A healthy economy, combined with the Clinton administration’s tax policies, have contributed to a decline in the child-poverty rate, according to an annual report from the president’s Council of Economic Advisers.
In particular, the federal earned-income tax credit, which the then-Democratic-controlled Congress expanded when Mr. Clinton took office in 1993, has helped to put more money in the pockets of low-income working families with children, says the report, which was released last week.
The proportion of U.S. children younger than 18 who are poor is still at its highest levels since the early 1960s, with one in five living in poverty.
Children who grow up in low-income families, research shows, are more likely to drop out of school and wind up in low-paying jobs. “Most studies find that family income is more strongly correlated with children’s achievement than parental schooling or family structure,” the report says.
But since 1993, the official rate has declined, from almost 23 percent that year to slightly more than 20 percent in 1996, according to the U.S. Census Bureau. When the tax credit is considered—through an alternative measure of child poverty—the rate has fallen even more, by 4.7 percentage points, the report says.
The earned-income credit, its supporters say, acts as an incentive to keep low-income parents off welfare. Those who qualify for the credit can get back some or all the federal income tax that was deducted from their paychecks during the year.
Based on earnings from 1996, more than 18.9 million people received the tax credit last year, receiving a total of $27.7 billion, according to the Center on Budget and Policy Priorities, a nonpartisan organization in Washington that focuses on how public-policy issues affect low-income people.
Call for Vigilance
“The earned-income tax credit is a fantastic form of assistance for low-income families with children,” said Deborah Weinstein, the director of the family-income division at the Washington-based Children’s Defense Fund, an advocacy group.
She added, however, that widespread support for middle-class or across-the-board tax cuts might make the program vulnerable.
“Those of us who understand how valuable this program is to a constituency that is not powerful—low-income working families—need to be vigilant,” she said.
In general, Republicans in Congress are not opposed to the earned-income tax credit, but they have spoken out against errors and fraud in the program, such as instances of ineligible people claiming the credit, said James Wilcox, a spokesman for Rep. Bill Archer, R-Texas, the chairman of the House Ways and Means Committee.
“Before spending more, we should really work to see if we can cut down the fraud and abuse currently in the program,” Mr. Wilcox said.
The expansion of the tax credit is just one strategy that the Clinton administration says it is using to raise family incomes. Others includes stricter child-support enforcement laws, increases in the minimum wage—which has risen from $4.25 to $5.15 per hour during Mr. Clinton’s terms—and the federal welfare-reform law, which seeks to move parents off public assistance and into jobs.
“A single mother with two children can now earn enough, if she works full time, to bring her income with the [earned-income tax credit] above the poverty line,” last week’s report says.
