The number of poor people in this country is much lowe r than previously reported , the Congressional Budget Office said yesterday.
IN "background paper" on the pocketfook effects of government benefits programs, the CBO said that only about 5.4 million families and single individuals - 6.9 per cent of all such units - had purchasing power level inthe period 1975-76.
THe Census Bureau, usual keeper of poverty statistics, said last September that nearly twice that many - 10.5 million families and individuals, or 13.8 per cent of the total - were living below poverty line in 1975.
The official government poverty standard which both studies used is adjusted each year for inflation. It is currently $5.500 a year for non-farm family of four, higger for larger familise, lower for smaller ones, and $2,800 for a single individual.
Where the tewo studies differ is in the definition of income. The Census Bureau counts only money or cash income. The CBO included certain other kinds of "income" as well - the dollar value of the so-called non-cash or in kind benefits that flow from such programs as Medicare Medicard foos stamps and some forms of federal housing assistance.
These in-kind benefits have become an increasingly important part of government aid to the poor in recent years. In fiscal 1965 they amounted to only $2.3 billion and accounted for only 6 per cent of all government transfer payments.
Various critics have attacked the Census Bureau poverty stastistics as misleading for their failure to tqake into account this shift in the amke'up of government aid.
They point that an in-kind benefits raises a recipient's standard of living as surely as like amount of cash, and they say the Census Bureau statistics exaggerate both the number of people in need in the country and the extent of income inequality.
THe CBO's poverty findings thus go to the center of a major debate over the nature of U.S. society. They bear on such subjests as welfare and tax reform, both of which the Carter administration and Congress seem likely to take up in the next several years, and both of which have income redistribution as their heart.
The CBO is an economic think tank that Congress created for itself when it last revised its appropriation procedures in 1974. The Poverty study was done by staff member John J. Korbel in response to an inquiry last springs from VIce President-elect Walter F. Mondale, then a Minnesota Senator.
Mondale wanter to know why government social welfare expenditures were going upm faster than poverty seemed to be coming down.
The number of Americans living below the government poverty line fell steadily in the 1960s, both in absolute trems and as a percentage of total populationM in 1960, the Census Bureau found 39.9 million poor, 22.2 per cent of the population, and by 1969 these figures had fallen to 24.1 million and 12.1 per cent. In the early 1970s, however, this steady decline seemed to have given way to a pattern of zigs and zags.
The CBO study begins with what it calls pre-tax, pre-transfer income, which is total money income before the government gets into the ast - wages, salaries, professiosnal fees and investment income without any transfer payments added in or income and payroll taxes taken out.
The CBO research found that on this pre-government basis, 20.0 million families and individuals - fully 25.5 per cent of the total - were below the poverty level.
The next step in the study was to aid in the benefits. The various levels of government in this country now pay out roughly $200 billion in benefits a year. Most of this money is federal; benefit payments - Social Security, Medicare, Medicaid, welfare, food stamps, the various veterans and housing programs and the rest - now make up nearly half the federal budget. Roughly one seventh of all the income Americans have is benefit income.
The CBO said this benefot income lowered the poverty population by about three-fourths, to 5.3 million families and individuals, or 6.7 per cent of the total.
The final step in the study was then the subtraction of taxes, which caused the poverty number ot edge back up a little, to 5.4 million families and individuals, or 6.9 per cent. This effect is mainly the result of the Social Security tax, which the working poor are required by law to pay like all other workers. Because of various liberalizations in recent years, few people in poverty status pay any federal income tax.
The CBO experts found that the benefit programs had somewhat different effects on different population groups. Thanks largely to Social Security and Medicare, elderly people benefited most. Nearly 60 per cent of families and individuals in the 65-and-over category were under the poverty line on a before-benefit basis. But counting benefits, the CBO said, only 4 per cent of the aged were poor.
The researchers also found a far higher poverty percentage among single individuals - 14.6 per cent - than among families of two or more members. Only 4 per cent of families turned up poor in the study. Korbel said many of the individuals under the poverty line probably were young people.
The CBO found 6 per cent of white families and individuals in poverty, 13.2 per cent of non-white.
White the study counts medical benefits as income on the basis of their cost, it acknowledges that in at least some cases this can be unfair, seeming to suggest that a person can lift himself out of poverty by getting sick and running up a big enough medical bill. If Medicare and Medicaid benefits are not counted as income, the number of families and individuals under the poverty line would be 7.4 million, or 9.3 per cent, the study says.
Before taxes and transfer payments, the study says, the poorest fifth of all familieso and individuals had only 0.3 per cent of the income in fiscal 1976, while the richest fifth had 50.2 per cent.
After transfer payments and taxes, those who had been in the richest fifth were left with 41.3 per cent of all income, while those in the poorest fifth had 7.2 per cent.
The tax and transfer system taken together thus do have an equalizing influence on the society, but a limited one, the study shows.