Trump May Redefine Poverty, Cutting Americans From Welfare Rolls

(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.

The possible move would involve changing how inflation is calculated in the “official poverty measure,” the White House Office of Management and Budget said in a regulatory filing on Monday. The formula has been used for decades to determine whether people qualify for certain federal programs and benefits.

The measure, first set in the 1960s, is calculated at three times the cost of a minimum food diet and adjusted every year as prices rise. In 2018, a family of four making no more than $25,900 was considered impoverished. The figure determines eligibility for a wide swath of federal, state, and non-profit programs, including Medicaid and food stamps.

By changing the index the government uses to calculate how much the cost of living rises or falls, the poverty level could rise at a slower rate.

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.

An administration official said the inflation measure was worth re-evaluating because it has remained unchanged for 40 years, and knowledge of how cost-of-living increases are calculated has increased substantially in that time. The official requested anonymity to describe the internal evaluation at OMB.

Read more: Lowest earners miss out as incomes, spending rise

The possible change appears to be the latest effort by the Trump administration to make it harder to access welfare programs. Last year, President Donald Trump signed an executive order calling on federal agencies to more strictly enforce current work requirements for welfare recipients, and propose additional, more stringent requirements that could further reduce eligibility.

“Millions of able-bodied, working-age adults continue to collect food stamps without working or even looking for work,” Trump said in December. “Our goal is to move these Americans from dependence to independence, and into a good-paying job and rewarding career.”

This isn't the first time a White House has considered using chained CPI to bring down the cost of government programs. President Barack Obama in 2014 proposed switching cost-of-living adjustments in Social Security and other retirement programs to the index. Congressional Democrats responded with an uproar, causing Obama to abandon the proposal in later budgets.

To contact the reporter on this story: Justin Sink in Washington at jsink1@bloomberg.net

To contact the editors responsible for this story: Alex Wayne at awayne3@bloomberg.net, Joshua Gallu

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