No Child Tax Credit for Working Poor

— As postal workers began making their rounds this past weekend, 25 million middle-class families began receiving envelopes containing $400-per-child tax credit checks, part of President George W. Bush's tax package.

But many low-income families will not receive those checks — an issue over which Democrats have tried to make political hay. On Friday, the House of Representatives recessed until September with the debate over those lower-income families still unresolved.

Soldier ‘Kind of Upset’

One example of those at the center of the controversy is Sgt. Diomario Hines.

Hines, a member of the 82nd Airborne, is back at Fort Bragg, N.C., after six months in Afghanistan, only to find himself in the middle of a different sort of battle.

In Afghanistan, as a member of a resupply unit, Hines provided food and water to U.S. soldiers. Back in North Carolina, Hines says he could use extra money from a child tax credit to help supply his wife and three children with food and school supplies.

But the Hines family is one of those that won't be getting a child tax credit check in the mail.

"It makes me feel kind of upset," Sgt. Hines told ABCNEWS, "because I pay taxes just like everyone else, and I need the same things they need."

Sgt. Hines and his wife, Gwendolyn, who works part-time at KFC, are members of the so-called "working poor," bringing home less than $26,000 a year.

No Income Tax, No Credit?

The Hines family and 6.5 million other working poor families pay all sorts of taxes — sales taxes, Social Security taxes — but they do not make enough money to pay income taxes. And the way many Republicans see it, common sense dictates that since Sgt. Hines does not pay income taxes, he should not get an income tax credit.

"To give them a $400 check from the government for every child they have would be the equivalent of giving them a welfare check," says Stephen Moore, president of the conservative Club for Growth.

But Democrats — and some Senate Republicans — argue that Moore misses the point.

"Taxes are taxes," says Rep. Charles Rangel, the liberal New Yorker who is the ranking Democrat on the House Ways and Means Committee. "You ask anyone who's working; they don't distinguish whether it's state, or it's city, or it's federal taxes."

Rangel argues that the working poor are more likely to spend the money and stimulate the economy, as well as needing the most help during these tough economic times.

"We need it more than the people who are going to get it, obviously," says Gwendolyn Hines.

While House Democrats like Rangel tried various parliamentary tactics last week to force the House to address this issue, protestors from liberal interest groups like the Children's Defense Fund and the Center for Community Change protested at the U.S. Capitol and outside a federal check-processing center in Philadelphia, which President Bush visited Thursday to showcase families who will receive the tax credit.

Bush Sees Economic Stimulus

The recipients included Barry and Donna Lonaberger from Narron, Pa., who plan to use the extra $800 they will soon receive for the college funds for their sons, Kyle, 13, and Brandon, 6.

After speaking to the Lonabergers, President Bush shed some more light on their plans: Barry Lonaberger told the president that the $800 will help pay for the family's summer vacation, "and he wants to renovate the kitchen in his home," Bush said.

Such activities will help stimulate the economy, the president said.

"When he renovates his kitchen, he's going to have to buy some equipment to help renovate it, which means somebody is going to have to manufacture the equipment that he buys," the president said.

This also applies to the family vacation.

"Somebody is going to find a job at the motel in the place where [the Lonabergers are] going," Bush said.

Plus, the family will eat while traveling, the president said, which is "good for the person who owns the restaurant and for the people that serve the food or cook the food."

Economists on both the left and right say there is little actual stimulative value in the child tax credit. It is social policy, they say, to provide a helping hand to parents and acknowledge that it costs much more today to raise a family than it did 50 years ago.

Bush May Favor Expanding Credit

But in Philadelphia, the president also indicated he heard the protestors' pleas about families like that of Sgt. Hines.

"The child credit must be given to low-income Americans as well," Bush said.

"I think they [in the White House] see this as a political problem," Stephen Moore of the Club for Growth told ABCNEWS. "They don't want to be accused as 'compassionate conservatives' of leaving any families behind."

But the president hasn't done much to pressure Republican leaders in the House who insist that if the tax credit goes to lower-income families, it must also go to those earning up to $150,000 a year. The bill thus was gridlocked.

On Friday, with the issue still unresolved, the House adjourned for summer recess and won't be back until September.

In the meantime, Sgt. Hines just got some news. Gwendolyn is pregnant with their fourth child.

"She ain't going to be able to work," Sgt. Hines said. "I'll probably get a second job."

It will be a second job to help raise some of the money he won't be receiving with a child tax credit.