We forget whether it was Rush Limbaugh, Newt Gingrich, Dennis Prager, or some other straight-talker who first shared with us the insight that pre-reform welfare was the government telling people, “Do not work, do not get married, have lots of children, and we will pay you.” The welfare reform of 1996 was one of the most successful pieces of domestic legislation ever. It has helped millions of people toward self-sufficiency and is beginning to reverse the trend toward single-parent families.

But that isn’t the full story. As the number of persons on the welfare rolls has declined, the number of persons drawing money from another federal anti-poverty program, the earned income tax credit, has skyrocketed. As the accompanying chart shows, if you combine cash aid to the poor — the old Aid to Families with Dependent Children, the program now known as Temporary Assistance for Needy Families — with the earned income tax credit, the total of federal anti-poverty spending in recent years has soared. In 1991, the total was about $28 billion; this year, it is $66 billion. In real terms, nearly all of the growth has come from the earned income tax credit. In 1991, the earned income tax credit amounted to about $6.5 billion in 2002 dollars; by 2002, the program was $28 billion.

Defenders of the earned income tax credit, like President Clinton, who expanded it, are fond of noting that it “makes work pay.” And indeed, economics would predict that the pull of the earned income tax credit played a part in the reduction in the welfare rolls, as did the push of the time limits on welfare benefits that were part of the 1996 reform. We’re all for work. Nor do we have any aversion to the fact that the tax credit increases the basis of the number of children in a family, as did welfare benefits. This is a pro-family, pro-growth newspaper. If the liberal elites who fund Planned Parenthood want to campaign for smaller families among the poor, they can carry that patronizing, Malthusian effort ahead without us.

The earned income tax credit’s downside is a perverse incentive problem. The problem has to do not with population, but with income. That is, the less you earn, the greater the credit. And the more you earn, the less the credit. And it’s a refundable credit, which means real cash back from the government, not just a reduced tax bill.

It’s one thing to have a progressive income tax code that lets low earners keep a greater proportion of what they make. America has this now, combined, hypocritically enough, with a payroll tax system that lets the rich keep a greater proportion of what they make. We’d ourselves favor a flat tax, including a reform of the payroll tax to make it less regressive. But the earned income tax credit ends up discouraging initiative or investments in education and training among low-wage workers. It ends up distorting people’s behavior. If you could work 35 hours a week and get a $2,000 earned income tax credit, or work 40 hours a week and get no earned income tax credit, which would you do? And why would you take time off and pay tuition to get skills leading to a higher-paying job if, once you get the job, you lose the credit?

There used to be plenty of people who scoffed at the notion that these relatively small economic incentives affected people’s behavior, but they’ve been discredited by the massive drop in the welfare rolls following the 1996 reform.

Having the government pay someone to work in a low-wage job is better than having the government pay someone not to work at all, but it’s still a form of welfare. That’s why, contrary to what Senator Schumer and the New York Times have been arguing, it makes sense for the government to move aggressively to monitor the program for fraud. Studies by the General Accounting Office and the IRS have found about one in four people claiming an earned income tax credit file more than deserved under the law. The money at stake is in the billions of dollars.

Mr. Schumer says, “Now the IRS wants to say that working families have to play by a stricter set of rules than wealthy Americans and corporations, and that’s just wrong. We are one nation, and we should have one set of rules for dealing with the IRS.” But no one is arguing for backing off on prosecuting tax fraud by the rich. Tax fraud and evasion are wrong when the rich do it, just as they are when the poor do it. The problem is that recipients of the earned income tax credit, particularly the refundable part of it, are already playing by a different set of rules than wealthy Americans. The wealthy Americans aren’t getting paid by the government to work. Just think of the IRS’s plans as welfare fraud prevention.