Originally posted on POLITICO.
The Trump administration has proposed a change in the way the federal government measures poverty. On the surface, this proposal may appear to be an innocuous, technical adjustment. It’s not. Instead, this change would dramatically reduce the number of people who qualify for vital basic assistance programs, including Medicaid, children’s health care and food assistance.
To understand what is happening, it helps to remember how the official poverty measure was first created.
The first U.S. poverty measure was a simple calculation. In the mid-1960s, a Social Security Administration researcher took a Department of Agriculture survey of household food consumption and found that a typical family of three or more spent about one-third of its post-tax income on food. The SSA then used USDA’s “economy” meal plan—a diet that would be nutritionally adequate in temporary or emergency situations—and multiplied that cost by three. That back-of-the envelope measure, which wasn’t based on an explicit accounting of costs for housing, health care, or anything other than food, is still effectively our baseline for measuring poverty.
For about a decade, the “official poverty measure” was recalculated every year based on the USDA’s meal plans, but eventually the federal government began tying the poverty measurement to inflation, using the Consumer Price Index.
So, what is the Trump administration proposing instead? Rather than updating the outdated measure itself, the proposal would change the inflation measurement to one that grows more slowly than CPI. That means that even if their incomes remain too low to meet basic living standards, fewer and fewer Americans would fall below the slower-growing poverty line over time. They would then cease to be eligible for public safety net programs designed to serve low- and moderate-income people, something the administration itself acknowledges in its proposal. According to a recent analysis by the Center on Budget and Policy Priorities, at least 250,000 seniors would receive less help in paying for prescription drugs, 300,000 children would lose their health insurance and hundreds of thousands of people would lose food assistance.
The effects of the Trump administration’s proposed change would go far beyond Medicaid and food assistance. In fact, over 80 federal programs and policies use some form of the official poverty measure, including the Children’s Health Insurance Program, public housing programs and the Low Income Home Energy Assistance Program. Millions of people who are struggling will lose access to these programs, causing greater poverty and hardship for millions of children and families.
Over the past 65 years, food spending for typical families has shrunk dramatically relative to other goods and services, so simply multiplying a family’s food costs would severely understate their financial need. Any honest attempt to update the poverty measure should include a wider range of basic needs – including housing, child care, long-term care, health care, access to internet and phone services, transportation and utilities. And that would result in more—not fewer—Americans identified as needing access to programs to ensure a basic foundation for every child and family.
In fact, the Obama administration began to develop that kind of modernized poverty measure. An extensive, interagency process led to the development of the Supplemental Poverty Measure, which quantifies the poverty threshold based on food, clothing, shelter and utility expenses, while taking into account family size, composition and geographical adjustments. The supplemental poverty measure, largely based on a consensus from the National Academy of Sciences, also subtracts necessary medical expenses and work-related expenses, such as child care, from income.
The Obama administration was not alone in attempting to modernize the poverty measure. Several organizations and research centers set out to calculate livable incomes. The National Center on Children in Poverty created the Family Resource Simulator to illustrate the impact of work supports, including income tax credits and child care assistance, offering a more complete picture of how family resources change as earnings increase. NCCP suggests families typically need nearly twice as much as the official poverty level to make ends meet thanks to factors like rent and utilities, child care, health insurance premiums, out-of-pocket medical expenses, transportation, debt and payroll taxes. The Economic Policy Institute’s Family Budgets, MIT’s Living Wage Calculator and the University of Washington’s Self-Sufficiency Standards all came to similar conclusions.
Simply put, the common, necessary expense categories not fully accounted for in the official poverty measure means the costs we all face are substantially higher than what it implies.
The Trump administration’s efforts to artificially “reduce” poverty is a disingenuous maneuver to lower government spending by taking away health care, food and other lifelines from millions of people in America. The president and many Republicans will argue that we cannot afford to help struggling families. But they did not worry at all about financing a huge and devastating tax cut in 2017 that included hundreds of billions of dollars in giveaways to the wealthiest Americans. Reducing poverty will require significant policy shifts—not ill-considered changes in definition.