On September 26, 2013, the conservative dominate U.S. Congress passed a Farm Bill which cuts $40 Billion from SNAP over the next 10 years.
The Conservative Principle/Rationale behind these cuts are:
-Reduce Laziness and Government Dependency
-Eliminate Fraud, Waste, Abuse in Government
Before we examine the current status of SNAP, let’s review is historic purpose and key legislative alterations.
First implemented in 1939, the Food Stamp Program (FSP) was not originally designed to feed the poor. It was instead intended to save our agricultural sector from an impending economic collapse created by huge surpluses of perishable food supply. By purchasing these surpluses and distributing them to the poor, the U.S. government injected demand, rescued this fundamental pillar of our economy, and generated substantial economic stimulus. A secondary outcome just happened to be that poor people could eat.
For decades, the FSP remained relatively stable, covering about 4 million people. Then, in the 1970s, under Presidents Nixon and Ford, the FSP expanded dramatically via increased rural distribution and eligibility.
-P.L. 91-671 National Eligibility and Work Requirement Standards
-P.L. 93-86 Required States to Expand Services to all Jurisdictions
-P.L. 93-347 Authorized USDA to pay 50% of State Costs
This surge in recipients triggered a backlash in outrage over waste, fraud, and abuse. Subsequently, the Carter Administration passed The Food Stamp Act of 1977, which brought massive savings in reforms by the following mechanisms:
– Established Statutory Income Eligibility Guidelines at the Poverty Level
– Penalized Households whose Heads Voluntarily Quit Jobs
– Restricted Eligibility for Students and Aliens
– Qualifying Stores Must Sell a Substantial Proportion of Staple Foods
– Right to Submit Applications on Day1 – and 30 day Processing Standard
Despite these reforms resulting in an extremely efficient cost per recipient, the overall expansion of FSP into new jurisdictions (primarily central U.S. rural areas) increased the total recipients by 1.5 million, thus increasing the total cost of the program.
To further contain costs (the program was now ~10 billion/yr), President Reagan enacted the following additional reforms:
– Annual rather than Semi-Annual benefit adjustments
– Counted income contributions from non-elderly siblings and parents
– Counted retirement accounts as income
– Increased penalties for those voluntarily leaving the labor force
– Gave states option that beneficiaries prove active job searching
Under these reforms, the number of recipients certainly decreased, but it turns out these were children and seniors who were now going hungry. This prompted Reagan to re-expand services to children and the elderly, while pairing this with even more severe penalties for non-working adults.
The other reform enacted under Reagan was a transition from paper stamps to EBT. That’s right. Reagan was the one who first allowed poor people to have dignity while using the FSP. But this was not the reason why he transitioned to EBT.
The old paper stamp system was impossible to regulate. Stamps could be sold or traded or used by people who were not the intended recipients. There was also no way of carrying over monthly balances not used by paper stamps (even though the government had already paid the full cost of the stamp). The EBT solved both of these major waste/fraud/abuse issues.
Under President Clinton’s first term, FNP was expanded to cover more children, particularly those from single parents not receiving child support. In his second term, however, Clinton passed one of the largest restrictions on FNP benefits in the Personal Responsibility and Work Opportunities Reconciliation Act of 1996. Key components of this bill include:
– Eliminated the vast majority of LEGAL immigrants from eligibility
– Placed 3 month cap on services for unemployed able-bodied adults
– Reduced maximum benefits, and froze minimum benefits
– Enhanced means-testing provisions
– Shifted funding away from food and into employment/training
– Disqualified people with arrest record or drug possession record
Very shortly after this Clinton legislation, however, President Bush and the republican congress passed the Food Security and Rural Investment Act of 2002, which made the following key changes to what became referred to as SNAP.
– Reduced payment inaccuracies by improving quality control
– Reduced funding for those employment and training programs
– Expanded LEGAL immigrant eligibility (kids, disabled, 5+ years in U.S)
The overall impact of these collective reforms was the leanest and most cost efficient program in the Federal Government, with 95% payment accuracy and appropriate utilization. At the same time, however, primarily because of increasing income inequality and expansion to legal immigrants, the number of recipients dramatically increased from 17.2 million in 2000, to 29 million by 2008.
Then the economic collapse of 2007-2008 happened.
