July 20, 2018
In a new report, Donald Trump’s Council of Economic Advisers (CEA) claims only about 1 out of every 33 Americans have income below the poverty line. This compares with about 1 out of 7 Americans according to the Census Bureau.
Why such a big difference? About half comes from using consumption data rather than income, and the other half comes from assuming the Consumer Price Index for All Urban Consumers (CPI-U) has been substantially overstating inflation since 1980.
By Trump’s CEA calculations, the official poverty threshold — $25,283 for a family of four in 2017 — is much higher than what families need to pay for housing, food, transportation, and other things needed to raise children while living at a minimally decent level.
How much income does Trump’s CEA calculate is needed to live decently? They don’t say in the report, and the American Enterprise Institute (AEI) report they rely on doesn’t disclose the dollar amount either. But, according to Luke Shaefer and Joshua Rivera at the University of Michigan — who have written an important working paper that looks at the AEI report — the AEI-adjusted poverty threshold for a family of four ends up being only $17,000 in 2011. Updating this for inflation since 2011 (using AEI’s adjustment method), I get $17,700 as today’s Trump Poverty Line for a couple raising two kids.
It’s interesting to compare the Trump Poverty Line with what most Americans think they need to live above the poverty line. According to AEI’s own public opinion research, this was $33,000 in 2016, or nearly twice the amount Trump’s CEA calculates will do.
If the Trump administration really thinks that a family of four can live decently on less than $18,000 a year, they should be transparent about it. If they don’t, they need to rewrite their report.
