What is the biggest scam practiced by the U.S. government?  There are a lot to choose from.  But if the criterion is number of dollars stolen or wasted based on the scam, the winner has to be the so-called "poverty" rate, published by the Census Bureau. 

Today the reports on "poverty" put out by the Census Bureau are completely and thoroughly dishonest.  As Mary McCarthy famously said about Lillian Hellman, everything about them is a lie, including "and" and "the."

I do not think that the poverty measure began as a scam.  It was created in the 60s as a very crude way to get a handle on poverty in the sense of material deprivation.  The Census Bureau calculated the cost of a basic market-basket of food for a family of four, and multiplied by three to account for all other family expenses.  If a family did not have a level of income equal to three times the cost of the basic food budget, it was deemed to be "in poverty."  While the measure was crude, it was a bona fide attempt to get a handle on material deprivation.  Since then, the poverty threshold as originally set by this measure has been adjusted for inflation.   For 2011 the poverty threshold for a family of four with two children by this original measure was $22,881.

Over the succeeding years the government put in place numerous programs to alleviate material deprivation:  welfare, food stamps, public housing, Medicaid, school breakfast and lunch programs, etc., etc.  Means-tested anti-poverty programs today approach $1 trillion in annual spending.  Here is a report from the Heritage Foundation putting the total Federal, state and local spending on means-tested welfare programs for fiscal 2011 at $927 billion.  The report collects Federal data for some 79 programs.

For 2011 the Census Bureau reported 46.2 million, 15% of the population, in "poverty."  Both those figures are well up from the late 70s, when supposedly they were about 25 million and 12% of the population.

Wait a minute.  $927 billion of spending on 46.2 million people is over $20,000 per person, over $80,000 for a family of four.  That is higher than the median income for a family of four in the United States. and if simply distributed as cash would be nearly four times as much as necessary to get every single one of the 46.2 million out of material-deprivation poverty.  How could we possibly be spending all that money and the reported "poverty" goes up instead of down?

The answer is that the Census Bureau long ago decided that almost none of the government spending counts against the measure of poverty.   The measure of "poverty" turns only on "cash income."  All in kind benefits are excluded.  Just to give a few prominent examples of what is excluded:  food stamps, school lunch programs, Medicaid, all housing assistance.

There is nothing honest about the exclusion of in-kind benefits from the definition of poverty.  The main results of the exclusion are (1) the public thinks that the "poverty" rate is measuring something about material deprivation, but it is not, and (2) additional spending, even hundreds of billions of dollars of it, cannot ever make any dent in the poverty rate, even as the government spends more per family in poverty than the median income of a family of four in the entire country.

Even as the mainstream (and not so mainstream) media has fallen hook line and sinker for this scam, at least some scholars and think tanks have been onto it, and have been trying to demand from the bureaucracy some real numbers showing the impact of in kind benefits.  The GW Bush administration made at least some modest efforts to push for a new measure taking account of in kind benefits, but never actually implemented any reform.   Needless to say, the idea of honest numbers horrifies the poverty bureaucracy, not only in the Census Bureau but throughout the government, because of the potential to reveal the dishonesty and undermine the basis for the massive ineffectual spending.

But once the Obama administration came in, the bureaucrats knew that they had friends who would cover for them.  In January 2011 Obama's Census Bureau released information that they were considering various alternative measures, supposedly to take account of in kind benefits.  Then, last Wednesday (November 14) the Census Bureau released the results of their research on the "alternative measures".  Surprise!  Even with the inclusion of in kind benefits, the measure of poverty has increased!  Now the poverty rate is 16.1%

With the $927 billion of annual means tested anti-poverty spending, how can this possibly be?  Simple: the new measure of poverty is no longer even attempting to be an absolute measure of material deprivation, and now is explicitly a relative measure with respect to 33rd percentile of the population.  By the way, read their release and, for that matter, the full report, and try to figure that out.

They think they have dodged a bullet and have come up with something so impenetrable that no one will ever figure it out.  Now we can safely have a measure of "poverty" that has nothing to do with material deprivation, that can be used to sell the gullible public on ever more "anti-poverty" spending, and that can never go down no matter how much anti-poverty spending there is.

Mickey Kaus is onto the scam.  Is anyone else?