Poverty has declined, though by less than the White House says

TWO years ago Paul Ryan, the Speaker of the House of Representatives, argued that Americans “are no better off today than they were before the war on poverty began in 1964”. The poverty rate, he explained, stood at 15%—the same as in the mid-1960s. Last month the White House’s Council of Economic Advisers (CEA) reached a completely different conclusion. The war on poverty, it proclaimed, was “largely over and a success”, with only 3% of Americans now poor. Clearly, both cannot be right. In fact, neither is.

Mr Ryan’s preferred measure, the Federal Poverty Level (FPL), is perfectly orthodox, yet perfectly absurd as a guide to how poverty has changed over time. It was based on food costs in the 1960s, using a rule of thumb that these were one-third of a family’s budget. Today’s FPL is, in essence, the cost of food for a family in the 1960s multiplied by three and adjusted for inflation. This rickety measure undergirds America’s entire welfare system, determining the flow of hundreds...