle-class families. But cutting the bottom rate does nothing for the poorest working families, who already don’t pay any income taxes; conversely, it benefits even the richest families by lowering taxes on their first $12,000 in earnings.

A more targeted answer is to enrich the earned income tax credit, which is specifically aimed at the working poor and can be received as a refund. Several good ideas have emerged, including eliminating a quirk in the credit that penalizes married couples and allowing families to keep a bigger share of the credit as their income rises. Just as urgent may be encouraging states to establish their own tax credits for low-income families: 40 states tax families earning less than $25,000 a year.

Raising incomes for the working poor by increasing the minimum wage also belongs in this picture. So too does Clinton’s proposal to expand the program that helps the working poor afford housing in growing neighborhoods with more jobs. And leaders in both parties are talking about redesigning existing programs--from the Children’s Health Insurance Program to food stamps--to make them more accessible to working families.

Even with federal surpluses, Washington can’t afford to meet every worthwhile goal. Yet working-poor families deserve to be near the front of the line. Slowly, but inexorably, the principal mission of America’s welfare state is shifting from providing a safety net for the nonworking toward supporting those who work for wages too meager to provide a decent life. That’s the right shift in emphasis, but a society that demands responsibility also must be prepared to reward it.

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See current and past Brownstein columns on The Times’ Web site at: https://www.latimes.com/brownstein.