Last week President Clinton previewed one of his State of the Union Address themes in a speech sponsored by the DLC at George Washington University. Returning to one of his most successful initiatives, the President called for a new expansion of the Earned Income Tax Credit (EITC) to: (a) eliminate the "marriage penalty" in EITC eligibility; (b) boost the credit for families with more than two children; and (c) to lengthen the "phase out" in eligibility so that families retain an incentive to earn more in wages. The proposal would provide 6.4 million families an average tax benefit of $315 per year, costing $20 billion over ten years.

Long-time New Democrats probably recognize EITC expansion as one of the first major policy proposals of the DLC and PPI. The idea was, and remains, simple but profound: No family should live in poverty if its adults work full-time. The EITC supplements earned income for the poor, instead of subsidizing the poor through public assistance regardless of work or personal responsibility.

President Clinton's 1993 decision to push for a massive expansion of the EITC has yielded one of the great public policy success stories of this or any decade. It is a prime reason for why America now has the lowest poverty rate in more than 30 years. It is also a prime example of the power of ideas to change real-life conditions.

Not only has the supercharged EITC lifted over 4 million Americans out of poverty; it has also laid the foundations for a new social compact based on work and mutual responsibility rather than welfare dependence. By strengthening the EITC's capacity to "make work pay," the President's new initiative points us toward a policy based not just on moving people off the welfare rolls, but at lifting families with children out of poverty.

The proposal also creates an interesting challenge for Republicans, whose historic support for the EITC (once the favorite social policy of Ronald Reagan) has waned in recent years.

Last year Texas Governor George W. Bush sharply criticized congressional Republicans for tampering with the EITC to "balance the budget on the backs of the poor." But in his own tax plan, Bush did not find room in more than a trillion dollars of proposed tax cuts for any effort to beef up the EITC or deal with some of its current shortcomings. This omission is all the more remarkable because Bush hyped his plan as focused heavily on the working poor, and on eliminating "roadblocks to upward mobility."

Many Republicans dislike the EITC because it is "refundable"--its value above and beyond federal income tax liability is provided in the form of a check. But by definition, everyone earning a wage is paying the most regressive federal taxes of all: payroll taxes.

The EITC embodies tax fairness, respect for work, acknowledgment of the importance of strong families, and a non-bureaucratic way of accomplishing progressive policy goals.

At a time of unprecedented prosperity and hard-won fiscal dividends, this is one public investment the country can and must afford.