Census Poverty Rates Defy Predictions

Well, the crystal ball gazers blew it. The Census Bureau just reported that the poverty rate didn’t rise last year. The official 15% rate isn’t statistically different from the 2010 rate, it says.

This is surely good news. It nevertheless means that more than 46.2 million people were so poor as to fall below the Bureau’s very low poverty thresholds.

And well over 20.3 million — 6.6% — were so extremely poor as to fall below 50% of the applicable threshold. This is what’s commonly referred to as severe poverty.

What also hasn’t changed is the distribution of poverty across different age and race/ethnicity groups. For example, in 2011:

• The child poverty rate was 21.9% — not statistically different from the rate in 2010.
• The poverty rate for seniors was 8.7% — again, virtually the same as the 2010 rate.
• The black poverty rate was nearly triple the poverty rate for whites — 27.6%, as compared to 9.8%.
• The poverty rate for Hispanics was 25.3%.

Poverty rates among family types also replicate a familiar pattern. The percent of married couples who were officially poor was 6.2%, while the rate for single-woman households was five times higher — 31.2%.

Severe poverty rates were, of course, lower. But they mirror the same disparities. For example:

• Nearly 1 in 10 of America’s children — 9.8% — lived in severe poverty last year.
• The severe poverty rate for blacks was 12.8% and for Hispanics, 10.5%.
• By contrast, severe poverty afflicted 4.4% of whites and only 2.3% of seniors of all racial/ethnic groups combined.

What we’re to make of all this I’m really not sure. We’ll undoubtedly have many analyses in days to come.

In the interim, we can ferret out of the Census report a couple of policy-relevant messages, based on examples it provides of what the statistically adept can find out by using its online tool.

One we might guess from the relatively low senior poverty rate. Without Social Security benefits, about five times as many elderly people would have been counted as poor.

This is surely a testimony to one of our oldest anti-poverty programs — and a warning of what could happen if some of the “reforms” that are being widely promoted became law.

An additional 2.3 million people were lifted above the poverty threshold by unemployment insurance benefits.

A more imminent danger here because more than 2 million jobless workers will lose these benefits in January if Congress doesn’t extend the only still operative federally-funded UI program.

Millions more will have, at most, 26 weeks of benefits — this at a time when 40% of those actively looking for work have been unemployed for longer.

So here’s a case where our federal policymakers could keep what are still really depressing poverty numbers from getting worse.

Whether they will or not depends on what voters decide in November.

Hunger Struck More Families Last Year, USDA Reports

September is Hunger Action Month — a campaign launched by Feeding America to get us involved in efforts to help end hunger in this country.

And hunger there surely is, as the latest food (in)security report from the U.S. Department of Agriculture shows.

Last year, nearly 174.9 million households sometimes — or often — didn’t have the resources to buy the food that all members needed “for an active, healthy life.” These are households USDA classifies as food insecure.

There were more of them than in 2010, but the percent increase isn’t statistically significant, USDA says.

The bigger news, I think, is that the number of households with very low food security, i.e., those in which at least one member sometimes scrimped on meals or skipped them altogether, rose to more than 6.8 million — 5.7% of all households surveyed.

This is statistically significant. And it puts the very low food security rate back up to where it was during the recession we’re still recovering from.

All told, nearly 16.9 million people sometimes didn’t have enough to eat. For adults, in the main, this typically meant hunger during seven months of the year — and for a few days during each of these months.

Drilling down a bit, we see that:

• Food insecurity afflicted 20.6% of households with children — nearly 8 million families.
• Children themselves were food insecure in slightly under half these households — and actually experienced hunger in 374,000 of them.
• Food insecurity rates were highest for single-mother families — 36.8% or more than 3.5 million families.
• More than 1.1 million of them — 11.6% — were so food insecure as to fall into the generally recurrent hunger category.
• Single-father households also had unusually high food insecurity rates — 24.9%. But there were far fewer of them.

The correlation with poverty is, of course, very high. So not surprisingly, we see significant race/ethnicity differences.

• Among black households, 25.1% were food insecure, as compared to 11.4% of white, non-Hispanic households.
• The very low food security, i.e., hunger, rate among black households was 10.5%, as compared to 4.6% for white, non-Hispanic households.
• The food insecurity rate for Hispanic households was 26.% and the very low food security rate 8.3%.
• Children themselves were food insecure in 14.6% of black households, as compared to 6.7% of white, non-Hispanic households.
• The child food insecurity rate for Hispanic households was 17.4%.

Well over 88% of food insecure households were poor enough to qualify for food stamps. The USDA report doesn’t tell us how many received them. It does, however, tell us how households below the program’s standard income eligibility ceiling fared.

On the one hand, a large majority managed to keep enough food on the table without food stamps for all of 2011.

The survey results don’t tell us how, though we might guess that free school meals played a part. Perhaps also the food pantries and other emergency sources that Feeding America’s network supplies.

On the other hand, nearly half (49.1%) of the households that received food stamps all year were nevertheless food insecure. And more than one in five (22.3%) were so food insecure that at least one member of the household didn’t always have enough — or anything — to eat.

The new Farm Bill the Senate passed would nevertheless reduce food stamp benefits for about half a million households.

The version pending in the House would do the same. It would also cut off all benefits for at least 1.8 million low-income people, plus free school meals for about 280,000 prospectively hungry children.

If we’re going to end hunger in America — a doable thing in this very wealthy country — the very least our elected representatives can do now is avoid making it worse.

Sad that anyone should have to say something so blatantly self-evident.

What’s at Stake for DC If the Expanded EITC and Child Tax Credit Die?

