Special Report

Food Stamp Independency

After automatic cuts today, a good reason for Americans to smile and say "Cheese!"

By 11.1.13

Today, the first-ever program-wide reduction in the Supplemental Nutrition Assistance Program (“SNAP”), also known as food stamps, will take place. The reduction amounts to $5 billion out of a program that spent nearly $80 billion in the most recent fiscal year, more than double what food stamps cost taxpayers when Barack Obama took office and more than five times the cost in FY2002.

Food stamp benefits are distributed to a shocking 47 million people, about 14 percent of all households in the United States, up more than two-thirds from five years ago despite the unemployment rate having dropped far below the worst months of 2009 and 2010.

Think about that: Nearly one out of every seven Americans gets the government cheese. That can only be good for those who distribute the Velveeta (or, for today's pampered and unashamed EBT recipients, perhaps a fine organic chèvre), lovingly keeping millions of Americans as their little pet mice. We’re not even a nation of sheep anymore; we’ve been downgraded to rodents, hoping to be fed by our benevolent government keepers. Maybe we’ll even get over-sized Habitrails one day.

This increase in dependency is a specific goal of the Obama administration, with the USDA giving bonuses to states for “efficiency” in adding more people to the food stamp welfare rolls. In 2011, Oregon bragged of a $5 million “performance bonus” for increasing SNAP recipients by 60 percent over three years.

Contrary to willfully ignorant reporting describing today's reductions as "a move by congress," these automatic “cuts” represent the end of a temporary boost of 13.6 percent in SNAP benefits enacted through President Obama’s 2009 stimulus, which failed to stimulate anything other than the growth of government and dependency -- again, precisely the goal of this administration.

Due to the reduction, according to CBS News, “the maximum payment for a family of four will shrink from $668 a month to $632, or $432 over the course of a year.” In other words, program participants will see a modest cut which was always intended to take place at the end of a temporary boost in benefits (despite Reagan’s warning that “nothing lasts longer than a temporary government program”).

Yet panic-stricken liberals are warning of -- and perhaps hoping for -- riots.

Fox News has reported that the Department of Homeland Security is wasting $80 million taxpayer dollars to protect government buildings from the violence of those living off the forced generosity of others when that generosity is slightly reduced.

This has to stop.

We are not a nation of impoverished peasants living in straw huts, desperate for just enough kindness from the czar to allow us to survive, albeit cold and hungry, through another gray winter, while we listen hopefully to Bolsheviks promising to free us from bitter serfdom.

We are not a nation of mice, helpless in our cages but for the magical hand that makes cheese appear in our bowl.

And we are not a nation accustomed to seeing our fellow citizens’ self-worth destroyed by being led into the opiate of dependency -- at least not on this scale.

Separate from discussions of the importance of freedom, the immorality of redistribution, and the exceptionalism and self-reliance that once defined the American character, an economic debate also surrounds the food stamp program.

It's one thing for Nancy Pelosi, economoron that she is, to suggest that food stamps provide economic stimulus. Back in 2010, the lunatic leftist gave us this piece of economic wisdom: "It is the biggest bang for the buck when you do food stamps and unemployment insurance. The biggest bang for the buck."

But it's something else when a financial reporter buys unquestioningly into that obviously ridiculous argument.

In a piece called "Food stamp cuts will hurt more than you think," Yahoo! Finance reporter Jeff Cox gives us this gem of economic idiocy:

Programs such as SNAP have what economists call a "multiplier effect"--in other words, a dollar given to an entitlement recipient has amplified economic benefits. In this case, those consist primarily of the grocers who benefit when food stamp users shop in their stores. The estimated multiplier effect for food stamps is as high as 2 to 1.

Cox, who republished this story on CNBC’s website, is regurgitating a myth perpetuated by the left and seemingly accepted by an economically ignorant public (including, obviously, financial reporters who should know better).

Particularly annoying about the myth, beyond the fact that it is used to support harmful public policy, is that it is so obviously impossible.

First, food stamp money is simply redistributed from other Americans, either by taxing their earnings today or by deficit spending and taxing our children's future earnings. Which means that any positive economic effect is offset by an equal negative economic effect, some immediately and some as a wet blanket on the next generation's economic opportunity.

Second, if it were the case that food stamps have a miraculous positive multiplier, not only should we then put the whole country on food stamps, we should also use rent stamps and gasoline stamps and grande Frappucino stamps. Economic growth would skyrocket! Government revenue would surge so much from GDP growth that we could slash tax rates and still leave government with more revenue than it's taking in today, while we all get rich at the same time.

In 1848, the great French economist Frédéric Bastiat warned against the Pied Pipers of Redistribution:

There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen.

Yet this difference is tremendous; for it almost always happens that when the immediate consequence is favorable, the later consequences are disastrous, and vice versa. Whence it follows that the bad economist pursues a small present good that will be followed by a great evil to come…

It is simply and obviously impossible for redistribution to create important positive economic effects, which is also why Obama's ginormous stimulus package failed, why cash-for-clunkers failed, and why every Keynesian economic program ever attempted has failed.

Economic benefits arising from theft (also called taxation), even if the confiscated money is then redistributed toward ostensibly charitable ends, are no more likely to exist than is the Tooth Fairy.

In fact, there is no economic difference between the money I redistribute to my daughter when she loses a tooth and the money Democrats redistribute to people through the food stamp program (as long as my daughter then spends the money, such as on a candy bar in a grocery store, right behind a food stamp recipient). In both cases, one person's gain is another person's (my) loss. But at least when I act as the Tooth Fairy, we know that our money is going to someone we want it to go to.

I do not want Americans to starve in the streets, much less riot at the thought of getting less of my money. But even during the Great Depression, prior to the existence of the welfare state, we did not have either. The American people have been, and must return to being, proud, self-sufficient whenever possible, and voluntarily generous, rather than living in a statist world where Big Brother takes care of everything -- meaning citizens need care little for others, or even for themselves.

Today’s first-in-history nationwide reduction in food stamp spending is a welcome pause in the metastasizing culture of dependency intentionally brought on Americans since FDR trampled the Constitution to create a welfare state.

But it represents the beginning rather than the end of the conversation: In September, the House of Representatives passed the Nutrition Reform and Work Opportunity Act of 2013 which would cut almost $40 billion from food stamp spending over the course of a decade (representing less than a 5 percent reduction) by more rigorous means testing, eliminating certain duplicate benefits, ending bonus payments and SNAP advertising budgets, and cutting down on fraud and abuse within the program.

The Democratic-controlled Senate passed a measure that would reduce SNAP costs by about one tenth of that amount and, given the Democrats’ history when it comes to redistribution and their true interest in reducing the number of dollars flowing through the sticky fingers of bureaucracy, even that minuscule reduction is likely a mirage.

President Obama is pressing for a Farm Bill, which includes food stamp funding, to be agreed upon and passed as quickly as possible. The chasm between budget- and dependency-cutting House Republicans and Harry Reid’s Senate poverty pimps will be extraordinarily difficult to bridge. At least the worst case seems to be a halt to the rapid growth of American mice nervously awaiting their handout of government cheese.

Photo: Wikimedia Commons

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About the Author
After years as a self-employed trader and investor, Ross is now the host of “The Ross Kaminsky Show” on Denver's TalkRadio 630 KHOW, weekday mornings from 6 AM to 10 AM. He's a senior fellow of the Heartland Institute and an Objectivist/libertarian so you can't offend him by saying he's not sufficiently conservative. You can reach Ross by e-mail at rossputin(at)rossputin(dot)com.