New Poverty Data Induce Clinton Nostalgia

| Wed Aug. 27, 2008 1:31 PM EDT

Hillary's speech last night at the Democratic convention wasn't the only event of the day to inspire a little nostalgia for the Clinton administration. A few hours earlier, the Census Bureau released its 2007 poverty and income report, a snapshot of the nation's economic well-being. The easy takeaway message might have been this: We never had it so good as we did in Bill Clinton's second term, when unemployment was low, poverty was low, and the rising tide was lifting all boats. The Census data for 2007 confirm that all future economic progress will be measured by whether the country can get back to the prosperity of 1999. Right now, the Bush administration can't even get the economy back to where it was during the 2001 recession.

According to the Census Bureau, child poverty, which hit a record low during the Clinton years, went up in 2007, and it's significantly higher than it was in 2001 (18 percent vs. 16.5 percent). Median income for working-age adults was lower last year than it was during the recession of 2001, and more people were uninsured, too. The numbers were especially grim given that they came at the end of six years of economic expansion. The data for 2008 are likely to be much, much worse.

The happy years of the Clinton administration notwithstanding, the data make clear that the country has made scant little progress in combating poverty since 1980. The percentage of children living in poverty today is 18 percent, slightly more than it was 28 years ago. The percentage of single moms living in poverty stands at 30 percent, almost exactly what it was in 1980. And the median income for black households in 2007 was $33,916. In 1980, it was $32,876. The poverty trends haven't gone unnoticed by the political class, however, on both sides of the aisle.

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A few hours after Census released its report, a cadre of Washington's policy wonks not in Cape Cod or Denver converged on the Brookings Institution for a briefing on what it all meant and what should be done about it. The general consensus was that the data ought to be a national embarrassment, both because of the way it's calculated, and for what it says about the country's priorities.

Ron Haskins, a senior fellow at Brookings and a former Republican White House political adviser on welfare issues who chaired the event, believes that Congress is on the edge of taking action. He said Tuesday that poverty is on the national agenda again in a way that it hasn't been in many years, in part because of what happened after Hurricane Katrina, and also because of John Edwards, who, before his recent disgrace, had made poverty a major focus of his presidential campaign.

The House Ways and Means committee has held a number of hearings over the last year to consider proposals for reducing poverty that include everything from a major investment in early childhood education to expanding the Earned Income Tax Credit. But the one major congressional action most likely to succeed is a revision of the way the country tallies up the poor—i.e., the very data released by the Census this week. Quoting the late Sen. Daniel Patrick Moynihan, the Casey Foundation's Michael Laracy said Tuesday, "You can't solve a problem if you don't know how to measure it."

The official poverty measurement hasn't been updated in decades, and is considered badly flawed. It was developed by a woman in the Social Security Administration in the 1960s who boiled the poverty threshold down to a simple equation: three times a "subsistence food budget." Back then, Americans spent a third of their income on food, so this wasn't such a bad thing. But the basic formula hasn't been altered to include such big-ticket items as housing, health care and childcare that today eat up a much larger share of family income. According to congressional testimony this summer by Douglas Nelson, president of the Annie E. Casey Foundation, the current poverty line--$21,200 for a family of 4—is less than 60 percent of what it actually costs a family to meet its basic needs.

The poverty measurement also excludes non-cash income, such as housing vouchers, food stamp benefits, tax credits or Medicaid, which can significantly boost family income. Brookings fellow Rebecca Blank has argued that the failure to include such benefits in the poverty measurement has given politicians the false impression that the poverty rate has remained virtually unchanged since the 1970s, despite the outlay of billions of dollars in federal entitlement programs. "In a very fundamental way, our poverty statistics failed us and made it easy to claim that public spending on the poor had little effect," she writes. She harkens back to 1988, when Ronald Reagan observed that "some years ago the federal government declared war on poverty and poverty won."

Yet changing the poverty measurement is rife with political peril. If it's updated only to include government benefits as income, as the Bush administration wants, the poverty rate could take an immediate plunge on paper and weaken support for further action or government spending. But if it includes a broader assessment of basic needs, millions more people could be classified as officially poor and thus eligible for public assistance. That's one reason that the official poverty measurement hasn't been fixed, despite years of criticism. (The fact that it is the only statistical measurement of economic status that is controlled by the White House hasn't helped, either.) Changing the formula, too, could create a major shift in the way federal funds are allocated to the states. (Haskins, echoing a favorite Republican argument, suggested that a change to broaden the definition of poverty would result in money flowing from poor Clarksdale, Mississippi to San Francisco.)

This year, though, Republicans and Democrats seem to be virtually in agreement that something needs to be done about the poverty measurement, if not poverty itself. At the end of Tuesday's briefing on the Census data, Haskins predicted optimistically that regardless of who is in the White House, "by the end of the next Congress, we will have a new poverty measure."