Fast food workers and activists demonstrate outside the McDonald's corporate campus on May 21, 2014 in Oak Brook, Illinois.
Scott Olson/Getty Images

A GOP alternative to a minimum-wage increase

Updated
Some notable Republican figures, who happen to no longer be in public office, recently broke with their party’s orthodoxy and said it’s time for a minimum-wage increase. Ramesh Ponnuru, a leading conservative pundit, believes the policy is the wrong way to go, but nevertheless suggested last week that his party consider an alternative approach with a similar goal.
The political power of the minimum wage comes from its appeal to Americans’ values. It doesn’t come from their self-interest: Most voters don’t benefit from it directly. They favor raising the minimum wage because it seems like a way of giving people a leg up and making the economy fairer. Opposition is politically dangerous because it signals indifference to those goals.
 
If that’s right, then Republicans can mitigate the political harm they incur from opposing an increase. They just need to find different ways to associate themselves with those goals.
 
One way to do so is to support expanding the earned income tax credit, an earnings subsidy that targets poor households much better than the minimum wage does and poses no threat of destroying jobs. That credit may not be as easily understood as the minimum wage, but it would give Republicans a way to show that they want to help the poor – and that their stated objections to raising the minimum wage are sincere.
I don’t share Ponnuru’s concerns about a minimum-wage hike, but his broader argument makes quite a bit of sense. An increase enjoys broad public support because the American mainstream sees value in putting more money in working families’ pockets. If Republican lawmakers intend to block federal efforts to boost the minimum wage, as now appears obvious, party officials can at least demonstrate concern for those who’d benefit by endorsing a conservative alternative, such as the earned income tax credit.
 
And why not? The EITC was a favorite of Ronald Reagan, which effectively gives low-income earners a generous tax break.
 
The merits of the minimum wage notwithstanding, Ponnuru’s EITC suggestion is a sound, sensible argument. Indeed, it’s so sound that Ponnuru isn’t the only one arguing along these lines – congressional Democrats have been urging Republicans to take another look at the EITC, too.
 
E.J. Dionne Jr. recently noted that Sen. Patty Murray (D-Wash.) is pushing a plan that would raise the minimum wage and expand the EITC – lowering the eligibility age and including adults without children – paying for it by “closing loopholes already identified as worthy of being scrapped by the GOP’s leading tax reformer, Rep. Dave Camp of Michigan.” President Obama also supports expanding the EITC.
 
So what’s the problem? My msnbc colleague Tim Noah explained that Republicans, who used to love the EITC, now want to cut it.
House Ways and Means Committee Chairman Dave Camp’s tax reform reflects that ambivalence. Camp would in effect replace the EITC with a payroll-tax exemption up to $4,000 and impose various restrictions…. The trouble with Camp’s EITC proposal is that, by the reckoning of the Joint Committee on Taxation, it would cut this highly-regarded program by $217 billion over the next decade. Robert Greenstein, chairman of the Center on Budget and Policy Priorities, a Washington nonprofit, calculates that a mother with two children working full-time at the minimum wage would lose roughly $2,000 per year once the change went fully into effect.
The list of issues that Republicans touted, right up until the president said he agreed with them, is not short. GOP officials were on board with the individual health care mandate, cap-and-trade, payroll tax breaks, civilian trials for terrorist suspects, the DREAM Act, clean debt-ceiling increases, etc., until Obama endorsed the Republican ideas, forcing GOP policymakers to abandon their own proposals.
 
It appears the EITC now belongs on the list. This was an area of bipartisan agreement for the last three decades or so, and for some notable conservatives, the policy is a credible alternative to a minimum-wage hike. In effect, when it comes to tax breaks for low-income workers, Democrats are ready to give GOP policymakers what they said they wanted.
 
But Republicans, no longer willing to even maintain a pretense about America’s working class, now oppose both.
 
Some of the opposition is based on financing – closing tax loopholes that help the wealthy in order to give the poor a tax break is apparently outrageous – and some of it is the result of the EITC leaving many working families with no tax bill at all. As Ed Kilgore explained last week, “[T]he EITC has been largely responsible for eliminating federal income tax liability among low-income Americans. And that has become a deep source of grievance, and even of conspiracy theories, among conservatives at both the elite and grassroots level.”
 
The result is some worthwhile advice from Ponnuru to his like-minded allies – advice that Republicans will forcefully reject.
 

Tax Policy

A GOP alternative to a minimum-wage increase

Updated