Child Tax Credit

CHILD TAX CREDIT

Mr. REED. Mr. President, I rise today to express my dismay about the failure to provide the child tax credit to millions of low-income Americans. In this regard, I join my colleague, Senator Johnson, and applaud his efforts to try today, through unanimous consent, to resolve that at least we will as a Congress commit ourselves to give the benefit to low-income families which many other families in America are about to enjoy.

Yesterday, the Internal Revenue Service began mailing out the first batch of advance $400 checks to middle and upper-income American families who are receiving the child tax credit. The President was at a mailing facility to get a visual of these checks going out. That is good news for these families. But certainly low-income Americans have the same needs; in fact, one might argue even more compelling needs for help and assistance to raise their children.

Mr. President, 6.5 million low-income families will not receive a check today. They will be left out. Even though this body
acted prudently to give them the opportunity, the House, in May, dropped the provisions and did not respond with an appropriate bill.

On June 5, nearly 2 months ago, this Senate, in a bipartisan manner, passed legislation that would provide for the refundability of these tax credits and in effect give the credit to low-income families. I commend all of the individual Senators who have led the way both on the Finance Committee and, in particular, Senator Lincoln of Arkansas, who has been advocating strenuously for this very fair and very prudent approach.

The House, on the other hand, passed an expansive $82 billion tax cut package surrounding this child tax care credit. As a result, they politicized and essentially frustrated the obvious and the compelling need to help these low-income families.

The President has called for the passage of this act, but frankly, other than appearing yesterday at a mailing facility, he has not done a great deal to force the House to pass this very simple, very necessary measure.

I hope we can make progress on this. This tax credit for child care is an important benefit for all of our families and, as I said before, very important for low-income Americans. They are struggling and with both parents working two jobs to make ends meet. These are the working Americans who are doing difficult work and working very hard. They deserve the same kind of assistance to raise their children we are providing for middle and upper-income Americans.

This is a question of fairness, certainly. It is unfair, in my view, that we would provide benefits for certain children—ironically, some of the most affluent children—and not provide similar benefits for low-income families with children. It is just patently unfair. Also, it is part of an emerging pattern of indifference, and worse, towards low-income Americans.

There is the issue of the Earned-Income Tax Credit. This has been an enormously successful program. It has, in my State of Rhode Island alone, provided $90 million to over 57,000 families in the year 2001, giving them additional help based upon their work. Recall now, this is the Earned-Income Tax Credit; you have to be working, you have to qualify by accumulating income to get the tax credit.

This is one of those very ingenious mechanisms which help lift families and children out of poverty, and it has done so with remarkable success. It has been a tax provision supported by both sides of the aisle enthusiastically for several decades. But now the IRS has announced its intention to require elaborate precertification for EITC eligibility for about 45,000, as they term it, high-risk households. Generally these are households in which grandparents or single fathers are raising children.

But perhaps of more concern to me is that there are plans to expand this precertification process to 2 million households in the year 2004 and to 5 million households within 3 years. This is a move that President Bush clearly supports, because he requested $100 million in additional funds for the fiscal year 2004 budget for this so-called compliance initiative.

If we were to propose an elaborate precertification for middle-income and upper-income tax advantages, there would be howls of protest. We would rush to this floor crying foul, accusing the IRS of overreaching and meddling with burdensome impacts upon taxpayers. But that is exactly what, in my view, is happening to low-income families in the budget proposal of the President for this precertification.

Again, I note the President has requested $100 million for additional funds to supposedly precertify families qualifying for a tax advantage under the Earned-Income Tax Credit. Just yesterday we couldn't afford, according to the vote, $100 million for improved transit security in the United States. That suggests to me the wrong, and perverse, if you will, priorities. If we are spending $100 million to try to force low-income families to come up with documentation to qualify for a tax cut but we can't find the money to protect the subways and the trains and the buses in the United States, that suggests something askew in our policies and our priorities.

I think what the pre-certification does, frankly, and maybe intentionally, will dissuade some individuals who qualify for the EITC from coming forward and applying for it. They might not understand the new precertification. They might have to pay for tax advice to do it appropriately. And one other point: the IRS has the authority to release all this documentation to the Department of Justice and other Federal agencies at their discretion, which might cause some people concerns about privacy.

This is something that, again, if we proposed it for middle- or upper-income Americans, you could not hear yourself think because of the howls of protest in this body. Indeed, back in 1998 we passed the Internal Revenue Service Restructuring and Reform Act because of supposed taxpayer harassment inflicted upon middle- and upper-income Americans by the IRS.
It seems when it comes to low-income Americans who work and who qualify for the EITC, harassment isn't a problem when it comes to proposals by the administration.

I am also disappointed that in line with this attack against low-income Americans is the inability of this body and the other body to pass a long-term unemployment compensation benefit that will really take care of all the Americans who are suffering because of an economy that is functioning poorly—and that is being polite—at this moment. Unemployment in June was up to 6.4 percent, and those numbers don't even include the 4.5 million underemployed individuals, those who are working part time, looking for full-time employment but struggling to get by on part-time jobs. At least 1.3 million of these 4.5 million are in that category of looking for long-term, full-time employment but having to settle for something part-time.
Yet they are excluded from our unemployment compensation provisions.

In addition, we will shortly be looking at new rules by the Department of Labor with regard to the Fair Labor Standards Act that relax overtime protection. We are also encountering proposals to increase the TANF requirements from 30 hours to 40 hours per week. Here, at a time when there are so many Americans struggling to find a job, struggling to find a few hours of part-time work, we are proposing to increase the number of work hours under the TANF Program. I think this approach to TANF will be another impact on the low-income children of this country because it will necessarily require mothers to spend less time with their children. Again, this is another example of a policy that is not good for the economy and it is certainly not good for children.

Then we are looking at Head Start proposals and AmeriCorps proposals, as Senator Stevens just indicated, that are shortchanging so many people, particularly young people in this country. Again, I hope we can very quickly resolve this issue with respect to the child tax credit, the underlying point of my remarks today. There are 6.5 million wage earners who are working, contributing to our economy, and trying with all their might to raise their children. Today we are ignoring the plight of all of those 6.5 million people. I hope our indifference will end very quickly.

I yield the floor.