Yesterday, the House passed a bill to extend the Bush tax cuts that’s virtually identical to the Senate Republicans’ recently defeated bill — this after defeating an alternative much like what the Senate passed.

What will happen next is anybody’s guess. What will happen if the Republicans finally prevail on the issue of the refundable Earned Income Tax Credit and Child Tax Credit isn’t — thanks to some great number-crunching by Citizens for Tax Justice.

As I earlier wrote, the Republicans don’t want to extend the tax credits in their current forms, i.e., with expansions originally made by the Recovery Act.

Without them, parents with more than two children wouldn’t get as large an EITC credit as they can now. And married couples would again incur a significant “marriage penalty.”

The refundable Child Tax Credit wouldn’t be available at all for very low-income working families. Refunds would be much smaller for many others because they’re a percent of income above a threshold that would rise from $3,000 to about $13,300 initially — and keep rising as time went on.

CTJ provides state-by-state breakouts for some of the impacts. Here’s what it tells us about the District of Columbia, with some additional observations from me.

In 2013 alone:

• Nearly 7,940 District families, including an estimated 11,673 children, could no longer get any Child Tax Credit refund.
• These families, plus those who could still claim the credit would collectively lose $7.6 million — a hit to not only their budgets, but our local economy because there’d be that much less for them to spend.
• About 8,285 families, including 24,435 children, would lose some portion of their federal EITC.
• These losses would total $5.3 million.

Families would also lose out because the District’s own EITC is linked to the federal. Taxpayers can get 35% of whatever their federal credit is — and reimbursements if claiming the credit brings the taxes they owe to less than zero.

Rough back-of-the-envelope calculation suggests that total EITC losses could be well over $7.1 million.

In 2010, 1.6 million more people would have fallen below the poverty line if the Recovery Act hadn’t expanded the EITC and Child Tax Credit, according to analyses by the Center on Budget and Policy Priorities.

Hard to believe we wouldn’t have more District families in poverty if Congress extends the credits in their earlier, more restrictive forms.

Republicans Say No Tax Increases, Except for Low-Income Working Families

As I remarked earlier, Republicans in Congress don’t actually want to prevent tax increases for everybody.

The votes in the Senate last week confirm this. And the upcoming vote in the House almost certainly will as well.

The Republicans — Mitt Romney included — are dead set against increases for the wealthiest 2% of households — those who’d pay more if the two top tax brackets reverted to their pre-Bush levels.

They’re bound and determined to preserve the huge estate tax giveaway — an additional $1.1 million, on average, for heirs to the wealthiest 0.3% of estates.

But they’re opposed to extensions of the current Earned Income Tax Credit and Child Tax Credit — both expanded by the Recovery Act and then extended, in their current forms, as part of the December 2010 tax cut/unemployment insurance deal.

These tax credits, they say, were temporary stimulus measures. “Stimulus” is, as we know, a pejorative when used by Republicans, who are heavily invested in claiming the Recovery Act failed.

The rest of the Bush tax cuts were also nominally temporary and initially sold as a stimulus. But this is nit-picking, I suppose.

What ought to concern us now is what will happen to low-income families if the Republicans get their way.

Citizens for Tax Justice has a new brief that answers this question — though not entirely — both for the nation as a whole and for each state and the District of Columbia.

Refundable Tax Credit Basics

As you probably know, the EITC is a refundable tax credit available to low and moderate-income working families.

In other words, if the credit, plus deductions and other credits they can claim leaves the amount they owe at less than zero, they get a check for the difference from the Internal Revenue Service.

The credit they get — thus the reimbursement, if any — phases out until it disappears. At what income level depends on family structure.

When we talk about the Child Tax Credit in this context, we’re actually talking about a technically separate additional credit that’s partially refundable.

Parents can get up to 15% of their earnings refunded, but only if they’ve earned more than a set minimum. Both the credit itself and the refundable amount are capped at $1,000 per child.

Expiring Recovery Act Improvements

Before the Recovery Act, the EITC provided no additional credit for families with three or more children. And its structure imposed a severe “marriage penalty” because the phase-out was the same for individual filers and couples filing jointly.

The Recovery Act added a tier for larger families and a separate phase-out schedule for the joint filers.

The refundable Child Tax Credit could be claimed only by parents with incomes over $12,050* — and only for earnings above this amount.

So it wasn’t available for the lowest-income families at all. And refunds were well below the $1,000 maximum for those who didn’t earn much more than the threshold.

The Recovery Act dropped the threshold for claiming the credit to $3,000 — thus also the point at which the 15% starts to kick in.

What No Extensions Would Mean

If the two tax credits revert to their pre-2009 forms, 13.6 million families, including 25.7 million children, would lose, on average, $843 in 2013 alone, according to the CTJ brief.

But losses for some would be considerably greater.

For example, a married couple with three children and earnings at the estimated 2013 federal poverty line would lose $1,934 — nearly 7% of their income — due to the combined changes in the EITC and the CTC.

A single mother with two children and a full-time minimum wage job would get $1,552 less if the Child Tax Credit reverts to its pre-2009 threshold. That’s more than five weeks of her pay.

Additional Losses

The EITC estimates reflect only losses directly due to changes in the federal tax code.

Twenty-three states and the District have their own EITCs — virtually all a percent of what their residents can claim on their federal returns. All but three of these are fully refundable — just like the federal EITC.

So many families who lose all or some portion of their federal EITC would lose out on their state taxes too. Still more losses in a couple of local jurisdictions because they’ve got EITCs too.

* Before the Recovery Act, the threshold was linked to a cost-of-living index, like many other key parts of the income tax code. CTJ says the threshold would be $13,300 next year if Congress doesn’t extend the refundable Child Tax Credit as-is.