Well, that’s one way to make it look like “we have the strongest economy in the history of our nation,” as Trump likes to proclaim.
On Monday, the Office of Management and Budget put out a request for comments on the possibility of adjusting how the government determines the official poverty measure, better known as the poverty threshold. That’s the calculation used to determine eligibility for a range of government social safety net programs, including Medicaid, food stamps and housing assistance.
One proposed change would alter how the poverty threshold rises to reflect inflation; under the plan the threshold would move from using the consumer price index to using the “chained” consumer price index. While almost all indexes, including the CPI, measure inflation, in part, by assuming consumers will substitute one item for another when things get too costly, chained CPI does it more aggressively. Over time this change would lead to a decrease in the number of people living in poverty, not because they are earning more money, but because they will not meet the increasingly narrow definition of it. As a result, “fewer and fewer people would receive benefits over time,” said Monique Morrissey, an economist with the Economic Policy Institute.
What makes this idea particularly absurd is that studies repeatedly find that lower-income households experience greater inflation than higher-earning ones. (Researcher Xavier Jaravel dubbed this “inflation inequality” in a 2017 paper.) One reason: Companies are catering to the top tier of earners, upping competition and reducing prices for many of the products the affluent are likely to use. For example, decreases in the price of organic groceries acted to reduce the overall increase in the price of food as calculated by the government. But fewer low-income households purchase organic food, since it costs more.
In fact, many experts agree that the poverty measure should be adjusted to make it more inclusive and generous. About a decade ago, the Department of Labor published research showing that, thanks to increases in housing and utility costs, government poverty measures significantly underestimate the number of households experiencing trouble making it financially on their earnings. This should be blindingly obvious to anyone checked in to the U.S. economy, where almost 40 percent of households can’t come up with $400 out of their own resources.
So what’s the motivation? The OMB said in the request for comments that it’s been decades since this measurement was reviewed. And, yes, researchers also listed other indexes they were studying and contemplating switching over to, including one that measures spending by elderly consumers.
But the Trump administration doesn’t deserve the benefit of the doubt here for one minute. It was just last year that this White House declared the war on poverty “largely over and a success” as part of its efforts to argue for work requirements on people seeking government aid. The administration’s 2020 budget proposal contains severe cuts to programs that help people in poverty, including the Supplemental Nutrition Assistance Program (SNAP), Medicaid and housing programs. Proposed regulatory rollbacks such as the Consumer Financial Protection Bureau’s plan to rescind key protections in payday lending rules are also leaving those who are struggling more vulnerable.
Finally, here’s more than a small irony here. Once upon a time, Trump accused the Obama administration of using statistics to make the economy look better than it was, at one point calling the reported unemployment rate “one of the biggest hoaxes in American modern politics.”
But in fact it’s Trump who is resorting to myths about the economy. His proposed budgets rely on unrealistic growth estimates, and he has claimed that the gross domestic product is higher than the unemployment rate for “the first time in over 100 years,” when in fact it’s something that’s happened dozens of times since 1948. Now his White House managed to figure out a way to combine two of his pet obsessions: declaring the economy under his watch the greatest ever, and making life harder for the poor. Talk about winning! Unfortunately, if this comes to pass, those living in poverty will lose.