The data paints a stark portrait of the American haves and have-nots at a time when unemployment continues to be stubborn. The number of poor Americans has reached a record 49 million in 2010, or 16 percent, according to the new Census data released last week. It showed poverty rates for the elderly, Asians and Hispanics and an increasing poverty rates for whites, Asians and working-age adults but falling for blacks and children. Interestingly poverty for Asians increased, from 12.1 per cent under the official measure to 16.7 per cent. Among non-Hispanic whites, it rose from 10 percent to 11.1 per cent. For the first time, the poverty rate for Hispanics eclipsed the rate among blacks, by 28.2 per cent to 25.4 per cent.

The new method depicts an overall US poverty rate of 16 per cent, versus an official 15.1 per cent, with an annual income of $24,343 for a family of four, compared with $22,113 under the official measure. The new figures released by the Census Bureau contrast with official poverty data, released in September that put the number of poor Americans at 46.2 million. Unlike the Census Bureau's official poverty measure, which focuses on the food budgets and cash wages of the poor, the new data covers government benefits such as food stamps and household expenses and regional differences in the cost of living. A silver lining is that the poverty rate for children declined, from 22 per cent to 18.2 per cent. The new method also showed poverty rates increasing for whites, Asians and working-age adults but falling for blacks and children.

This growing income gap is naturally worrying policymakers who are concerned about the effects on aggregate demand if wages continue to stagnate. Ironically, the new poverty figures are released just in time to show the success of many of the very programs that are being considered for budget cuts and scrutiny by the Super Committee.

The latest census figures underscore the challenges facing the US federal and state governments as they seek to reduce deficits. The findings also highlight the challenges facing Republicans and Democrats on a special congressional 'super committee' working on how to cut at least $1.2 trillion from the federal budget over the next 10 years. November 23 is the deadline for resolving this issue for the super committee. The new data have opened up a fresh debate over Social Security, Medicare and other programs to help the poor. The problem is that if planned cutbacks take effect and unemployment remains stubborn, life for the poor and middle class may become harder. This is at a time when the Democrats and Republicans have proposed hundreds of billions of dollars in cuts to Medicare despite intensive lobbying against reductions by interested groups.

American Economists have often held that the official poverty rates are inadequate but they differ widely on the best ways to calculate it. The official rate continues to assume the average family spends one-third of its income on food while those costs have shrunk to a much smaller share. Also the official formula fails to account for other expenses such as out-of-pocket medical care, child care and commuting.

Interestingly, a media research group released figures recently that the top tier of the Americans are doing well despite the recession. The group’s survey found that the number of households making more than $100,000 a year was 44.2million in 2011, compared with 44.1million the previous year.

New census data paint a stark portrait of the American haves and have-nots at a time when unemployment is the biggest problem. Yet what do these numbers actually mean? What does it mean to be poor in America? For most Americans, the word “poverty” suggests destitution and inability to provide a family with nutritious food, clothing, and reasonable shelter. But according to official definition, their living standards are far different from the images depicted by advocacy groups. It may surprise even the American public to know that a typical household defined as poor by the U.S. government had a car and air conditioning. The household had two color televisions, cable or satellite TV, a DVD player, and a VCR. The household had a refrigerator, an oven and stove, and a microwave, a clothes washer, clothes dryer, ceiling fans, a cordless phone, and a coffee maker.

Moreover, the home of the typical poor family was not overcrowded. In fact, the poor American had more living space than the average European. The poor American family was also able to obtain medical care when needed.

The fact that the average poor household has many modern conveniences and experiences no substantial hardships does not mean that the poor families do not face hardships. It is true that the poor families certainly struggle to make ends meet, but in most cases, they are struggling to pay for air conditioning and the cable TV bill as well as providing food.

The law makers will have to find ways and means to deal with this complex situation that the number of poor are on the increase, the rich are doing better with the gap widening to a worrying level. This is the major challenge for the US Congress now to come up with a realistic solution of how to cut the budget without affecting the poor. Apart from the White House, this is also a challenge which will face the presidential hopefuls in their debates in 2012. (IPA Service)