Various federal and state laws, regulations, and policies influence whether a low-achieving reader is categorized as "disadvantaged" or "disabled," and consequently what instructional interventions are provided. Low-achieving readers are being referred to special education at high rates while the number of eligible students served in compensatory reading programs for the economically disadvantaged is declining, though poverty among children has actually increased. Statistics using professional literature citations show a decline in interest in reading failure as an environmental deficit and an increase in organic impairment as an explanation. The government's view of its role in support of education has also changed focus, from a concern for equity to a concern for excellence. Many other factors are involved in the shift toward labelling low-achieving readers as "mildly handicapped" or "learning disabled" including: (1) the economically disadvantaged do not constitute a protected group under civil rights law as the handicapped do; (2) disabilities are defined so as to place children in better-funded special education programs; (3) the lower expectations allowed for special education programs are easier to meet compared to those of remedial reading programs. The need for a reformed policy on services to underachieving children is emphasized. Sixty references are appended. (JDD)