Special Report

Obama’s Food Stamp Fetish

Free food for one seventh of the population yet we're not getting richer.

By 2.28.12

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The food stamp program, part of the Department of Agriculture, is pleased to be distributing the greatest amount of food stamps ever.

Meanwhile, the Park Service, also part of the Department of Agriculture, asks us to "Please Do Not Feed the Animals" because the animals may grow dependent and not learn to take care of themselves.
-- Recent viral e-mail (author unknown)

The irony is amusing but the implications for our nation's finances and essence are not.

A USDA web page on the Food Stamp Program (FSP), officially called the Supplemental Nutrition Assistance Program (SNAP), offers some outdated data:

• The FSP serves approximately 1 in 11 Americans every month.

• 67 percent of those eligible for the Food Stamp Program (FSP) participated in 2006, up from 65 percent in 2005 and 54 percent in 2001.  This demonstrates continued growth in the proportion of eligible people participating for the fourth consecutive year.

• Over 10 million children and low-income people have been added to the program since 2001 and we continue to promote FSP participation aggressively among eligible people.

• America invested $34.9 billion in the FSP in FY 2008.

• Currently, just over 27.7 million low-income people benefit from the FSP every month.

Note the use of the word "invested" when it comes to this welfare program. Even Robin Hood didn't consider himself an investor.

Democrats and others who benefit directly or electorally from government transfers of other people's money suggest, and may actually believe, that welfare has a positive impact on the economy, and this is exactly what the USDA claims:

• Every $5 in new food stamp bnefits generates almost twice as much ($9.20) in total community spending.

• If the national participation rate rose just 5 percent, 1.9 million more low-income people would be able to spend an additional $1.3 billion on healthy food. This would generate $2.5 billion in new economic activity nationwide.

This explains why the Obama budget looks like it does. They literally believe in a free lunch.

Still, while the USDA appears proud of how many handouts it makes, it is either feeling stung by Newt Gingrich's calling Barack Obama a "food stamp president" or it's extremely lazy: The data reported on its web page is from 2008, not showing the explosion in growth of users and cost of the food stamp program during the Obama administration.

The number of people who got food stamps in November, 2011 was 46.3 million, an increase of more than 60 percent under the reign of Obama and more than 160 percent since 2000 (the year with the lowest number of food stamp recipients since 1989). According to Bloomberg News, "The number of Americans receiving assistance under the program set records every month from December 2008 until June 2011 and has changed little since September."

The proportion of Americans taking food stamps is closer to 1 in 7 than 1 in 11. Think about that for a moment.

In Fiscal Year 2011, the cost of SNAP was about $78 billion, more than doubling the FY 2008 cost, with $26 billion of the increase due to temporary provisions of the 2009 "stimulus" bill. But lest you take comfort in the word "temporary," government spending on food stamps rose by 6.9 percent in the year from November 2010 to November 2011 despite a 1.1 percent drop in the unemployment rate during that time. And Bloomberg reports that food stamp program costs in 2013 will remain 17 percent higher than in 2011.

Over the last three years, the increase in SNAP participants has substantially outpaced both the increases in the number of unemployed and the number of people living below the poverty line as the Obama administration spends taxpayer money encouraging Americans to take, and perhaps become addicted to, the government cheese.

Clearly this administration does not accept Ronald Reagan's wisdom that "We should measure welfare's success by how many people leave welfare, not by how many are added."

The New York Times recently noted, with an unmistakable hint of approval, that "Americans are relying on government benefits more than ever before" and that "even critics of the safety net increasingly depend on it." Team Obama is smiling with every additional handout-taking voter.

In its analysis of SNAP, the liberal Center on Budget and Policy Priorities promotes the Keynesian "positive multiplier" view of welfare: "Moody's Analytics estimates that in a weak economy, every $1 increase in SNAP benefits generates $1.72 in economic activity. Similarly, the Congressional Budget Office rated an increase in SNAP benefits as one of the two most cost-effective of all spending and tax options it examined for boosting growth and jobs in a weak economy."

The chief economist at Moody's, Mark Zandi, has been a leading cheerleader of "stimulus," quantitative easing, and other Keynesian policy suggestions despite repeated failures throughout history, including over the past few years, of government pump-priming. (Zandi, a Democrat, was a top economic advisor to John McCain, which suggests how little improvement we might have had under a McCain presidency versus an Obama presidency.)

Nancy Pelosi has claimed, perhaps based on a USDA study, that $1 redistributed through food stamps generates $1.79 in economic activity. (The $9.20 gained for $5 spent, as the USDA website claims, represents a 1.84 multiplier. This number has been replaced in the USDA's thinking by the 1.79 multiplier from the more recent study, but remains on the USDA website.)

Of course, if any of these numbers were true, government should redistribute much more income into food stamps and make us all fat and happy (though Michelle Obama would clearly object, at least to the former)

As Harvard economist Robert Barro notes, the Keynesian multipliers being offered to us by supporters of the welfare state are based on economic models, not on actual outcomes: "Theorizing aside, Keynesian policy conclusions, such as the wisdom of additional stimulus geared to money transfers, should come down to empirical evidence. And there is zero evidence that deficit-financed transfers raise GDP and employment—not to mention evidence for a multiplier of two."

The Congressional Budget Office estimates that the SNAP participation rate and costs to the government will decline over the next decade as employment improves, but even at a projected 5.3 percent unemployment rate in 2022, food stamp program costs are only expected to decline less than 10 percent, to $72.6 billion, more than double the 2008 level. This is due to assuming a 20 percent increase in monthly benefits offsetting most of 27.4 percent drop in monthly food stamp recipients. Even that modest $8 billion drop in SNAP spending will be more than offset by a $10 billion (54 percent) increase in child nutrition programs, primarily the National School Lunch Program, as James Madison no doubt intended. Now it's not just a free lunch, it's a free lunch "for the children."

In other words, even when the economy gets better, even when employment improves and poverty declines, the welfare state ratchet will keep the costs to the taxpayer from dropping.

As the Cato Institute's Michael Tanner argues, "We are becoming a society that makes poverty more comfortable instead of doing what we need to reduce poverty. Food stamps is about taking people who are poor and enabling them to live better poor instead of focusing on things like job creation which actually gets people out of poverty."

For those who accuse opponents of the growing use of food stamps of racism -- as NBC's David Gregory did to Newt Gingrich -- the number of white householders receiving food stamps exceeds the number of black and Hispanic household recipients combined (based on 2010 data).

Food stamp spending represents a modest percentage of entitlement spending. But it represents the ever-increasing welfare state, the ever-growing sense among our citizens of entitlement, and the ever-shrinking understanding within the American soul of our Founding traits of self-reliance and voluntary private and family charity when self-reliance is insufficient.

Unlike the sign at the zoo cautioning us not to feed the animals, Americans are being taught that distributing food to each other through the tax code is economically wise and socially just. But, notwithstanding the attempts of the Obama administration to make us dependent on federal subsidies for everything from health care to energy to mortgages, we are not caged animals reliant on the generosity of the zookeeper for our very survival. Allowing government to treat us as if we are is a giant step down the road toward national insolvency. More importantly, it is an insult to our Founding Principles and an assault on our very humanity.

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About the Author
Ross Kaminsky is a self-employed trader and investor and is a senior fellow of the Heartland Institute. He is the host of The Ross Kaminsky Show on Denver's NewsRadio 850 KOA on Saturday mornings from 6 AM to 9 AM. You can reach Ross by e-mail at rossputin(at)rossputin(dot)com.