Vermont Progressives and liberal Democrats should tread cautiously in their reaction to Gov. Peter Shumlin’s budget address this past Thursday lest they open a political divide between themselves and the vast majority of Vermonters. The danger is that would be perceived as too far left of the mainstream, as the Tea Party is perceived to be too far right, and their political clout compromised.
That is particularly true of the governor’s proposal to shift $16.7 million from the state’s Earned Income Tax Credit (EITC) to pay for increased childcare subsidies and the suggestion to end lifetime benefits for Vermonters on a welfare program called Reach Up.
As Gov. Shumlin said in his budget address, here are the facts:
• The governor called for shifting $16.7 million out of $26 million of the state’s matching portion of the EITC. That $16.7 million would be used to increase the childcare subsidy for low-income families from the current 10 cents on the dollar to 50 cents on the dollar. That’s a huge benefit for young families struggling to get a start in their careers and would encourage parents to stay in a job once they have a child.
The governor is changing the program, in part, because spending has skyrocketed. Because it is tied to the federal EITC, state spending on the program has shot up 49 percent over the past eight years. Vermont is one of 23 states that add a match to the federal tax credit and it offers the second highest benefit. Twenty-seven states choose to contribute nothing. Reallocating the $16.7 million brings Vermont more in line with what the other 23 states do, it’s still far ahead of the other 27, and there will still be $10 million-plus in the fund that helps Vermonters eligible for the benefits.
Progressives are arguing that the state should fund both the EITC at the current level and ante up another $16.7 million for the childcare program. Sure. Why not. Just raise more taxes on the wealthy. It’s a refrain that does have limits, and many believe the state is teetering on that edge. The higher the income tax on the wealthy (if it gets too out-of-whack), the more wealthy people leave the state and the net result could be less income to state coffers. What that limit is, is certainly up for debate, but the premise is undeniable and the governor has flatly rejected raising broad-based taxes in this budget. To argue for more taxes is simply blowing hot air.
The question to debate is whether the money — the $16.7 million — should be used as a payment at the end of the year to help the low-income pay bills, or actually use the money for a long-term investment in a child’s education to help that family break the cycle of poverty. For most Vermonters, that’s an easy call.
• A companion piece to the governor’s childcare subsidy is a fundamental change in the state’s welfare system.
“We face an insidious problem right now in our welfare system,” he explained in his budget address. “It might surprise most Vermonters to learn that Vermont is the only sate in the country that extends Reach Up benefits without interruption to the entire household for a lifetime. In contrast to Vermont, 46 states limit assistance to five years or fewer… Extending welfare-to-work benefits without interruption for a lifetime does nothing to actually encourage people to get a job. What is far more troubling is that we actually penalize Vermonters who want to earn more money and get a job because we reduce their childcare and other benefits as they begin to earn money, causing many to stay out of the worforce or quit their new job because they do better on welfare.
“It is neither compassionate nor prudent to continue a system in which struggling Vermonters are financially punished for getting off government assistance, finding a job, and providing for their children by going to work… We will not allow vulnerable Vermonters, such as those who are disabled, to fall through the cracks, but we will ask those who can work to get the training and support they need and get a job. The fix is long overdue. It takes courage to say it, but say it we must: Benefits for Vermonters who are able to work must be temporary, not timeless.”
Progressives and liberal Democrats who take on those arguments and clamor for the status quo, best know that mainstream Vermonters won’t be with them. Compassion is one thing, but supporting those who won’t help themselves — well, that really rankles folks. If the governor gets out of the beltway and takes these proposals to all corners of the state, he’ll rally a strong majority of Vermonters — from all-stripes of Democrats to the most conservative Republicans — and leave Progressives increasingly alienated just as important issues like health care reform come to the fore.
That should give the far left reason for pause.
Angelo S. Lynn