Republicans Brand Ronald Reagan Socialist Welfare King
Among the most predictable frauds in the Republican war against the Obama stimulus plan is the bogus claim that it offers to tax credits to Americans "not paying taxes." But while voters on Election Day rejected the cries of "socialism" from John McCain and Sarah Palin, GOP leaders from Rudy Giuliani and John Kyl to Jim Demint continue to deride Obama's proposed tax credits for working Americans as "welfare."
As it turns out, that puts them on the opposite side from conservative patron saint Ronald Reagan. As his latter-day adherents conveniently forget, it was Reagan who famously proclaimed the bipartisan Earned Income Tax Credit (EITC) "the best anti-poverty, the best pro-family, the best job creation measure to come out of Congress."
Former New York Mayor Rudy Giuliani provides a case in point. One week before taking to the airwaves to defend the $18 billion in taxpayer subsidized bonuses to Wall Street executives that President Obama deemed "shameful," Giuliani told Fox News' Sean Hannity that the Obama economic recovery package constituted welfare:
HANNITY: All right. The -- and other big issue that is facing this country right now is the economy. He's talking about trillion-dollar deficits as far as we can see. He's saying it's a tax cut, but people who don't pay taxes are going to get a check.
Look, you dealt with welfare in New York. Is that welfare?
GIULIANI: Yes, if -- somebody is not paying taxes is going to get a check from the government, then that is welfare. You haven't earned it, that's a welfare payment. I think he's going to have to abandon that in light of the economic situation.
In reliably regurgitating the Republican talking point (that Barack Obama wants to give tax cuts as welfare to the undeserving) promulgated by the Wall Street Journal, the Washington Times, Townhall and other mouthpieces of the right during the 2008 campaign, Giuliani like John McCain before him is ignoring two inconvenient truths.
First, as Salon, the Washington Monthly and the New Republic among others quickly pointed out last fall, the Republican braintrust is willfully sidestepping the fact that essentially all working Americans pay Social Security and Medicare payroll taxes starting with very first dollar they earn. Importantly, as the nonpartisan Tax Policy Center concluded in a 2003 analysis, "three quarters of filers pay more in payroll taxes than in income taxes." And as Robert Gordon and James Kvaal noted at the New Republic:
"It is true that Obama has proposed several tax credits that include families who earn too little to owe income taxes, a group that include about half of families with children. But many of these families work and pay thousands of dollars in other taxes. For example, a family of four must earn about $25,000 before owing income taxes--but they must pay payroll taxes on the first dollar they earn. Indeed, Obama's biggest refundable credit ['Making Work Pay'] is designed to cushion the blow of payroll taxes."
It is with good reason that Salon deemed the shared critique of the Congressional GOP and its allies at the Wall Street Journal, "economic illiteracy."
Which brings us to the second part of the Republicans' fraudulent charge. That millions of hard working American families pay no income taxes is due in large measure to the Earned Income Tax Credit. Created in 1975, the EITC "a refundable federal income tax credit for low-income working individuals and families" that results in a tax refund to those who claim and qualify for the credit when the EITC exceeds the amount of taxes owed. As the Center for Budget and Policy Priorities detailed in 2005, the EITC has not only been extremely successful in reducing poverty, it has enjoyed broad bipartisan support:
The Earned Income Tax Credit has been found to produce substantial increases in employment and reductions in welfare receipt among single parents, as well as large decreases in poverty. Research indicates that families use the EITC to pay for necessities, repair homes and vehicles that are needed to commute to work, and in some cases, to help boost their employability and earning power by obtaining additional education or training.
The EITC has enjoyed substantial bipartisan support. President Reagan, President George H. W. Bush, and President Clinton all praised it and proposed expansions in it, and economists across the political spectrum - including conservative economists Gary Becker (a Nobel laureate) and Robert Barro, among others - have lauded it.
While Giuliani and McCain are apparently now content to side with the likes of Newt Gingrich and Phil Gramm in terming EITC recipients "lucky duckies," they sadly find themselves fighting the Gipper himself.
While many of his conservative allies expressed disdain for the working poor, Ronald Reagan championed the refundable Earned Income Tax Credit. As the American Prospect recalled in 2006:
Almost 20 years ago, as he signed into law the tax bill expanding the Earned Income Tax Credit, President Ronald Reagan hailed it as "the best anti-poverty, the best pro-family, the best job creation measure to come out of Congress."
It's no wonder John McCain in 1999 called the EITC a "much-needed tax credit for working Americans."
But that was then, and this is now. With Democrat Barack Obama in the White House, tax credits for working Americans represent, in the words of South Carolina Republicam Jim Demint, "a mugging" and a "slide towards socialism."
As the New York Times and the Wall Street Journal detailed, it was this very issue that prompted President Obama last week to gently remind Republicans "I won." While the President patiently listened to Republicans including Mitch McConnell (R-KY), John Kyl (R-AZ), John Boehner (R-OH) and Eric Cantor (R-VA) air their grievances and alternatives at the White House, Obama was forced to smack down Kyl on the tax credit point:
Challenged by one Republican senator over the contents of the package, the new president, according to participants, replied: "I won."
The statement was prompted by Senate Minority Whip Jon Kyl of Arizona , who challenged the president and the Democratic leaders over the balance between the package's spending and tax cuts, bringing up the traditional Republican notion that a tax credit for people who do not earn enough to pay income taxes is not a tax cut but a government check.
Obama noted that such workers pay Social Security and Medicare taxes, property taxes and sales taxes. The issue was widely debated during the presidential campaign, when Sen. John McCain, the Republican nominee, challenged Obama's tax plan as "welfare."
With those two words - "I won" - the Democratic president let the Republicans know that debate has been put to rest Nov. 4.
As for the remaining Republicans in Congress, a different debate is raging within their party as the economic recovery package unfolds. Appearing on PBS, presidential historian Richard Norton Smith said:
"[Obama] knows the Republican Party has been reduced to a rump, ideologically and geographically, and he's going to give them a choice of being, in effect, the Rush Limbaugh Republican Party or the Ronald Reagan Republican Party."
Apparently, Rudy Giuliani, John Kyl and their Republican colleagues have made their choice and lined up with the right-wing radio host and poster child for Oxycontin addiction. Today's Republicans aren't with Barack Obama or even Ronald Reagan, but with Rush Limbaugh.