This week, the Obama administration announced it will create a new poverty-measurement system that will eventually displace the current poverty measure. This new measure, which has little or nothing to do with actual poverty, will serve as the propaganda tool in Obama’s endless quest to “spread the wealth.”
Under the new measure, a family will be judged “poor” if its income falls below a certain specified income threshold. Nothing new there, but, unlike the current poverty standards, the new income thresholds will have a built-in escalator clause: They will rise automatically in direct proportion to any rise in the living standards of the average American.
The current poverty measure counts absolute purchasing power — how much steak and potatoes you can buy. The new measure will count comparative purchasing power — how much steak and potatoes you can buy relative to other people. As the nation becomes wealthier, the poverty standards will increase in proportion. In other words, Obama will employ a statistical trick to ensure that “the poor will always be with you,” no matter how much better off they get in absolute terms.
The Left has promoted this idea of an ever-rising poverty measure for a long time. It was floated at the beginning of the War on Poverty and flatly rejected by Pres. Lyndon Johnson. Not so President Obama, who consistently seeks to expand the far-left horizons of U.S. politics.
The weird new poverty measure will produce very odd results. For example, if the real income of every single American were to magically triple over night, the new poverty measure would show there had been no drop in “poverty,” because the poverty income threshold would also triple. Under the Obama system, poverty can be reduced only if the incomes of the “poor” are rising faster than the incomes of everyone else.
Another paradox of the new poverty measure is that countries such as Bangladesh and Albania will have lower poverty rates than the United States, even though the actual living conditions in those countries are extremely bad. Haiti would probably have a very low poverty rate when measured by the Obama system because the earthquake reduced much of the population to a uniform penniless squalor.
According to Obama’s measure, economic growth per se has no impact on poverty. Since the beginning of the 20th century, the incomes of nearly all Americans have increased sevenfold, after adjusting for inflation. However, from Obama’s perspective, this increase in real incomes had no impact on poverty, because the wages of those at the bottom of the income distribution did not rise faster than the incomes of those in the middle.
What has the Obama measure to do with actual poverty? Not much. For most Americans, the word “poverty” suggests destitution: an inability to provide a family with nutritious food, clothing, and reasonable shelter. But only a small number of the 40 million persons classified as poor under the government’s current poverty definition fit that description. Most of America’s poor live in material conditions that would have been judged comfortable, or even well-off, two generations ago.