Saturday, April 13, 2013

Workfare

Planet Money highlights the Earned Income Tax Credit:
Last year, a federal program called the Earned Income Tax Credit took about $60 billion from wealthier Americans and gave it to the working poor. And here's the surprising thing: This redistribution of wealth has been embraced by every president from Ronald Reagan to Barack Obama.
"This program worked," says Richard Burkhauser, an economist at Cornell University and the American Enterprise Institute. "And there's not a hell of a lot of these programs where you can see the tremendous change in the behavior of people in exactly the way that all of us hoped it would happen."
When he says it worked, he means it helped single mothers on welfare find work and get out of poverty.
In the 1930s, in the early days of welfare, many of the women who received it were widows. Americans didn't think single mothers should have to work, so the government paid them to stay home. But by the '90s, the idea of paying people not to work seemed backwards to many Americans. If moms want to get paid, many thought, they should get a job.
The Earned Income Tax Credit started as a small program in the 1970s and was expanded under President Reagan. But it was President Clinton who turned the program into what it is today — one that effectively gives low-wage working parents a big bonus. For some workers making around $15,000 a year, that bonus can now reach nearly $6,000. As the name suggests, the money is paid out like a tax refund, when workers file their income taxes.
I'm surprised more conservatives don't pitch a fit about this program.  Maybe deep down, they know that some money has to be redistributed.  Or maybe, they don't understand it.  

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