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One of the more striking things about Paul Ryan's new anti-poverty plan is that his plan to increase the Earned Income Tax Credit for childless workers is nearly identical to that of President Obama. They both want to double the credit's maximum value from $503 to $1,005. They both want to increase the phase-in / phase-out rates to 15.3 percent. They both want phase-out to start at $11,500 for single childless people rather than $8,220. Ryan simply adopted Obama's policy with only the most minor of alterations.
Given that the most powerful House Republican on economic policy and the President agree on a highly specific policy proposal, that plan should be passed rather quickly, right? Not a chance.
Obama's plan costs $59.7 billion over ten years. That's a pittance in the grand scheme of the federal budget, and what we really ought to do is just add $6 billion a year or so to the deficit and leave it at that. But both parties have accepted a norm in recent years where all budgetary proposals must be at least deficit-neutral, so both Obama and Ryan include measures to pay for the idea.
And neither set of pay-fors is remotely acceptable to the other side. Obama would pay for the expansion by raising taxes on hedge fund managers and rich self-employed people, while Ryan would cut other safety net programs and "corporate welfare," which is this case means specifically energy subsidies the Obama administration likes. Ryan has explicitly rejected Obama's funding mechanism, and it's hard to imagine Obama accepting Ryan's.
Is it theoretically possible that the two of them could sit down and hammer out a compromise funding package for the deal? Absolutely. Ryan and his Senate counterpart, Senate budget committee chair Patty Murray, worked out a deal on federal spending in December, which suggested that, when really big issues like entitlement reform and the overall structure of the tax code are taken off the table, the parties can make tiny compromises on fiscal matters. There's no reason why Ryan and Obama — or Ryan and Murray, who has an EITC expansion plan of her own — can't craft a similar deal to fund this idea.
But there's no sign they're interested in doing that. Ryan's proposal didn't indicate that he wanted to work on a deal, and there have been no noises out of the White House suggesting they want to work on one either. It's not especially surprising. When Congressional leaders and/or the White House have sat down to work on budgets, it's usually been under threat of hitting the debt ceiling, or the government shutting down, or both. There's no similar point of leverage when it comes to tackling poverty. Poor people have little to no political power. There aren't going to consequences for elected officials if the tax code continues to fail them.
I hope I'm wrong. I hope the White House and Ryan make coming to an agreement on EITC expansion a major priority, and arrive at some kind of compromise funding mechanism. Jonathan Chait has suggested a bargain using chained CPI, a way of reducing Social Security's cost of living adjustments, to pay for an EITC boost. I kind of doubt that's viable, given that the Obama administration has already endorsed chained CPI and Ryan likely wouldn't view it as much of a concession, but that's at least the sort of thing they should be talking about. But historically policymakers haven't made reducing poverty that a legislative priority of that kind, and there's little sign of that changing.
