EARLIER IN this Congress it appeared that the big winners in the first two years of the Bush administration might include the poor. Now that prospect has greatly dimmed. Initiatives to help the poor have lost momentum. Here, as elsewhere in government, much now depends on the budget summit, which in turn is a prisoner of the political calendar and events in the Middle East.
Congress last year, after months of negotiations with the administration, passed the first increase in the minimum wage in nine years. The wage floor had lost more than a third of its purchasing power, and the increase restored only part. But that added to pressure on, and expressions of willingness from, both parties to make up the difference in other legislation.
First among these was to be, in the guise of a child care subsidy, a large increase in the earned-income tax credit, which acts as a wage supplement for the working poor with children. The president himself endorsed the idea as an alternative to a Democratic child care program he said would be heavy-handed. In addition there was in fact to be a new child care program of some kind, though strong disagreements persisted about the form it should take. The food stamp program was also to be liberalized, restored as part of the farm bill (because it is administered by the Agriculture Department) to its level before the Reagan cuts of 1981 and 1982. A modest further extension of Medicaid, which still serves only 40 percent of the poor, and a bill to revive the housing programs -- which, moribund in the Reagan years, serve only 30 percent -- were also in prospect.
Now the earned-income tax credit is in some danger of being folded into the summit discussions and being used, not so much to increase the incomes of the poor but as a balancing device to make them whole after excise tax increases or other regressive steps reduce their incomes. The child care bill of which, at least in the House version, the EITC was the leading provision is meanwhile in a kind of limbo; House-Senate conferees operating under a veto threat and trying to reconcile more irreconcilable proposals than they can afford are making little progress.
The food stamp restoration bill is also in an uncertain state; the question is whether the budget agreement will leave room for the proposed increases of ultimately more than $1 billion a year in costs. Also in part for budget reasons, any expansion of Medicaid this year is likely to be modest, while the housing bills, for all the fuss surrounding them, are mainly extensions of the status quo.
The budget negotiations could end up not merely foiling efforts to help the poor but hurting them, not just by tax increases but by raising fees regardless of income, as has been proposed for part B of Medicare. But all of this is wrong. A social deficit has been allowed to accumulate in recent years alongside the budget deficit. Income inequality is sharply up; the poverty rate is also high for an economy now completing an eighth straight year of expansion. Recession would exacerbate both figures, compounding the social as well as the fiscal shortfall. The budget summit and the final weeks of this Congress will be a double test. The deficit should come down, but at the same time aid to the poor should, as the rhetoric once suggested it would, go up.