Does America, the richest country on earth, have a poverty problem? Are vast numbers of people

going without shelter or food? Are poor children suffering from malnutrition? If you read the

headlines, you might believe this is true. It's not. America's poverty crisis is fiction,

a myth manufactured to make us feel like we're not doing enough to

help the unfortunate. We should feel bad about our treatment of the poor. We are doing them a

terrible disservice, but not for the reason you think. So, where does this myth come from? It comes

from an accounting trick. Ready for this? The official measure of poverty does not include 88% of the welfare benefits low-income

families receive from the government.

Refundable tax credits for which the beneficiary receives a check from the Treasury, not counted.

EBT debit cards loaded with SNAP benefits? Not counted.

Benefits from over a hundred other programs,

including Medicaid and housing subsidies? The government doesn't count any of this as income,

even though in the real world it obviously is. Let's see how this plays out. The average household

in the bottom 20% of income earners receives, on average, annual government transfer payments of

about $45,000. When those transfer payments are counted as income, the poverty rate falls from

its official level of 12% to only 3%. The percentage of children living in poverty plummetes from

17% to 3%. Seniors, 9% to 1%.

Counting transfer payments also eliminates most of the differences in the poverty rate across races.

Census data from 2017 shows that 11% of whites and 21% of blacks are poor.

But when counting all transfer payments as income received, the relative poverty

numbers fall to 2% for whites and 4% for blacks. You'll find these numbers in much more in

Phil Graham and Donald Boudreau's excellent book, The Triumph of Economic Freedom. As Graham and

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