They can't treat their living expenses exceeding income as deductions, no.
But if:
* their sole proprietorship loses money in one year, it can be carried forward to offset taxes the next year
* they have net losses in investments, those can be carried-over to offset gains in other years
* any LLCs in which they are members have allocated losses, those can be carried-over against profits in later years
These are the ways a private individual engages in economic activity that are analogous to what a C-Corp does, and for these, the standard is essentially the same.
All true, the objection comes from the limits placed on individuals that don't apply to businesses. Businesses are allowed to "use up" all of their losses, both current year and carried forward, in a single year. Individuals are forced to arbitrarily carry forward losses when they still had income/cap gains that could have been deducted against.
