Trump Administration Considering Changes That Would Redefine The Poverty Line

May 9, 2019
Originally published on May 14, 2019 9:52 am

The Trump administration is considering changing the way the government measures poverty, which has anti-poverty groups worried that many low-income individuals will be pushed off assistance programs such as food stamps, Medicaid and Head Start.

The possible change would involve adjusting the poverty line annually using a different inflation measure, one that would result in a slower increase over time.

Arloc Sherman of the left-leaning Center on Budget and Policy Priorities says this change would mean that millions of people eventually could see their benefits either reduced or eliminated because they wouldn't be considered as poor as they were under the old measure.

"They have a goal, and the goal is to cut people of low or moderate income off of government assistance," Sherman said of the administration. He noted that the idea is being floated at the same time that the White House is proposing work requirements and steep budget cuts for safety net programs.

The administration raised the possibility of changing the poverty calculation in a notice published this week in the Federal Register. It seeks public comment on which measure of inflation should be used but does not state a preference.

The current poverty line for a family of four is about $26,000. Each year, the government adjusts the line for inflation based on the consumer price index. Among the options that the administration is considering is whether to use a version called the "chained CPI," which is lower than the rate currently used. The chained CPI assumes that as the prices of goods go up, individuals substitute less expensive items, thereby reducing their overall expenses.

Some economists argue that this is a more accurate way to measure inflation, and both Barack Obama's and George W. Bush's administrations tried, without success, to introduce the use of the chained CPI in federal programs.

"It went nowhere," recalls Douglas Holtz-Eakin, who was chief economist in the Council of Economic Advisers under Bush. Holtz-Eakin says he understands why the proposal would be controversial among anti-poverty advocates. But if they're worried about cuts in government aid, he says, it would be better to change the programs themselves rather than continue using an inaccurate measure of inflation.

"If we're going to have federal programs indexed to inflation, and we have many — we have the tax code, we have Social Security, we have the poverty index, all sorts of things — then it's important to measure inflation as correctly as possible," he says. Holtz-Eakin, who is president of the right-leaning American Action Forum, notes that the 2017 tax law requires that the chained CPI now be used for adjusting income tax brackets.

Still, he thinks there's less than a 50-50 chance that the change will happen because of the fierce opposition expected from those who believe they would be harmed.

Anti-poverty groups are already gearing up to block any such change, portraying it as part of a broader administration attack on the safety net. They are also fighting efforts to impose stricter work requirements on food stamp recipients and efforts to restrict housing and other aid for immigrants.

"This is a cynical attempt to squeeze working-class people. Their incomes will STILL be too low to make ends meet, but Trump's decree would make it harder for them to qualify for help," tweeted Melissa Boteach, of the National Women's Law Center.

She and others say the existing poverty measure is already inadequate for the needs of low-income families because it's based on a 1960s formula that assumes the average family spends about one-third of its income on food, something that is no longer the case.

The government recently began producing a supplemental poverty measure that most experts think is more accurate. It takes into account such things as medical and child care expenses, geographic differences in the cost of housing and the value of benefits such as food stamps and tax credits. But that measure is not used when determining eligibility for government programs.

Sherman of the Center on Budget and Policy Priorities says the administration should look at the overall impact of the current poverty measure rather than cherry-pick one part that would lead to reducing benefits for low-income families.

The administration is accepting comments on the poverty calculation until June 21.

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The Trump administration is considering changing the way the government defines poverty. That could mean lower benefits such as food stamps and Medicaid for millions of low-income Americans. Anti-poverty groups are already up in arms over this. NPR's Pam Fessler is covering the issue and is here with us in the studio. Hi, Pam.


SHAPIRO: Why is the administration considering these changes?

FESSLER: Well, the way the government measures poverty has always been very controversial, and there are a lot of people who think that the current method isn't very good at describing what low-income families are actually going through. And part of this measure is what's called the poverty line. If you fall below it, you're considered poor. Right now it's about $26,000 for a family of four. But each year the line is adjusted for inflation, and what the Trump administration is considering is whether to use a different inflation measure to make that adjustment, one it says would be better but which is also lower than the current rate that we use.

SHAPIRO: If something like this did move forward, how would that change access to government benefits?

FESSLER: Well, the poverty line would still go up but probably not as quickly as it goes up under the current system. And what that means is over time, fewer people would be considered poor. And it also means fewer people would qualify for government benefits that are based on the poverty line such as food stamps, which are also called Supplemental Nutrition Assistance Program benefits - Medicaid, energy assistance, Head Start. There's a whole bunch of programs that low-income families rely on. The change would be very gradual over time, but the impact could be substantial eventually. It could affect millions of people who would either see their benefits cut or eliminated.

SHAPIRO: What's the justification? What do supporters say is the reason for doing this?

FESSLER: Well, the administration is questioning whether the current measure is really that accurate. So it's considering using something instead called the Chained Consumer Price Index, and the argument they use for wanting to use the - potentially wanting to use the Chained CPI is that it's a better way to show actual expenses that families face. That's because it assumes that as prices go up, people won't keep buying the same things, but they'll substitute cheaper things. So if the price of steak goes up, they'll buy chopped meat instead just to keep their expenses down.

And a lot of economists agree that this is the way to go. In fact, both the Obama administration and the George W. Bush administration tried to do this for some federal programs. But in both cases, their proposals never went anywhere because the opposition was so strong from those who stood to lose their benefits. And in Obama's case, he wanted to use it for calculating the cost of living increase for Social Security benefits. So as you can imagine, that did not go over well.

SHAPIRO: And this is still in the proposal stage. It's not an official policy. Any sense of what will happen with the idea?

FESSLER: Right. They've just - they've posted a notice in the Federal Register. They're looking for public comment. But right now anti-poverty groups are very opposed to any change in the poverty rate. It comes at a time they're already upset over a bunch of other proposals that the Trump administration has made to cut back on safety net programs or to make it more difficult for people to qualify, and they see this as part of a much bigger fight. So I think those comments - a lot of them are going to be very much against this proposal.

SHAPIRO: That's NPR's Pam Fessler. Thanks, Pam.

FESSLER: Thanks, Ari. Transcript provided by NPR, Copyright NPR.