GOP approach to safety net draws criticism, defense

Feb. 22, 2013 @ 06:46 PM

A day after one of the N.C. General Assembly’s top Republicans defended his party’s approach to the social safety net, the leader of the advisory group that watches over Durham’s attempts to prevent homelessness blasted it.

Homelessness often results when people find they don’t have enough money to pay a single month’s rent or utility bills or afford the deposit on an apartment, said Bo Glenn, chairman of the city/county Homeless Services Advisory Committee.

Just “a little bit of help can stop the downward spiral” families can find themselves in without a nest egg for emergencies, but “there are things that are going on in our state legislature right now that are eliminating that little bit of help,” Glenn said during a Friday morning news conference.

He singled out Republican-led votes in the General Assembly to cut unemployment benefits, reject an expansion of Medicaid and eliminate the state’s earned-income tax credit as decisions that will put many people “a little bit closer to that time when they can’t pay the rent” and undermine local efforts to combat homelessness.

Glenn’s comments came during a news conference officials called to announce the results of Durham’s annual court of the homeless. They reported the count had risen for the second straight year.

About 12 hours beforehand, N.C. House Speaker Thom Tillis, R-Mecklenburg, told leaders of the Durham County Republican Party he thinks claims the GOP is slashing the safety net are “nonsense.”

“What we’re trying to do are remove the policies that have been implemented by wrong-minded leadership that have made it more difficult to provide services to the people who need it most, to put the resources in the hands of people who need it, versus the bureaucracies who waste it,” Tillis said.

He singled out the House’s vote on Wednesday to eliminate, starting in 2014, the state’s version of the earned-income tax credit as one such efficiency measure. He said it will free up money the state can use to support low-income families who “legitimately deserve it and need” its help.

The state earned-income credit is an echo of a federal tax credit for the working poor that’s been in place since 1975. The state’s version offers a fraction of the money the federal credit does, but still cost North Carolina’ government $105 million last year. The House repeal measure is pending in the state Senate.

Tillis cited reports he said indicted that “30 out of every 100 filings” for the federal credit “had fraudulent information associated with it.”

“If 30 out of 100 are getting them on a fraudulent basis, then that means there’s a lot of other people out there who are being left out in the cold,” he said. “So let’s find a new way.”

The percentage of bad claims – “non-compliance,” in federal parlance – is an issue with a long pedigree. The U.S. Internal Revenue Service owned up to the problem in 1999.

A 2011 report from the U.S. Treasury Department’s inspector general for tax administration said found that for five years running – 2005 to 2009 – some 23 to 28 percent of federal earned-income tax credit claims were improper in some way.

That could mean the IRS wound up granting too large or too small a credit, the inspector general’s report said, adding that the IRS hadn’t fully complied with an executive order from President Barack Obama that sought data officials could use in boosting collections.

But improper doesn’t necessarily mean fraudulent. An Urban Institute fellow, Leonard Burman, told a U.S. House of Representatives committee in 2003 that research suggested about a quarter of the bad claims at the federal level were intentional.

Many of the rest, he speculated, could have resulted from paperwork errors and taxpayer confusion about eligibility.

Durham’s four N.C. House members – all Democrats – voted Wednesday against repeal of the state’s version of the earned-income credit. Like Glenn, they said repeal would be a blow against the working poor.

The federal credit had bipartisan support initially and as recently as 2003 drew praise from an analyst at the conservative Hoover Institution, Jeffrey Jones, as “probably the most cost-effective anti-poverty program the federal government operates.”

But it’s been a target of criticism lately on grounds that go well beyond the improper-claims issue.

In an article published Tuesday on the Web site Salon.com, writer Michael Lind said the earned-income credit is an invention of Southern legislators who were eager to prop up their region’s low-wage economy.

“Every penny spent on the federal [credit] is a penny that Southern state governments and Southern employers do not have to spend on Southern workers to keep them from starving,” Lind said, adding that it forces taxpayers elsewhere in the U.S. to subsidize the South, often to the detriment of businesses in their home states.