In Earned Income Tax Credit, In The News

The Federal Earned Income Tax Credit (EITC) was originally brought into being as President Gerald R. Ford faced an unusual economic dilemma.

As Donald Holloway, curator at the Gerald R. Ford Presidential Museum, explained in a press conference promoting EITC held at the Museum last Friday, the U.S. economy was experiencing both inflation and recession.

“Inflation indicates an over-heated economy, and recession means the economy needs a kick in the pants,” Holloway explained. So President Ford, in the wake of the 1973 oil crisis, had to address two problems whose solutions were pretty much opposite.

First, Holloway says, the Ford administration instituted the well-known WIN program – Whip Inflation Now – which encouraged saving and personal responsibility on the part of the American public, but was reportedly  never intended to be the only governmental response to inflation.

As that wound down, Holloway says, Ford’s economic advisors suggested that recession should be the focus of his policies. The response was a tax cut bill that included the EITC.

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