Within the competing plans in Washington to balance the budget is a single component that is crucial to boosting the economy while supporting working families.

The White House has compromised this component, lumping it in with so-called tax cuts for the rich. Republicans vow they won't abandon the proposal. Let's hope they don't.

The key component of the Republican plan to balance the budget in seven years is a $500-per-child tax credit. The president has proposed a $300 tax credit, while opposing capital gains tax cuts and other tax-relief in the GOP plan.

The tax credit has tremendous economic benefits. Nationally, it would return to taxpayers with dependent children $22 billion annually. In Missouri, the total is nearly $500 million. The credit would give back $7 million to taxpaying families in Cape Girardeau County alone.

How many industries in this county have a $7 million annual payroll? The tax credit would have that type of affect on the local economy.

It's important to consider what will happen to the money once it's returned to taxpayers. "Who's going to pay for the tax break," the question goes. A more important question is: "Who is better able to make decisions about how to spend my money. Me or the government?" The same question can be applied to any tax relief, whether it is aimed only at the working poor, or at the middle class and rich as well.

With regard to the tax credit, its increase is long overdue. In 1948, the average family of four paid only 3 percent of its income to Washington in income and payroll taxes. Today, the same family pays almost 25 percent. Add to that local, state and Social Security taxes, and a family's tax bill can exceed what it pays for food, clothing and shelter combined.

If the per-child credit increases to $500, a family of four making $24,000 a year no longer would pay any federal income tax. That family's federal tax bill likely is around $50 per month. What could family members do with that $50 if it wasn't sent to Washington? They could go out to eat or go shopping. They could invest a portion of it. All these activities, spread among millions of taxpayers, help the economy.

Struggling retail stores and restaurants are able to stay afloat, thereby paying sales and property taxes and keeping other taxpayers in their employ. Thriving businesses are able to expand and hire more workers who also add to tax revenue. Suppliers and manufacturers hire more workers to increase production and meet the greater demand.

In other words, those getting a direct tax break, pay for the cut indirectly through a charged economy. When the principle is applied to tax breaks for the middle class and wealthy and it becomes clear how tax cuts can increase, not reduce, tax revenue.

The skeptic might respond, "I understand how tax cuts hypothetically increase tax revenue, but isn't it risky to put it into practice? After all, the world's largest economy is at stake."

But it already was tried in the 1980s under President Ronald Reagan. The result was the longest peacetime period of economic expansion and the greatest tax-revenue growth in U.S. history.

"Yes, but we also failed to balance the budget during those years to the tune of hundreds of billions of dollars annually," is the typical reaction to the Reagan boon.

But how can the deficit be blamed on tax cuts, when those cuts increased revenue? Unrestrained spending is the sole cause of our growing national debt, and Reagan's inability to convince the Democratically controlled Congress to pare government spending is his greatest failure as president.

With enough Reagan soulmates now in Congress who know what needs to be done, the only question is whether they have the stomach to withstand the demagoguery of the vocal minority in the Democratic Party. The nation's economic health is at stake, and the GOP can't afford to blink.

~Jay Eastlick is the news editor of the Southeast Missourian.