Food Stamps, Poverty, and the Budget

July 28th, 2012 at 10:36 pm

Took a run with the great Diane Rehm this afternoon, listening to her show on food stamps, or SNAP as it’s now called (Supplemental Nutritional Assistance Program).  I thought it was a good discussion, and particularly appreciated the input of Jim Weill, a longtime anti-hunger warrior (and old pal).  I thought he wielded a powerful combination of facts, passion, and common sense.

All the panelists generally seemed to agree on the program’s merits (more on that in a moment), though Doug Besharov, a scholar of poverty issues and safety net programs, thought it’d be better just to give people the cash value of food stamps since it’s largely fungible anyway.

I get the economics of that—consumer sovereignty and all that—but while that might make good economics, it’s bad political economy.  Once it’s cash, it’s welfare, and thus far more vulnerable to cuts.  Though conservatives gun for noncash benefits too (e.g., their idea to block grant SNAP is a stealth benefit cut), such programs are a bit more insulated relative to pure cash transfers.

Listen to the caller at 41:40.  I thought she painted a useful picture of what staying on the food stamp rolls is like for a low-income, working family today.

So what’s so great about SNAP?  Three things: it’s strongly countercyclical, highly effective against poverty, and has strong multiplier effects.  TANF has largely lost those functions—welfare caseloads were quite inelastic during the Great Recession.  The EITC continues to deliver strong benefits if you’re working, but if you’re not, it doesn’t help you.

But SNAP expanded with need and its growth is slowing as the economy improves.  The figure below gets at both the counter-cyclicality and anti-poverty effectiveness of SNAP (et al, as you’ll see).  The bottom two lines show SNAP caseloads and poverty, both as a share of the population.  Note how they both rise in sync.

Sources: Census Bureau and FNS

But, wait, you say.  If SNAP helped to ameliorate poverty, why does poverty keep rising?

Because that measure of poverty fails to include SNAP benefits.  The top line in the figure features an alternative measure of poverty–ALTPOV–that includes SNAP, along with other non-cash and post-tax benefits (see here for more on these measurement issues).  While that rate is higher, it hardly goes up at all over the recession, a strong indicator that the safety net was more effective than is commonly thought.

One final point.  Some of the discussion on the radio show was about proposed budget cuts to the SNAP program, and someone stressed the point that we need to cut spending to get the budget in line (see here re the deets).  Yeah, well…not SNAP, OK?  Long before we go after highly effective programs that help poor people in an economy that hasn’t broken their way for years—since well before the recession (remember, poverty rates rose in the last expansion)—we need to get some serious revenue  s on the table, starting at the top of the income scale, as per the President’s proposal, now backed by Senate D’s.

Just sayin’.

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One comment in reply to "Food Stamps, Poverty, and the Budget"

  1. Rima Regas says:

    There is nothing to disagree with you here, Jared. SNAP, Food Stamps, whatever you want to call it, should be made available to more people, and the amounts allowed per family should be increased. Food prices are high and about to get more expensive due to the drought. No citizen, young, middle aged or old should be hungry and we have a lot of hungry people. Recent study reports I saw here and there show that there are many more children who are hungry since the start of the recession. So, if anything, the safety net is missing people and that is a shame.

    One thing no one ever brings up is that you cannot buy necessities such as toilet paper, shampoo, toothpaste and other things everyone needs. That could easily be corrected since all the POS systems where people use their food stamp cards are able to distinguish between the various types of purchases. Why those items are not allowed is beyond me. So, next time ya’ll donate food for the hungry, please include some toiletries.