The Daily Caller

The Daily Caller

Is “New Poverty” Dead?

What if they created a bogus “poverty” measure … and it was too bogus to use with a straight face? In 2011, the Census Bureau unveiled its “Supplemental Poverty Measure,” designed to replace the old familiar LBJ-era poverty measure (based on the cost of an “economy” diet, multiplied by 3 and indexed for inflation) with a new index so complicated it was barely comprehensible even to many poverty wonks.** The “SPM” has some useful updates–it takes into account food stamps and the Earned Income Tax Credit, for example, meaning it doesn’t count as “poor” many people who are helped by those programs. But its key feature–some (e.g. me) would say the trick liberals were trying to pull on the public–was that it wasn’t a measure of absolute deprivation. It measured relative income, even though this aspect was assiduously hidden.

“It’s pegged to the expenditures of the 33d percentile rather than a fixed  amount of purchasing power  …Under the old poverty line, “poverty” could be eliminated as society got richer–an achievable and widely shared goal. But the new poverty line will rise as society gets  richer (“adjust for rising levels and standards of living”). … 

The only way to reduce poverty under the new, relative measure–as Robert Rector notes–is to have those at the  bottom gain income faster than those around the 33d  percentile. [***]The [New York] Times‘ favorite “poverty” line  is now a measure of inequality, not absolute want–when its moral and  political force derives largely because it’s thought of as a measure of  absolute want, not inequality.”

The 50th anniversary of the War on Poverty should have been the moment for this new measure to take center stage. And sure enough, the report of the White House Council of Economic Advisers uses the “Supplemental” measure. …but with a crucial switch. The White House economists appears to have ditched its “relative” aspect (the one that raises the poverty bar with rising prosperity) and “anchored” it–that is, they raise the bar only for inflation in a market basket of goods. From the CEA report:

“The anchored version, like the official measure, fixes poverty thresholds based on expenditures on necessary items in a given year and then adjusts only for inflation in each year. This version allows for the use of the more comprehensive definition of resources in measuring poverty over time, while setting a fixed assessment of what constitutes basic needs spending on food, shelter, clothing, and utilities. The anchored measure is also more consistent with the vision of the War on Poverty architects, who believed  that poverty can be eradicated. Eliminating poverty defined with a relative measure may be nearly impossible, as the threshold rises apace with incomes.” [E.A.]

Good for the Council of Economic Advisers. But if the CEA can’t bring itself to use the Census’ deceptive, relative “Supplemental” measure–because it’s too, well, deceptive– why keep it around at all?  It exists mainly to give journalists a chance to write hype stories that exaggerate the (real) poverty problem by deviously switching poverty lines on their readers. It’s a fraud. Spending any more  money propagating it, when the White House itself is embarrassed to use it, would be a waste of taxpayer dollars.

Obama should follow his own CEA’s lead and kill it for good.****

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**–For a short, sharp attack on the Supplemental Poverty Measure by wonk eminence Richard Bavier, click here.

***–The CEA actually notes one other way it would be “theoretically possible” to eliminate redefined poverty under the non-anchored “Supplemental” index: Spending on the market basket of necessities at the 33d percentile could somehow remain “stable”  while incomes, including incomes of those below the 33d percentile, kept growing. This is not going to happen, as the CEA acknowledges–calling it “nearly impossible” to eliminate “poverty” in the unmodified “Supplemental” measure.

****– If some non-government researchers want to keep it going, fine–it’s good to know what’s happening with inequality toward the bottom of the income scale. But then reporters couldn’t pretend it was an official census “poverty line.”