Economy

The Trump Regime May Cut Poverty With Asterisks

JM Ashby
Written by JM Ashby

One way to reduce the number of Americans living in poverty is to give them more money.

Another way to reduce the number of Americans living in poverty -- a method apparently preferred by the Trump regime -- is to use accounting tricks to make it simply appear that fewer Americans are living in poverty.

Prices for basic necessities like food and clothing continue to rise, but the Trump regime wants to alter their measure of price inflation so they can limit the number of Americans who are tallied was impoverished.

From Bloomberg:

The Trump administration may alter the way it determines the national poverty threshold, putting Americans living on the margins at risk of losing access to welfare programs. [...]

One proposal the Office of Management and Budget suggested in the filing is to shift to so-called chained CPI, which regularly shows a slower pace of price gains than traditional measures. Chained CPI shows slower inflation growth because it assumes consumers will substitute less expensive items when prices for specific individual goods increase significantly.

“Because of this, changes to the poverty thresholds, including how they are updated for inflation over time, may affect eligibility for programs that use the poverty guidelines,” OMB said in a notice published to the federal register.

The assumption that consumers will substitute less expensive items is all well good (I do this all the time) except when less expensive items aren't available and prices are rising across the board even among the less expensive options.

I can easily picture a near future (the 2020 campaign) in which Trump claims he has reduced poverty using one weird trick.

  • muselet

    Chained CPI shows slower inflation growth because it assumes consumers will substitute less expensive items when prices for specific individual goods increase significantly.

    If the price of a Bentley gets too high, just buy the Mercedes instead. Easy peasy.

    Is there a single conservative anywhere—especially one who plays at being an economist—who actually understands how the real world works? (Rhetorical question. The answer is obviously a resounding NO!)

    –alopecia

  • Aynwrong

    Anyone who is surprised by this must have missed the last 25 years at least.

  • Kevin Krasnansky

    People at the poverty line are already buying the least expensive items. What the hell are they supposed to substitute with?

    • Badgerite

      Exactly. Chained CPI is just making shit up. As usual.