The Politics of the Poverty Line

On September 16th the Census Bureau published its annual report on the well being of the United States economy in 2009. The diagnosis: 14.3% of Americans live below the poverty line. That’s about one out of every seven Americans! For news about the Census Bureau’s findings, click here. To see the actual report, click here .

One aspect of this report which will come under fire is the criteria by which the poverty rate is determined. According to the Census Bureau, families of four that earn less than $21,954 live in poverty. Significantly this figure includes a household’s income before taxes but excludes capital gains from stocks, bonds, or real estate, accumulated wealth like home ownership, and non-cash governmental aid like food stamps and tax credits.

How the poverty rate is calculated directly impacts how many Americans are considered “poor.” For example, if the formula includes non-cash governmental aid, the Associated Press reports, then the number of Americans living in poverty decreases by 7.8 million. Add assets to the formula and the number of Americans beneath the poverty level might decrease even more substantially.

The question is this: Should assets and non-cash government aid be excluded from the formula?

There are several issues worth discussing here, but for now I’ll focus on two competing arguments and their political implications. On the one hand, if the numbers are crunched in such a way as to suggest that there are very few poor Americans, then political leaders on the Right will claim that the United States has won its war on poverty and repeal social welfare legislation. This would come as a major blow to Americans who only make ends meet because of non-cash government aid. This argument also ignores that the number of homeless and hungry Americans is on the rise.

On the other hand, if the criteria for setting the poverty rate are altered so that more Americans are included among the poor, then political leaders on the Left will argue that social welfare programs must expand to help the large number of Americans who suffer from poverty. This would create a backlash among Americans in higher tax brackets who will have more of their income siphoned off to pay for America’s wider safety net. Moreover it is an argument that ignores how “privileged,” so to speak, America’s poor people are when compared to those in less fortunate countries.

As more statistics become available, and political leaders on both sides of the aisle enter their election cycles, how Americans define "poverty" quantitatively will become one of the more hotly debated issues, especially given the current economic status of the country. Which position would you support in this debate? Where would you draw the poverty line? Is this a debate worth having, or are we sidestepping the real issue: poor people?