More grist for campaigns: Poverty in America rises

Last year, more Americans lived in poverty, more children were poor, and more people lacked health insurance than in 2002.

That message, reported by the US Census Bureau yesterday, was expected, but the increases confirm a troubling trend for the economy and a challenge for the incumbent president in an election year.

The numbers confirm a third straight year in which poverty rose and a gap in health coverage widened. Political analysts and partisans of both political parties rushed to put their stamp on the news.

"This will reinforce the feeling that we've had a very serious recession, and it's still with us," says Floyd Ciruli, a pollster based in Denver. Together with recent headlines about reduced job projections for next year, "I think it plays against the basic message that the president is trying to get across, which is that we've gone through the worst of it."

Still, there were some bright spots in the news, including the fact that the median household income held steady last year, at $43,318, after two years of decline. The percentage of children without health insurance also stayed unchanged - striking given that there was a large rise in child poverty. One factor: More children are being covered by Medicaid and the State Children's Health Insurance Program.

And the picture on income inequality - whether the gap is growing between rich and poor in America - was a mixed one. The primary way of calculating that inequality showed no change, but the income for the poorest Americans - those in the bottom 20 percent - went down, while the income for the wealthiest fifth of Americans went up.

Critics of the Bush administration, however, pointed to the sharp rise in child poverty - from 16.7 percent to 17.6 percent of the under-18 population - in addition to the more gradual rise in overall poverty (up from 12.1 percent of Americans in 2002 to 12.5 percent in 2003).

"It's disappointing ... seeing very little in the way of policy that really addresses turning that around," says Margy Waller of the Brookings Institution who served as a Clinton policy adviser. While the Bush administration has said it wants to change the focus on welfare reform to emphasize the well-being of children, she says, in reality "we're seeing reductions" and plans that undermine the safety net.

Other analysts suggested the numbers might indicate a worse picture than is actually the case. The numbers don't reflect any changes this year, for one thing.

"Compared to prior recessions, the effect here is quite mild," says Robert Rector, a fellow in domestic and economic policy studies at the conservative Heritage Foundation. "And the data show the continuing success of welfare reform." There are more than a million fewer black children living in poverty now than prior to the reform, he notes.

He adds that the Census tends to significantly undercount the number of people enrolled in Medicaid. "The Bush administration has gone out of its way" to expand Medicaid, he says.

Others, however, say the Medicaid undercount doesn't ultimately affect the numbers, since a study showed that those Americans who inaccurately report their lack of Medicaid coverage to the Census still report having some other form of coverage.

The Medicaid expansion is reflected by a somewhat smaller increase in the numbers of uninsured, says John Holahan of the Urban Institute, noting that without it, the ranks of the uninsured might have swelled to around 46 million, rather than the 45 million cited in the report.

Democratic candidate John Kerry said in a statement yesterday that the census numbers are another reason to choose him as president in November. "Today's economic numbers underscore the fundamental choice at stake in this election for the American people: four more years of an administration that puts the narrow interests of the few ahead of the interests of most Americans, or new leadership that will serve as a champion for the middle-class and those struggling to join it.

Some Democrats criticized the Bush administration for releasing the figures a month earlier than usual. Typically they are released in September.

As with health insurance, the means for arriving at the poverty numbers has long been controversial. Most experts agree that the current method is not very good. Developed in the 1960s, the poverty threshold is essentially three times the amount needed to feed a family - $18,810 for a family of four this year. It doesn't count non-cash income, such as food stamps, housing subsidies, or the earned-income tax credit, and also doesn't acknowledge regional differences in cost of living or the fact that food now constitutes a much lower portion of a family's expenses while housing and child care costs have risen.

Still, the current measure "does a pretty good job of measuring the temperature at the bottom end of the economy," says Douglas Besharov, director of the American Enterprise Institute's Social and Individual Responsibility Project.

The relatively high rate of poverty - not much different from 35 years ago - is in striking contrast to that of other industrialized nations, says Sheldon Danziger, codirector of the National Poverty Center at the University of Michigan. "The kinds of technological change, globalization, and the reorganization of production mean that folks with the least education and skills have been left behind for the most part, even when the economy is doing well over the past 30 years."