POLITICS FEBRUARY 20, 2014
The White House released a few details Thursday about President Obama’s 2014 budget. The biggest news is that it will not include chained CPI—an inflation calculation that would have cut Social Security benefits for seniors—which liberals were happy to hear. More importantly, though, the budget includes an expansion of the Earned Income Tax Credit for childless workers, an idea that might sound familiar to conservatives.
The EITC is a refundable tax credit that promotes work, because the amount workers receive rises with their earned income until it hits a certain point and then is slowly phased out. The credit is most generous for married parents. Currently, childless adults can collect a maximum of $496 from the EITC. That’s less than 10 percent of the maximum amount available to a parent with two children ($5,460). The White House said the cost of the EITC expansion will be offset by “closing tax loopholes that don’t reward work or help our economy,” according to the White House.
If this rings a bell, it’s because Senator Marco Rubio pitched a similar version of it in January. Rubio wanted to eliminate the so-called marriage penalty built into the EITC. The payments a family receives from the EITC are calculated based on the family's gross income, not based on each individual worker's earnings. That means that two individuals would each receive larger EITC payments as individuals than if they were married. Thus, the EITC penalizes marriage.
In response, Rubio proposed changing the EITC to a work subsidy that all workers could collect, regardless of marital status. A wage subsidy works in a similar manner as the EITC, supplementing the wages of low-income workers. However, unlike the EITC, it would be available equally to all workers. That means that Rubio's plan would allow childless workers to receive much larger payments.
But, as Sharon Parrot at the Center for Budget and Policy Priorities points out, unless Rubio is prepared to significantly increase the size of the EITC, his plan will cut payments to those who used to receive the most from it (mostly low-income, working parents). Besides that, Obama and Rubio are offering relatively similar ideas.
This isn’t the first time that the White House has pre-empted one of Rubio’s ideas. During the summer of 2012, Rubio and a few other Republicans were working on legislation that would have allowed the children of undocumented immigrants to stay in the country legally while working on their college degree or pursuing a military career. It was dubbed the "DREAM Act lite." But while Rubio was working on it, Obama announced that he was taking unilateral action to effectively stop the deportation of the children of undocumented immigrants.
Poof! Just like that, Rubio’s immigration plan, which he had been working on for months, was useless.
After Obama’s speech, Rubio claimed that he was not personally upset with the White House, but wished they had contacted him before the announcement. "If you're really interested, and you read in the newspaper that there's a Republican senator working on an idea, don't you reach out and say, 'Hey, how does your idea work? Just curious.' That never happened," he said. "It's not that my feelings are hurt. That's not the issue."
Less than two years later, Obama is stepping on Rubio’s toes again.