‘Cliff’ Deal is a Decent Start for Low-Income Americans

We’re proud to collaborate with The Nation in sharing insightful journalism related to income inequality in America. The following post originally appeared in The Nation.

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If you had told me in recent months that on January 2, 2013, we would have unemployment insurance extended for a year, an improved child tax credit and earned income tax credit extended for five years and no cuts to food stamps (SNAP), Medicaid or Social Security — I would have told you that you were out of your mind.

I understand that the criticism coming from the left about this deal is based largely on where things stand for the next round of negotiations, and also a concern that the deal didn’t raise sufficient revenues to avert substantial cuts down the road. But I’m troubled by the lack of attention being paid to how this deal benefits the more than one in three Americans living below twice the poverty line — earning less than $36,000 annually for a family of three, and the 46 million Americans living below the poverty line (less than $18,000 annually for a family of three).

I’m reminded today of a politically active homeless woman I spoke with earlier this year, who — although she is disgusted with Republican policies — was even more frustrated with “so-called progressives” (her words) whom she said talk about caring about poor people but fail to sufficiently speak up about their issues, bring them into their advocacy work and address their concerns in an ongoing and substantive way.

So let’s look at some of the particulars of this deal and how they affect low-income Americans.

The Earned Income Tax Credit (EITC) and Child Tax Credit (CTC):
These tax credits supplement the earnings of low-wage workers and kept 8.7 million people out of poverty in 2011 — pretty key, since 28 percent of workers earned poverty-level wages last year and 25 percent of all jobs in the U.S. pay less than the poverty line for a family of four (less than $23,000 annually). Republicans have been trying to limit the reach and effectiveness of both of these tax credits all year (and some Democrats indicated an openness to that position, especially with regard to the CTC). Getting a five-year extension on both — as well as for the American Opportunity Tax Credit that helps make college tuition more affordable — was certainly not a given heading into these negotiations. (It should also be noted, however, that while these provisions were extended for five years, the tax cuts for wealthier households making up to $450,000 annually were made permanent. Another downside, the two percentage-point cut in payroll taxes was allowed to lapse.)

Unemployment Insurance:
Let’s remember that without this extension, 2 million long-term unemployed people — who are disproportionately over age 50, women and minorities — would have lost their unemployment benefits as of yesterday; another 1 million would have lost benefits by April 2013, and more than 5 million people would have been without this vital assistance by the end of 2013. Unemployment Insurance lifted 2.3 million people above the poverty line in 2011, and 3.2 million the year before that. If this extension hadn’t happened — and it was by no means a given — you can bet that would have been reflected in the 2013 poverty numbers. Just the two long-term unemployed workers over 50 whom I recently spoke with — former steel worker Richard Crowe and assisted living facility worker Edith Harrison — were staring at the possibility of losing a house and ending up homeless, respectively. The $30 billion extension will also create $48 billion in economic activity according to Moody’s chief economist Mark Zandi, and the Congressional Budget Office estimates it will also create 300,000 jobs.

Food Stamps (SNAP):
A program that responded to the recession exactly as it was designed to do — lifting nearly 4 million people above the poverty line in 2011 — was facing proposed cuts of $12 billion in the House and $4 billion in the Senate. The average beneficiary household has an income of only 57 percent of the federal poverty line (about $10,200 for a family of three), and 84 percent of all benefits go to households with a child, senior or disabled person. It was feared in recent months that cuts might be included in any “Grand Bargain” at a moment when one in five children experience hunger. Instead, activists, advocates and political leaders continue the fight to protect and strengthen the program.

I understand there is still a long road ahead — Social Security, for example, which kept over 21 million people out of poverty in 2011, remains under threat. I understand that there is a fear that the GOP will repeat its insane strategy of using the debt ceiling and possible U.S. default as leverage to demand deep cuts in entitlements and other domestic programs. (And progressives and fair-minded people will have to push back against the false GOP talking point that there have been “no spending cuts” thus far. The Budget Control Act in 2011 cut domestic discretionary spending by $1.5 trillion, and will bring non-defense discretionary spending to its lowest level as a share of GDP on record.) But the fact is there were significant gains for low-income people in this deal, and none of the feared cuts have happened. So now we continue to wage the fight we need to fight — to protect Social Security, Medicaid and vital domestic programs; invest in job creation; and push for more progressive tax reform.

In the meantime, attention must be paid to what could have easily been lost — last I checked there was still a Republican House and a filibustering Senate — and what has been protected for people who are most vulnerable in these budget decisions.