Enrollment exploded from 29 million to 46 million as waves of Americans suddenly found themselves in abject poverty and in desperate need of a safety net. To keep these people from dying of starvation, SNAP increased in cost from 37 billion/yr in 2008 to 78 billion/yr in 2012. In other words, about the same amount of money that one company, Apple Inc., does not pay in taxes every year.
In response to this cost explosion, President Obama passed further cost containment measures. Chief among these were…
– Reduce admin overhead by monthly payments instead of higher frequency payments
– Disqualifications for recipients caught selling food or using EBT for cash
– Increasing penalties for retailer violations
And that brings us to today. We have ~46 million people using a program with an annual cost around $78 billion. SNAP is objectively one of most efficient per person utilization programs with the least amount of waste/fraud/abuse of virtually any government program. Since it’s inception in 1939, the expansion of recipients can best be attributed to two key mechanisms: 1) Expansion of benefits and qualifications under Republican Presidents, and 2) Increased poverty (thus more people qualifying under fixed terms) during Democratic President’s early office.
This historic review already reveals three major hypocrisies within conservatives. The first hypocrisy is that these supposedly fiscally conservative republicans were actually more instrumental in expanding benefits and qualifications, thus increasing the cost of the program and government spending. The second is that antithetical to what conservative would have you believe, SNAP actually has the least amount of waste/fraud/abuse of any major government social safety net program. The third is that while conservative argue that the EBT should be repealed because it allows recipients to have dignity, Ronald Reagan was actually the President who started the EBT program, because it was and continues to be an essential mechanism in minimizing waste/fraud/abuse.
In regard to the other Republican hypocrisies, first let’s delve into the hypocrisy that SNAP must be cut in order to incentivize employment and reduce laziness and dependency. First of all, I’ve already shown that FSP/SNAP has been reformed to only allow 3 months of benefits for non-working able bodied adults, states are already allowed to require proof of active job searching, and recipients can already be disqualified for arrest or drug possession records.
But these adults only represent a small minority of potential SNAP recipients. The vast majority of recipients aren’t even employable adults. The largest three groups of SNAP recipients are children 44%, disabled 12%, and retired seniors on fixed income 11%. Cutting SNAP for these people does nothing to incentivize work, it merely hurts people with no other means of meeting their most basic needs.
The last major area of hypocrisy (there are many more, but I’m trying to keep this blog post manageable in size) relates to the issue of the debt and the deficit.
On its surface, SNAP appears to be a large government expense contributing to the annual deficit and cumulative debt, but this analysis falls short of understanding the downstream economic impact of people using these benefits. Governmental (CBO, USDA) and non-governmental economic analyses alike are in virtually unanimous agreement that SNAP and unemployment benefits actually result in $1.30 – $1.89 in economic activity and value for every dollar spent. In other words, we not only recoop our expenditure but make an additional $0.30 – 0.89 on the dollar. (Primary data from USDA study and Moody study by Mark Zandi). It is also well known that (at a population level) SNAP and unemployment benefits actually shorten the time that people are unemployed or in poverty. Of course there will always be individual cases of people using their $129/month in SNAP benefits to stay unemployed and in abject poverty, but the reality is that these people are a rare exception to the rule, and actually tell the exact opposite story from what the program does for our overall population.
Lastly, it is not only hypocritical for conservatives to argue that we should cut SNAP benefits to reduce our deficit (when SNAP is actually instrumental at stimulating economic growth) but it is also disingenuous when there are so many other less economically beneficial / survival-necessary programs to cut. And this is just on the spending side of debt and deficit. There is little to no talk about the revenue side, despite us having the least amount of government revenue in decades. To illustrate just how important the revenue side of this equation is, if just one company, Apple Inc., was required to pay its taxes instead of offshoring or finding loopholes, we would have more than enough revenue to pay for SNAP at it’s current $78 billion/yr cost. (But BTW, should we take actions towards reducing poverty, the cost of the SNAP would decrease because people with a living income would no longer qualify).
And that is the final and most disingenuous point. Rather than cutting SNAP funding, conservative could be focusing their efforts in creating jobs with a living wage (public and private), since this would not only be a boom for our economy, it would also reduce the needed funding for SNAP by lifting people out of poverty. This is the correct approach to shrinking the SNAP program – not by cutting services for elderly, disabled, and children, but by actually lifting people out of poverty so that they no longer qualify for the program.
Primum Non Nocere