Blue-ribbon panel will urge changes in government's way of defining poverty

April 30, 1995|By New York Times News Service

WASHINGTON -- Experts at the National Academy of Sciences will soon recommend major changes in the way poverty is defined and measured, changes that could substantially increase the number of working Americans classified as poor.

The official definition of poverty used by the federal government for three decades is based simply on cash income before taxes.

But in a report to be issued Wednesday, a panel of specialists convened by the academy three years ago at the behest of Congress says the government should move toward a concept of poverty based on disposable income, the amount left after a family pays taxes and essential expenses.

Under the proposal, the government would count not only a family's cash income, but also noncash government benefits such as food stamps, subsidized housing, school lunches and home energy assistance. Those items would increase family income.

Other recommendations, meanwhile, would reduce family income. Specifically, the panel said taxes, work expenses, child-care costs and medical expenses paid by consumers from their own pockets should be deducted from cash income.

If its recommendations are adopted, the panel said, there will be "higher poverty rates for families with one or more workers and for families that lack health insurance coverage, and lower rates for families that receive public assistance."

The 12-member committee, the Panel on Poverty and Family Assistance, was convened in 1992 when Congress was controlled by Democrats. The forthcoming report seems unlikely to be embraced by the Republicans who now control Congress and who could block changes to which they object.

The recommendations have immense political implications. Voters and politicians use poverty statistics to assess the performance of presidents and the health of the economy. Eligibility for more than 25 government programs, including food stamps, Head Start and Medicaid, is linked in some way to the official poverty levels.

Poverty is also a factor in the formulas for distributing billions of federal dollars to state and local governments for education and other purposes.

In its report, the panel tried to estimate the effects of its proposals on the poverty rate for 1992. In the Census Bureau's original report for that year, 14.5 percent of Americans were officially classified as poor, but under the panel's recommendations, this figure would have been at least 15 percent or 16 percent.

Each percentage point represents more than 2.5 million people.

The panel also recommends that the official poverty threshold, now $15,141 for a family of four, be adjusted for geographical differences in housing costs.

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