New Census poverty data shows what is at stake in the fiscal debate

Today, the Census Bureau released new data from the Research Supplemental Poverty Measure (SPM) that showed that more Americans are likely in poverty than is reflected by the official federal poverty line. The SPM estimates for 2011 show a poverty rate of 16.1 percent, or roughly 49.7 million people, which is higher than the official poverty rate of 15.1 percent, or 46.6 million people.

First introduced last year, the SPM attempts to make a more holistic appraisal of household well-being by incorporating greater detail on real household expenses and additional resources available to households through government programs. The SPM also takes into account individuals’ residence type (renters, homeowners, homeowners with a mortgage), and regional differences in consumer prices.

With this inclusion of more detailed data on government assistance, the SPM allows for some interesting back-of-the-envelope calculations on the poverty-fighting effects of these programs. Figure 1 shows what the poverty rate would be under the SPM in the absence of various government programs. These hypothetical poverty rates hold all other variables constant and assume no behavioral change from the absence of each program.

As the figure shows, these programs keep millions of Americans from falling into poverty. Clearly, Social Security has the largest impact, but this figure actually understates the program’s true effect because it is the average across the entire population. Looking only at the population 65 years old and older, excluding Social Security from households’ incomes would put  16.2 million seniors below the SPM poverty line, moving the SPM poverty rate for the elderly from 15.1 percent to 54.1 percent. Similarly, when looking only at children, refundable tax credits, such as the Earned Income Tax Credit (EITC), keep 4.7 million children above the SPM poverty line. Without these tax credits, the SPM child poverty rate would rise from 18.1 percent to 24.4 percent.

As Congress debates how to address the looming “fiscal obstacle course,” today’s release is a stark reminder of what is at stake. Budgetary decisions have real world consequences. Lawmakers must remember that the choices they make are not simply reconciling numbers in the federal ledger; for millions of Americans, these decisions are the difference between meeting their family’s basic needs and falling into poverty.

  • benleet

    Without Social Security about an additional 40% (39.0%) of seniors would live in poverty, a jump from 15 to 54%. But S.S. is deferred earned income not charity or “safety net”. Last years SPM increased poverty for seniors from 9.0% to 15.9%, and decreased it for persons under 18 from 22.5% to 18.2%. I find this report confusing. Exactly how many people would be below SPM poverty line without government programs? Not shown or told. I added the “+25.7 million people” numbers for all categories and it totals 52.7 million. 49.7 million is the figure given in this report for total in poverty. The CBPP states that without government programs the poverty rate would be around 28%. Is that accurate? If so, then 12% or 37 million are supported above the poverty line by a government program, of which 16.2 million are seniors receiving Social Security. That leaves 20.8 million or 6.7% of population elevated above poverty by the safety net, exclusive of S.S.. 16.1% plus 6.7% = 22.8%. Therefore, if we consider S.S. as earned income deferred, instead of a poverty level of 22.8% with no government programs we have 16.1% poverty with government safety net. I’m inferring that S.S. is deferred income not charity. About 20.8 million (6.7%) are lifted out of poverty from government programs, and 50 million (16.1%) remain in poverty. — in a nation whose GDP per capita is over $47,000 a year.