Low-income Michiganders could face cuts to federal food, health care and heating assistance programs under proposed regulatory changes from the President Trump administration.
The White House Office of Management and Budget (OMB) is pushing changes to how the government calculates the official definition of poverty in the United States. The technical recalculation could have major effects: the poverty line is used to determine eligibility for more than 40 different federal assistance programs.
In 2018, there were 38.1 million people living in poverty in the United States, almost 12% of the population, according to a report from the U.S. Census Bureau. Michigan is higher than the national average with 14.1% living in poverty. That’s down slightly from 14.2% in 2017.
Gilda Jacobs, president and CEO of the Michigan League for Public Policy, a Lansing-based nonpartisan think tank, said the administration’s changes will impact housing, heating and food assistance for low-income people.
“I think President Trump is confused about what ‘moving the needle on poverty’ means,” she said. “Recalculating the poverty threshold to lower the count of people in poverty does nothing to fix the real problem, and will be particularly harmful here in Michigan. While our unemployment rate has gone down, our poverty rate is still several points higher than the national rate, meaning more people are working but still barely getting by. Taking vital food, housing, heating and other resources away from more people in Michigan and nationwide flies in the face of good governance and sound leadership.”
OMB first proposed the changes last spring. Since then, the plan has received push-back from welfare groups, researchers and Democrats. The U.S. House Committee on Oversight and Reform held a hearing on the issue last week, the first in a series to examine the administration’s policies on low-income children and families.
“The administration cannot solve the nation’s poverty problem by simply lowering the dollar amount and claiming victory,” U.S. Rep. Gerald Connolly (D-Va.), chair of the Government Operations Subcommittee, said at the outset of the hearing.
The proposed changes from the Trump administration are somewhat esoteric. Currently, the government uses an inflation index to calculate changes to the poverty line. OMB wants to change that to use the chained consumer price index.
The chained CPI grows more slowly than current inflation rates, so fewer people would qualify for programs over time.
“The proposed change is technically questionable, economically unwise, and morally troubling,” Indivar Dutta-Gupta of the Georgetown Law School Center on Poverty told lawmakers at the hearing. “The administration’s proposal would shrink the poverty line.”
The poverty line is used to calculate eligibility for dozens of federal programs, including parts of Medicaid, housing programs, education grants, help with heating bills, school lunch programs and the Supplemental Nutrition Assistance Program (SNAP, formerly food stamps).
If the Trump proposal goes forward, hundreds of thousands of people nationwide would lose access to some of these programs, according to an analysis from the Center on Budget and Policy Priorities (CBPP).
The Urban Institute estimates if the chained CPI had been used in 2016, the average monthly number of households receiving SNAP that year would have been 761,000 instead of 766,000 in Michigan.
CBPP estimates that by the 10th year of the changes, more than 250,000 low-income seniors and people with disabilities would lose access to Medicare subsidies and more than 300,000 children would lose coverage through Medicaid or the Children’s Health Insurance Program (CHIP). The group also estimates 200,000 people would lose SNAP benefits that help them pay for food.
OMB assembled an interagency “technical working group” to study an array of possible price change measures and make recommendations. The agency did not assess how many people the proposal might affect, but said they would consider comments from other groups in developing their final recommendation.
Republicans say changes may be in order to focus welfare on the recipients who need it most.
“As we look to move forward, what I would love to do is work in a bipartisan way to really address the real need of what we have,” U.S. Rep. Mark Meadows (R-N.C.) said at the hearing this week. “There is no denying the economy is growing … but is there still a real problem we need to address, yes.”
The way the government calculates the poverty line has changed little in the past 50 years. The formula compares cash income, before taxes, against a threshold set at three times the cost of a minimum food diet from 1963.
In 2019, a family of four with an income of $25,750 or less qualified as poor and eligible for some federal programs.
Michigan’s child poverty rate stood at 19.4% for 2018, down from a rate of 19.7% in 2017. The 2018 census figures also show about 13.6% of people ages 18 to 64 and 9% of people older than 64 lived below the poverty line.
In March 2019, the Michigan Association of United Ways released its report examining “ALICE” households, those that are “Asset limited, income restrained [and] employed.” The study found the number of those households grew by 13% since the last time this was measured in 2010. That happened even as the number of Michigan households in poverty, overall, fell by 6%.
The bottom line was that 43% of Michiganders in 2017 were either below the federal poverty line or the ALICE threshold, meaning almost half of the state’s households were unable to meet their basic needs.
Jacobs contrasted Trump’s policies to those of Democratic Michigan Gov. Gretchen Whitmer, who established a Poverty Task Force in December as has eased requirements for people to obtain public assistance.
Last week, Whitmer proposed her Fiscal Year 2021 budget, which included financial boosts to several safety net programs, including childcare assistance, maternal and infant care and eliminating school lunch debt.
“Our governor is raising the asset test limit on state assistance programs, expanding overtime eligibility, pushing for numerous budget investments to better support kids and workers, and creating a poverty task force to do a better job of addressing the needs of Michigan residents with lower incomes,” Jacobs said. “The president should be following Gov. Whitmer’s lead and doing more to help struggling Michiganders, not coming up with new bureaucratic barriers to cut them off from the resources and programs designed to help them.”
AOC: ‘This is a moral wrong’
Experts say the federal government should reassess the poverty line formula — which does not take into account things like childcare costs or variations across the country. But they disagree on the way the Trump administration wants to approach it.
“It is due for an update, absolutely… it is a rather arbitrary number that might not work across the country,” said Ryan LaRochelle, a professor at the University of Maine. “Looking at the poverty line and adjusting it could be a good thing, but this proposal is problematic. It is due for an update, but not this update.”
U.S. Rep. Alexandria Ocasio-Cortez (D-N.Y.) has proposed legislation that would require the U.S. Census Bureau and Department of Health and Human Services to work with the National Academy of Sciences and form a new calculation that takes into account family size and geographic differences in the cost of good and services.
“Our poverty lines treats all communities the same, and all of this is wrong,” Ocasio-Cortez told lawmakers at the hearing. “We can’t go another year with kids not getting food that they need, or losing parents because they can’t afford health care. This is a moral wrong.”
Jacobs said this is part of a national trend from the Trump administration.
“Sadly, this change is just the latest in a long line of federal administrative policy changes that harm people at the lower end of the income scale, from the inequitable Tax Cuts and Jobs Act that mostly cut taxes for the wealthy, the public charge immigration rule that ties green card access to wealth, the continued cuts to food assistance, school meal programs and other valuable resources, and more,” she said.