The Trump administration has taken a step toward changing the way the poverty threshold is calculated, a move that could strip many low-income Americans of their federal benefits.
The annual increase in the official poverty line, which determines who qualifies for food stamps, Medicaid and other assistance programs, is currently set using the consumer price index. The administration is considering switching to a different inflation measure that rises more slowly, a change that over time would make it harder to qualify for help.
The move is the latest in what liberals see as President Donald Trump and Republicans’ continued attacks on the poor. The administration is also pushing working requirements and other restrictions in safety net programs, which will lead to many losing their benefits.
The consumer price index is widely used and frequently criticized as inaccurate. The Office of Management and Budget said in a regulatory filing on Monday that it is soliciting comment to shift to the so-called “chained CPI,” which rises more slowly because it assumes consumers will switch to less expensive items when prices go up.
Chained CPI grows about a quarter of a percentage point less than the traditional inflation measure, on average, according to the Congressional Budget Office. The impact would be relatively small initially, but would likely affect millions of low-income Americans over time, said Arloc Sherman, senior director at the Center on Budget and Policy Priorities.
Had chained CPI been used over the past five years, the federal poverty level in 2018 would have been $12,113 for a single person, rather than the actual threshold of $12,140, according to Douglas Holtz-Eakin, president of the American Action Forum and former official in both Bush administrations.
Holtz-Eakin supports switching to chained CPI because it’s more accurate than the current index.
“If you are going to index government programs broadly to inflation, get the best inflation measure,” he said. “If it turns out that reveals the programs are not what you wanted, fix the programs.”
But advocates for the poor said that such a change would run counter to the Trump administration’s efforts to require more people to work for their benefits. The switch would most likely affect Americans who have jobs, but don’t earn a lot of money so they still qualify for assistance.
“The Trump administration is floating a proposal that would unilaterally strip working class people of Medicaid, nutrition assistance and other basic support by pretending that our definition of poverty is too generous,” said Melissa Boteach, vice president for income security, child care and early learning for the National Women’s Law Center.
Bloomberg first reported on the OMB regulatory filing.
Past attempts by the Bush and Obama administrations to introduce chained CPI in federal government programs prompted fierce backlashes, leading officials to back down. President Barack Obama dropped the idea after including it in his 2013 budget proposal, which would have reduced the annual growth of Social Security payouts.
However, Congress succeeded in shifting to chained CPI to adjust federal income tax brackets annually as part of the 2017 tax reform law.