Whenever Democrats start talking about raising the minimum wage, Republicans respond that this is a dumb way to help the working poor. Instead, we should raise the Earned Income Tax Credit. That’s way more economically efficient.
Maybe so. But this is just a smokescreen. Republicans turned against the EITC long ago, and their occasional recollections that the sainted Ronald Reagan supported it are as fragile as a whiff of smoke in a sea breeze. Jon Chait explains why:
First, there is a perennial pattern in which any time Democrats propose a higher minimum wage, Republicans re-discover the virtues of the EITC as a foil. Second, there is the current political moment of Republican economic reform, in which Republicans are now crafting campaign messages for 2016 designed to avoid the plutocratic trap that snared Mitt Romney.
….The EITC plays the role here of a protective shield against populist attacks….The ultimate trouble is that the EITC costs money. And when you get into the gritty reality, Republicans are not willing to devote resources to it. Republicans would never agree to expand the EITC by simply adding the cost to the budget deficit….Obama proposes in his budget to offset the cost by closing tax deductions for the rich, but obviously Republicans would never agree to that, either.
Yep. This is one of the reasons1 I support an increase in the minimum wage: Republicans may oppose it, but they oppose the EITC even more. That’s because corporations absorb the cost of the minimum wage while the EITC is funded by taxes—and Republicans will never, ever, ever agree to raise taxes in order to fund an EITC increase. Combine this with the fact that the public is strongly in favor of raising the minimum wage but probably thinks the EITC is a communicable disease or something, and this means that even though the odds of getting Republicans to vote for a minimum wage increase are slim, they’re still better than the odds of getting them to vote for an EITC increase. The fact that the EITC is theoretically more conservative really doesn’t matter.
Perhaps this seems cynical. So be it. I assure you it will all become pellucidly clear now that President Obama has released his 2015 budget, which officially includes a proposed EITC increase. Yesterday conservatives may have thought the EITC was great. Tomorrow they will not give it so much as the time of day.
1There are other reasons, too, mainly that I think the minimum wage acts as a pretty good complement to the EITC. They work better together than either one does by itself.