There Are Plenty of Ways to Cut the Budget. Food Stamps Shouldn’t Be One That Congress Can Agree On.
After two years of debate and foot-dragging, the House and Senate have finally agreed on a farm bill—one that comes with a ten-year price tag of $956 billion. Despite being widely referred to as “the farm bill,” most (almost 80 percent) of the spending in the Agriculture Act of 2014 (its official name) is actually for nutrition programs. And most of that 80 percent goes to fund the Supplemental Nutrition Assistance Program (SNAP, also known as food stamps).
This isn’t to say the other $200 billion in the farm bill—the sections that more closely relate to actual farms—is not worth commenting on. It is. Among other controversies, a vastly disproportionate share of crop insurance subsidies —which were significantly increased in the bill—accrues to the largest (and richest) farm operators.
The big controversy within the bill, however, is the $8.5 billion cut from SNAP over the next decade. The cuts come from a tightening of the eligibility and benefit rules. Many of these are small-bore: prohibiting deducting the costs of medical marijuana when determining a household’s discretionary income and thus its level of SNAP benefit, disallowing households with large lottery or gaming winnings from receiving SNAP benefits, ensuring violent ex-felons receive benefits only if they follow the terms of their parole, and so on. (CBPP has an excellent rundown of such provisions.)
However, the vast majority of SNAP benefit cuts come from what has been characterized as the closing of a program loophole. As SNAP benefits are based on a household’s income minus some mandatory expenses, there is an extra deduction for households who spend more than half their income on housing and utilities. Under federal law, households that receive benefits from the Low Income Home Energy Assistance Program (LIHEAP) are assumed to pay for their own utilities, and at a rate set by each state. This rate is factored into recipients’ housing costs for the purpose of calculating their SNAP benefits. In an effort to decrease paperwork and administrative burdens, households that receive LIHEAP benefits do not have to show heating bills to prove they (and not their landlords) pay for heating or cooling. This has led 16 states and DC to provide low-income households with a nominal LIHEAP benefit (as low as $1), even if those households do not pay their own utility bills. In this manner, states are paying a small cost to increase federal SNAP benefits for their citizens. In closing this loophole, the new farm bill will cut benefits for 850,000 households by about $90 a month.
In isolation, this change appears reasonable: it stops states from gaming the system to get more federal money for their citizens, and it evens benefits across states. However, when taken in the context of loopholes that could theoretically be closed in the name of deficit reduction, it is striking that the one part in the budget Congress can actually agree to cut is SNAP benefits. In 2012, these SNAP benefits kept 4 million Americans out of poverty. Further, despite Republicans’ efforts to demonize the program, it is incredibly lean, efficient, effective, and targeted at delivering economic relief to those who need it most. In 2011, according to the USDA, 83 percent of SNAP-receiving households lived in poverty; 39 percent had zero net monthly income; and 83 percent of benefits went to households that included a child, an elderly person, or a disabled person. Moreover, there are simply fewer sources of federal aid than in prior decades: the percentage of SNAP households that received traditional welfare benefits dropped from 42 percent in 1990 to 8 percent in 2011. Further, SNAP benefits, at just $1.48 per meal, are hardly lavish. Finally, SNAP routinely ranks as the one of the most effective policies that can be enacted for supporting economic activity and job growth in economies operating below potential (like ours is today). Put simply, people don’t save SNAP benefits—they spend them. And given that it’s lack of spending that continues to put downward pressure on generating a full recovery, cutting SNAP benefits isn’t just cruel, it’s stupid as well.
If anything, we should be expanding, not cutting, programs like SNAP.
Are there “loopholes” that could be found to make up for not cutting $8.5 billion over 10 years from SNAP? Ones that would not inflict pain on the most economically vulnerable?
Well, here’s one: ending the “carried interest” loophole—a giveaway to managers of hedge fund and other investments—would save $9 billion over ten years. And even the huge increase in crop insurance subsidies in the farm bill itself, which accrue disproportionately to rich households, could have been pared back to finance maintenance of SNAP benefit levels.
With Congress set to send the bill to the president for his signature as soon as tomorrow, it’s hard to imagine a clearer sign of Washington’s policy dysfunction than the fact that the one thing Congress can actually agree on is taking money from families that need the help of food stamps to get by.