Magazine article In These Times

Lies, Damn Lies and Poverty Statistics

Magazine article In These Times

Lies, Damn Lies and Poverty Statistics

Article excerpt

How an archaic measurement keeps millions of poor Americans from being counted

STANDING BEFORE THE HOUSE rostrum on the night of January 31, President George W. Bush beamed as he recounted the state of the country's economic health.

"Our economy is healthy," the president declared during his State of the Union address. "Americans should not fear our economic future, because we intend to shape it."

What shape Bush has in mind is clear. While the administrators of the presidents economic policies champion 11 consecutive quarters of GDP growth, Bush-mandated tax cuts ensure that the government will continue to make less while the rich and large corporations eagerly fill their coffers. In 2005, federal revenues were just 17.5 percent of GDP, 1 percent less than the previous 50-year average. By contrast, the Feb. 12, 2005 Economist reported that in 2004, after-tax corporate profits reached their highest level as a proportion of GDP in 75 years.

In the meantime, everyday Americans are spending more than they make. For the second straight year, personal savings have been in the red, a phenomenon that has only happened once before, at the height of the Great Depression. Research conducted by the Economic Policy Institute shows that the indebtedness of U.S. households has risen nearly 36 percent over the last four years. As a result, the gulf between the "haves" and "have nots" is reaching crisis proportions.

Compounding the crisis is an archaic method for determining America's poverty rate, which is then used to formulate the funding of programs that alleviate poverty. When President Bush sat down with his advisors to draft his FY 2007 budget, it's debatable whether he took the time to examine the national poverty statistics provided each year by the Census Bureaus. What's not debatable is that the Census Bureaus methodology is woefully inadequate.

The current method for measuring poverty in the United States was developed in 1963 by a young statistician for the Social Security Administration named Mollie Orshansky. Using data from a 1955 Department of Agriculture survey, Orshansky developed a set of thresholds that set a poverty line at three times the annual cost of feeding a family of three or more under Agricultures "low-cost budget." She developed the thresholds purely for her own research and said at the time that her data's limitations would yield a "conservative underestimate" of poverty.

At that, Orshansky's work might well have passed into history. But on January 8, 1964, President Lyndon Johnson uttered the famous words: "This Administration today, here and now, declares unconditional war on poverty in America." It was a war Johnson intended to win, but missing was an official yardstick for gauging the problem and its ultimate resolve.

Not just any measure would do. Rather, the administration required a threshold that was sufficiently conservative to render eradication of poverty attainable-winning the war by moving up the finish line. Orshansky's model fit the bill. But first, the Office of Economic Opportunity substituted the Agriculture Department's "economy food plan," which was still another 25 percent lower than the "low cost budget" originally chosen by Orshansky. Almost immediately, the new thresholds had an effect, and by 1968, the nation's official poverty rate had dropped by more than 10 million.

Forty years later, with the War on Poverty no closer to being won, the Census still relies on the Orshansky Thresholds to calculate each year how many Americans live in poverty. That number then determines the nature and distribution of an array of federal policies and programs aimed at addressing the issue. …

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