WHEN congressional Democrats were urging a large increase in the minimum wage last year, Republican and other critics said they had a better idea: an increase in the earned income tax credit or negative income tax that the government maintains as a wage extender for the working poor with children.
When Democrats also proposed a new federal child care program, Republicans, led by the president, responded with the same alternative: a children's tax credit for low-wage parents that boils down to an increase in the earned income tax credit by another name.
Now budget negotiators for the administration and Congress are meeting on deficit reduction, including a possible tax increase. Among the candidates are increases in the gasoline, alcohol and tobacco taxes, all regressive. The administration also continues to seek a cut in upper-income capital gains tax paid mainly by households in the upper-income brackets. To offset and balance these steps there is talk of including in any final package a tax break for the poor as well -- once again, an increase in the earned-income tax credit. Yes, it's a good idea, but how many times can the same tax cut be pressed into service?
A large increase in the earned-income credit is the central ingredient in the House-passed child care bill. That's true even though it has nothing directly to do with child care. The president endorsed it in the name of child care, and the Democrats weren't about to let the opportunity pass. The problem now is that the increase may be larger than either the administration or the Senate is prepared to support, and larger also than the House-Senate child care conference committee will be able to afford.
The child care bill is also in danger of becoming a hostage to the budget negotiations. That is just what supporters feared would happen when House Democrats failed to resolve their differences and failed to produce a bill last year. At one point last year it appeared that, in a reversal of the Reagan years, this might be an important Congress for the poor. The first increase in the minimum wage in nine years, though modest, would be magnified by an increase in the earned-income credit, together with new support for child care and some possible embroidery on the food stamp, Medicaid and low-rent housing programs.
But the credit can't do triple duty. The same provision can't at the same time offset a regressive tax increase, stand guard for the minimum wage, substitute for a child care program and still help the poor. That's a shell game.