This column contains a correction.
Today, the U.S. Census Bureau released its benchmark annual data on income, poverty, and health insurance for 2016. Building on historically strong gains in 2015, the data show that Americans continued to see improvements in economic security in 2016. The official poverty rate declined to 12.7 percent, with African Americans, Hispanics, and children experiencing especially dramatic decreases. The typical American household saw a raise of $1,809, with the median income increasing to $59,039. And rates of health insurance coverage nudged up slightly to 91.2 percent, the highest rate in U.S. history.
Yet proposals in President Donald Trump’s and congressional Republicans’ budgets to gut programs that ensure families can afford the basics—including slashing Social Security, cutting nutrition assistance, eliminating energy assistance, dismantling Medicaid, and more—would put these gains at risk. In fact, recent Center for American Progress analysis shows that if just three of Trump’s draconian budget cuts had been in place in 2015, 2.3 million more Americans would have been poor. Coupled with tax proposals that are largely giveaways to the wealthiest Americans, congressional Republicans and President Trump are poised to do tremendous damage.
Here are three ways today’s data make clear that public policies are critical in increasing Americans’ economic security—and how much is at risk during budget debates this fall.
1. Policies matter to ensure basic living standards for families
Programs that ensure basic living standards were vital to keeping families out of poverty in 2016. According to the Census Bureau’s Supplemental Poverty Measure (SPM)—preferred by researchers because it includes government-provided assistance alongside income—these programs cut the poverty rate almost in half in recent years. Last year, Social Security protected more than 26.1 million people from poverty, while working-family tax credits protected nearly 8.2 million, and the Supplemental Nutrition Assistance Program (SNAP) protected nearly 3.6 million people.* President Trump and congressional Republicans have vowed to cut these and other essential programs families rely on, which would be disastrous for families’ ability to make ends meet.
If policymakers were serious about boosting economic well-being for American families, they wouldn’t seek to slash health care, education, nutrition, and other basic necessities. Rather, they would enact the policies Americans need to get ahead—policies that raise wages, create jobs, improve overtime protections, help close pay gaps, support families’ efforts to balance work and caregiving responsibilities, increase access to health care, and ensure that families can meet basic living standards.
2. Income inequality remains near historic highs
Despite an improvement in the typical household’s income and a narrowing of the gender wage gap in 2016, policymakers must do more to make the economy work for everyday Americans. The new data show that more than 95 million Americans lived paycheck to paycheck in 2016—with incomes less than twice the poverty line—and that income inequality remained near historic highs. Indeed, the top 5 percent of households captured 22.5 percent of all income—more than seven times the share captured by households in the lowest fifth of the income scale.
Yet policymakers’ current tax and budget proposals are poised to worsen this inequality. Trump’s April 2017 tax plan would provide enormous tax cuts, more than 60 percent of which are estimated to benefit the wealthiest 1 percent of Americans, all while slashing programs families rely on to make ends meet. Rather than increasing income inequality, policymakers should ensure that both the wealthy and corporations pay their fair share.
3. Rates of health insurance coverage are at an all-time peak
Today’s data release reveals that health insurance coverage hit a new high of 91.2 percent, up from 90.9 percent last year. Recent coverage gains are overwhelmingly due to the Affordable Care Act (ACA)—in particular, Medicaid expansion under the ACA—a fact starkly evident from large and growing disparities in coverage rates between states that have expanded Medicaid and the 19 that have not yet done so. Health insurance coverage rates are more than 5 percentage points higher in states that have expanded Medicaid compared with those that have not. These gains would be eroded by congressional Republicans’ efforts to undermine the ACA; states’ actions to limit access to Medicaid; and the Trump administration’s attempts to destabilize insurance markets—such as the recent 90 percent cut to the ACA’s advertising budget.
Rather than dismantling health care—which would be devastating for millions of Americans, including veterans and people with disabilities—policymakers should be focused on stabilizing insurance markets and improving coverage for all Americans.
While many families are still struggling, today’s data show that Americans are on the right track. In 2016, due in large part to smart policy decisions, poverty declined, incomes rose, and health insurance coverage increased. But President Trump’s and congressional Republicans’ budget proposals put these gains at risk by recommending steep cuts to critical programs that help families afford the basics. Instead of pulling the rug out from underneath families who are trying to make ends meet, policymakers should be proposing policies to help create jobs, raise incomes, and increase access to opportunity so that all families can thrive.
Katherine Gallagher Robbins is the director of family policy for the Poverty to Prosperity Program at the Center for American Progress. Rachel West is an associate director for the Poverty to Prosperity Program at the Center.
*Correction, September 28, 2017: This column contains a revision necessitated by a correction by the U.S. Census Bureau to the Supplemental Poverty Measure for 2016.