Present at the Creation

Among the many things Al Gore has claimed credit for introducing to the world is apparently the Earned Income Tax Credit. This is a refundable credit paid by the IRS to below-median-income workers that has, over the last 25 years, swelled both in size and in the esteem with which it is held by Republicans and Democrats alike.

Many politicians have wrapped their arms around this sturdy reinforcement for the efforts of ill-paid workers, but few if any have been so fulsome in their embrace as was the vice president in a November interview with Time magazine. In commenting upon his rival Bill Bradley’s proposed expansion of the EITC, Gore asserted, “I was the author of that proposal. I wrote that, so I say, welcome aboard. That is something for which I have been the principal proponent for a long time.”

Last week, the Bradley forces jumped on the veep’s claim of authorship, pointing out in an ad that the EITC became law in 1975, a year before Gore was elected to Congress.

Who then can claim credit for this invention, which this year distributed close to $30 billion in refunds to some 20 million families and individuals? Chatterbox knows because Chatterbox really was there—or at least close by.

Just for the record, the EITC was the brainchild of the powerful Senate Finance Committee Chairman Russell Long. Yes, Russell Long, the son of Huey Long, the flamboyant populist governor of Louisiana immortalized in All the King’s Men. In the 1970s, Russell Long was anathema to most liberals, who viewed him as the major roadblock in the way of a more generous welfare state. And, indeed, Long was an arch opponent of President Richard Nixon’s Family Assistance Plan, which would have doubled the size of the welfare rolls by extending cash assistance to the “working poor.”

Long didn’t like the idea adding millions of people to the rolls, but he wasn’t at all adverse to the notion of giving poor people a helping hand—as long as it was done in a way that would encourage rather than discourage work. So he asked one of his staffers, Michael Stern, to work out the details of a plan that would do just that. Michael Stern, in turn, asked Chatterbox and a friend of hers from the Urban Institute to help out. The final plan, which the Finance Committee reported out in 1972, was remarkably generous—certainly more generous than the welfare reform enacted a few years ago of which both Gore and his boss the president brag. It guaranteed a job to any family head needing work. True, the wage in these public jobs was sub-minimum, so as not to encourage people to abandon their private sector jobs for the perhaps less demanding public sector. But to help out people working in poorly paid jobs, Long came up with the idea of rebating their Social Security taxes as a “work bonus.”

Although Mike Stern was assigned to work out the details of how the EITC would be computed, he insists the idea really was Sen. Long’s. “He liked the idea because it rewarded work,” says Stern, who is now with the Investment Company Institute.

The net cost of the plan was about $4.3 billion, including $1 billion for the EITC—big, big money in those days and more than a 60 percent increase over what the feds were then spending on welfare for families. As former Federal Reserve governor, OMB director, and CBO director Alice Rivlin noted at the time, when she and Chatterbox were on a panel together, if someone other than Russell Long had proposed this, they would have been acclaimed as a hero. But because it was a Long product, it was branded by the press as “slavefare” and went nowhere in Congress. But Long continued to press for the EITC part of his plan, and in 1975, while the fight over welfare reform was still raging, it quietly passed into law. So quietly that Al Gore apparently didn’t notice it.