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Defining Away Poverty

Earlier this month, the Trump Administration proposed a change to the way the threshold for poverty is calculated that would slowly cut off federal assistance to millions of people.

The current poverty threshold for a family of four is $25,750 per year. Poverty thresholds are used not only to estimate the number of Americans living in poverty, but also to determine eligibility for many federal assistance programs like SNAP (formerly food stamps), Medicaid, and many others.

To calculate next year’s poverty threshold, the Census Bureau will simply adjust this year’s threshold for inflation using a measure called the Consumer Price Index. The Consumer Price Index tracks changes in the price of goods and services purchased by urban households and estimates how much prices have risen overall in the past year. Since April 2018, the CPI has gone up by 2.0 percent.

The administration has proposed adjusting the threshold annually using a different measure of inflation called the Chained CPI that measures inflation differently. It relies on the same price changes as the CPI, but assumes that families adjust their purchasing when certain items rise or fall in price. Because of this behavioral assumption, the Chained CPI always comes out lower than the CPI; since April 2018, the Chained CPI has risen by 1.8 percent.

The difference between a 2.0 and 1.8 percent increase to the poverty threshold may seem trivial, but over time this change would have major impacts. According to research from the Center on Budget and Policy Priorities, 300,000 children would lose health coverage through Medicaid and CHIP over a decade as a result of this change. Similar rates of attrition would be seen across other public benefits.

This is an administrative Trojan horse: a back-door attempt to weaken the safety net hidden inside a complicated regulatory calculation. Though the Trump administration claims its plan is based on a desire to identify and implement the measure of inflation that most closely corresponds with the way households experience and account for price increases, this explanation is arbitrary at best and an outright lie at worst.

While we must calculate inflation accurately, the bigger problem is that the current poverty threshold is far too low. It does not take into account many basic living expenses such as child care, taxes, and medical expenses. As a result, many families who live nominally above the poverty line face the burdens typically associated with families in poverty: massive rent burdens, food insecurity and high rates of uninsurance, among others.

The simple fact is that the official poverty threshold simply does not match the lived experience of families in this country and the Trump administration has shown little interest in solving this problem.

2019-06-03T14:48:13-05:00June 3rd, 2019|