Presidential Inauguration speeches don’t typically contain policy statements, but President Obama broke with tradition on January 21 when he touched on a number of issues including, poverty.
“Together we resolve that a great nation must care for the vulnerable,” said the President. “The commitments we make to each other through Medicare and Medicaid and Social Security, these things do not sap our initiative. They strengthen us.”
It was a gutsy move since the White House is under a lot of deficit pressure to decrease funding to some safety net programs. A recent Congressional Research Service study, commissioned by Senate Republicans found that federal spending for low income programs totaled $746 billion in fiscal year 2011.
But two days after that speech, a short-term debt ceiling deal came to a vote on Wednesday, January 23, which would allow the government to function through May 18 with no spending cuts attached, though lawmakers still face sharp automatic cuts in spending on March 1, according to the Washington Post.
The latest official poverty figures from the US Census Bureau released in September 2012 puts the number of poor people at 46.2 million, or 15 percent of the population. This includes more than one in four African Americans (27.6 percent) and Hispanics (25.3 percent) officially living in poverty followed by Asian Americans (12.3 percent), and white, non-Hispanic (9.8 percent).
Poverty is greatest among children (21.9 percent) - compared with seniors (8.7 percent) and adults (13.7 percent) - and why federal spending was 27 percent higher in 2011 than in 2008 for children under 2, according to an October 2012 report from the Urban Institute.
Another Urban Institute report, Child Poverty and Its Lasting Consequence, found that nearly half of children born to poor parents remained poor half their childhoods, with two-thirds of poor black newborns remaining “persistently poor.”
The Census Bureau uses these numbers to determine eligibility for government assistance. But the Census numbers have been under fire by researchers for years because they don’t really reflect who are really "the poor." The official numbers rely on an outdated 1965 formula to determine the minimum income needed to survive and only changes when it’s updated annually for inflation. In addition, it suffers from errors in income reporting and does not take into account geographic variation in the cost of living, according to the West Coast Poverty Center at the University of Washington.
In 2011, the government added a new "supplemental poverty measure" (SPM) to give a more realistic picture of poverty by counting both disposable income and expenses. While the official Census numbers say 15 percent of Americans live in poverty, the SPM says it’s 16 percent. But, according to an August 2012 study by the University of Notre Dame and University of Chicago, the SPM is “counterproductive” and performs worse than the official poverty rate in capturing the poorest while including better-off people with more education, home and car ownership, than those who are dropped from the definition of poverty.
The President also acknowledged the emerging “new poor,” stating: “We recognize that no matter how responsibly we live our lives, any one of us at any time may face a job loss or a sudden illness or a home swept away in a terrible storm.”
These “new poor” also includes those working full-time while living in poverty; many once held well-paid jobs but were forced to settle for lower paying work. In fact, more than 40 percent of the jobs added to the economy between 2008 and 2010, and six of the 10 jobs projected to see the most growth by 2020, are low-wage jobs, according to the National Employment Law Project.
When the September 2012 Census numbers were released, a joint statement from leaders of Half in Ten, a national campaign aimed at cutting poverty in half in 10 years, voiced concerns about rising economic inequality being the “civil rights issue of our time.”
That inequality continues. As a share of the economy, corporate profits have never been higher, growing by 171 percent while wages as a percentage of the economy have fallen to all-time lows. Workers also got hammered by a recent increase in the payroll tax, which could wipe out a minimum wage increase in some states. Meanwhile, the Business Roundtable, a group representing the CEOs of the nation’s largest corporations, is pushing to raise the retirement age to 70.
With these new realities, many more people could be showing up in the “official” poverty numbers and continue to raise the issue of the “haves and have-nots.”
The President seemed to acknowledge this when he noted during his Inauguration speech that Americans “understand that our country cannot succeed when a shrinking few do very well and a growing many barely make it.”