How Obama could abuse a new set of poverty statistics.
The Census Bureau’s recently created “Supplemental Poverty Measure” (SPM) looks like a ruse to artificially show economic and poverty-reducing improvement in time for the 2012 presidential election. Longer-term, it appears to be a rigged mechanism for demonstrating how ObamaCare, assuming it survives legal challenges and attempts at repeal, is a resounding success.
If I’m right, the press is doing a really good job of playing along. A recent Associated Press item which gained an usual amount of traction in the center-right blogosphere with an unfortunate shortage of skepticism told us that “1 in 2 Americans are now poor or low income.” SPM, which is indeed what AP cryptically referenced, radically redefines what it means to be “low income,” in the process adding almost 40 million more people to that category in 2010 compared to the number in the bureau’s official income and poverty report.
Though there are many technical and conceptual problems with the bureau’s traditional poverty measurements, the only problem that matters to Barack Obama and his reelection team is the political impact of the official poverty rate. During the supposed era of Hope and Change, the rate has stubbornly and sharply increased. In 2007, the year before the arrival of what I have been calling the POR (Pelosi-Obama-Reid) economy since mid-2008, that official rate was 12.5%, about the same as the previous four years. After increasing to 13.2% in 2008, it zoomed to 14.3% in 2009. When it hit 15.1% in 2010, it meant that the administration’s supposedly brilliant set of Keynesian policies had essentially taken us back to where we were in the early 1990s. The official poverty rate seems virtually assured to increase yet again when the bureau releases its results in September 2012, at which point the rate will likely be higher than at any time since the mid-1960s.
To be clear, the problem from Team Obama’s perspective isn’t that more and more people are living in economic misery (Please, with hundreds of dead bodies resulting from the Justice Department’s Operation Fast and Furious and the president’s 2009 advice to a daughter that her elderly mother should have been “taking painkillers” instead of having life-extending surgery, to name just two examples, spare me the garbage about Obama’s and his administration’s alleged compassion). The real problem is that the American people have learned that more and more of their fellow citizens are economically miserable. Even worse, they will have that message reinforced less than two months before Election Day 2012 — unless something is done about how poverty is measured and reported.
Enter SPM. The irony of its creation is more than a little hard to take. After decades during which leftists ridiculed conservatives and others who validly criticized official poverty measurements for excluding obvious items like the value of non-cash government benefits such as food stamps and traditional welfare from available resources, all of a sudden effective in 2009 the administration tasked the Census Bureau with developing SPM, which incorporates those and similar items into its measurement base.
But SPM, based on a study which had been gathering dust since the mid-1990s, additionally and arbitrarily deducts a number of expenses from income to arrive at a new “resource measure” which supposedly represents what is available to pay for “a basic set of goods that includes food, clothing, shelter, and utilities (FCSU), and a small additional amount to allow for other needs (e.g., household supplies, personal care, non- work-related transportation).” SPM then compares that new “resource measure” to a clearly higher poverty threshold than the bureau has officially used for almost 50 years (if you really have to know, SPM’s poverty threshold is “The 33rd percentile of expenditures on FCSU of consumer units with exactly two children multiplied by 1.2″).
So what are the expenses SPM deducts from income? Astute readers will begin to grasp the underhanded cleverness of the new measurement when they see the list: taxes (while adding back tax credits like the Earned Income Credit), work expenses, and medical out-of-pocket expenses.
Now let’s look at the bureau’s graph comparing where Americans fall under the official and SPM definitions:
Since “low income” is defined as anyone whose “resource measure” is above but less than twice the defined poverty level, the SPM portion of the chart provides the support for AP’s assertion that 48% of Americans (rounded to “1 in 2″ for dramatic headline purposes) are either poor or low income.
SPM’s consideration of taxes will help Obama’s reelection campaign if (and I believe it’s more like when) the Census Bureau surprises everyone and releases its related report in October of next year instead of November, as it did this year, and attempts with media help to give it greater credibility than the official measurement. By far the largest tax low-income families pay is the payroll tax. In 2011, that tax was reduced by two percentage points. As a result, when next year’s SPM report comes out, millions of Americans will no longer be “low income” under its framework. I can imagine the campaign verbiage already: “Who first broached the idea of eliminating part of the payroll tax? Why, it was Barack Obama, who singlehandedly moved millions into the middle class in one bold move, undoing much of the damage of the past decade’s misguided policies.”
As to the ObamaCare gambit: State-run health care will very visibly and quickly remove most medical out-of-pocket expenses from millions of Americans. In return, of course, we know from experience in other countries that they’ll have longer waits for care, be subject to rationing, receive lower quality care, and see a virtual end to medical innovation. But those things won’t be as immediately visible. Thus, ObamaCare will in its early years appear to almost painlessly move millions more from SPM’s “low income” category into the middle class. Again, thanks to artifice, Obama will look like a hero.
It must be nice to be able to create your own customized measurement to arrive at the conclusions you want. Don’t be deceived, and don’t let your friends be fooled.