With the inauguration of a new President and the beginning of a Congress that is almost evenly divided between Republicans and Democrats, Washington has settled down to work on the annual appropriations process. Most of the important decisions affecting low-income people that are made in 2001 will come as routine parts of the budget cycle, not through new initiatives.

The exception is President Bush's tax proposals, which were central to his election campaign. Now Mr. Bush is attempting to honor his promise that ever taxpayer would receive some benefit from his tax proposal. At issue are who will receive how much, and the extent to which low-income households will benefit.

Mr. Bush has proposed increasing the current tax credit for children to $1,000 per child. This would only be helpful to low-income families if the credit is made fully refundable, which is not now part of the Bush plan.

Tax credits are claimed when income taxes are paid. A refundable tax credit is given to the taxpayer whether or not he owes any taxes, so that even a very low-wage worker who has no federal tax liability would benefit. If the credit is not refundable, a person who pays no taxes will get no credit. The only benefit will go to those who have enough income to owe more in taxes than the value of the credit. The Bush tax credit, being child-based, would offer no help to people who have no children or to those whose children are over age 17, no matter how low the household income is.

Making any increased child tax credit fully refundable has become a high priority for child advocates because they see that as an effective way to lift families out of poverty.
Another part of the Bush plan would give and across-the-board rate reduction. While this would apply to workers without children as well as to those with dependents, it would not help the poorest working people in the society who are not required to pay taxes. About half of the benefit would go to the 15% of the population whose income is over $100,000 per year.

Minimum Wage

For the last several years, efforts have failed in Congress to raise the federal minimum wage, an action that would significantly help low-income workers. Legislation for this purpose passed both the House and the Senate in the last Congress, but no agreement was ever reached on the differences in the two measures, and the legislation died.

Sen. Edward M. Kennedy (D-MA) and Rep. David Bonior (D-MI) are the co-sponsors of S. 277, which would raise the minimum wage from the current $5.15 per hour to $6.65 in January 2003. This would be accomplished in three steps, rising to $5.75 thirty days after enactment, $6.25 next January 1, and the final step a year later.

President Bush has proposed that the Kennedy-Bonior bill be amended to allow states to opt out of the minimum wage increase, a proposal that is opposed by advocates for low-income workers. Many states, far from wishing to opt out, have voluntarily passed higher minimum wages for their own residents and for state workers.

The current minimum has been stuck at $5.15 since 1997. A person working at that salary for 40 hours a week and 52 weeks a year earns a total of $10,700, which is $3,400 a year below the poverty line for a family of three.

Contrary to popular belief, 70% of the people who hold minimum wage jobs are over the age of 20. Sixty per cent of these poorly paid workers are women, and a great many of them are supporting children. Nearly half (48%) of all minimum wage workers are employed full time at these meager wages. Increasingly, the minimum wage population includes elderly people who are working to supplement their Social Security and inadequate pensions.

Senator Kennedy had 22 co-sponsors when he introduced the bill and is seeking many more.

Food Stamps

Recent reports continue to document the fact that hunger is increasing in the U.S. even as participation in the Food Stamp program is decreasing.

According to a U.S. Census Bureau report for the year 1999, 31 million Americans -- 12 million of whom are children -- suffer from hunger or live on the edge of hunger in the U.S. A study by Catholic Charities of 1999 statistics showed that requests for help from their soup kitchens, food banks and other food services jumped by 32% in that year.

At the same time that these alarming indications of need were coming out, the federal General Accounting Office reported, "food stamp participation has dropped faster than related economic indicators would predict." Further, GAO said, "there is a growing gap between the number of children living in poverty -- an important indicator of children's need for food assistance -- and the number of children receiving food stamp assistance."

An Urban Institute study looked into the question of whether the declines in food stamp participation might be linked to falling welfare rolls and concluded that "About two-thirds of the families that left the Food Stamp program [between January 1995, before the passage of the 1996 welfare reform bill, and October 1997, after its implementation] were still eligible for food stamps."

This conclusion is consistent with the findings of numerous other studies of the welfare legislation's effects, which show that people who are leaving welfare are being wrongfully denied food stamps and other supportive services to which they are entitled by state caseworkers who either do not understand the law or are trying to save state money. This matter will no doubt be the subject of great concern when the Food Stamp Program and the welfare program (Temporary Assistance for Needy Families) are reauthorized in 2002.

General Assembly guidance:

The 1996 Presbyterian General Assembly adopted a resolution on "Eradicating Poverty and Improving the Human Habitat," calling for actions to: "Provide incentive for productive employment for the unemployed, including a livable minimum wage." The 1997 General Assembly stated its support of restoration of cuts in the food stamp program following the 1996 Welfare Reform legislation.