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Fact Sheet

Alabama Arise comments in opposition to federal plan to redefine poverty line


The Office of Management and Budget (OMB) is proposing to reduce annual cost-of-living adjustments to the federal poverty line. Over time, this plan would reduce or end Medicaid, SNAP food assistance and other work supports for millions of Americans. Here is the full text of the comments Alabama Arise submitted in opposition to this proposal:

Organizational purpose and interest

Alabama Arise is a nonprofit, nonpartisan coalition of congregations, organizations and individuals promoting public policies to improve the lives of low-income Alabamians. Arise believes acts of charity are vital, but they are not enough. We also must work to improve harmful policies. Arise provides a structure through which Alabamians can engage in public debates with the goal of improving the welfare of all Alabamians.

Arise envisions an Alabama where all people have resources and opportunities to reach their potential to live happy, productive lives, and each successive generation is ensured a secure and healthy future. We envision an Alabama where all government leaders are responsive, inclusive and justice-serving, and where the people are engaged in the policymaking process. And we envision an Alabama where all people live with concern for the common good and respect for the humanity of every person.

Arise has engaged actively in advocacy and outreach on a wide variety of means-tested programs. These include Medicaid, Affordable Care Act subsidies, the Children’s Health Insurance Program (CHIP), the Supplemental Nutrition Assistance Program (SNAP), subsidized child care and school meals.

The Office of Management and Budget’s (OMB) proposed change in consumer inflation measurement would deeply affect all of these programs. More importantly, it would deeply affect the people who use them as work supports.

We understand OMB is not seeking comments on the impact of changing the Department of Health and Human Services’ (HHS) poverty guidelines. But we encourage OMB to undertake rigorous analysis and seek public comment before changing the inflation measurement underlying those guidelines.

Analysis of the proposed change

We understand OMB proposes to change the methodology for calculating poverty by using the Chained CPI (C-CPI-U) instead of the CPI for All Urban Consumers (CPI-U). We believe this change would not adequately reflect inflation’s impact on people living in or near poverty. And we believe this change ultimately would leave millions of struggling Americans ineligible for needed work supports.

The C-CPI-U assumes that, as inflation increases, consumers will purchase less expensive versions of items, thereby reducing their total cost. The flaw in this assumption is that most low-income families already purchase the least expensive items possible. That means they cannot turn to less expensive substitutes when prices increase.

In reality, low-income families typically face more inflation in the price of goods they purchase than do wealthier families. And people with low incomes cannot afford to make the adjustments in household expenditures available to more affluent people.

For the above reasons, the C-CPI-U is not an appropriate way to calculate the poverty line. Instead, it would simply define low-income families out of poverty even when they still cannot afford basic necessities.

Denying families who are still poor in every real sense access to health care, nutrition, child care or other assistance would only increase misery and threaten the health and welfare of American families. This is no way to promote economic prosperity. And it is not what Congress envisioned when creating a safety net for Americans facing hard times.

Conclusion

We agree that there are serious problems with the official poverty measure and that its calculation needs revision and updating. But we do not agree that the OMB’s proposed change is the right way to make those updates.

Changes in the cost of child care and housing have increased the burden of those expenditures for low-income families in a way not anticipated in the 1960s, when the poverty level was first established. The U.S. Census Bureau, recognizing the problems with the official poverty calculation, has developed the Supplemental Poverty Measure (SPM).

The SPM takes into account more realistic costs for housing, child care and health care. As a result, this measure actually shows a higher poverty level than does the official measure. If OMB truly wishes to calculate poverty more accurately, we would encourage rigorous analysis of actual spending patterns, similar to that reflected in the SPM.

OMB’s proposed change would not make the calculation of inflation and poverty more accurate. It would only make problems with the current calculation worse, while denying families assistance they need to make ends meet. This proposal would disproportionately harm people of color. And it would hurt the most vulnerable Americans – children, seniors, and people with disabilities – the most.

Struggling families will continue to need the assistance of critical work support programs. Denying access to those programs would be contrary to congressional intent and would only hurt our country and its people.