No plausible rationale for reducing food assistance

“What’s for dinner?” should be a low-drama question, especially in the United States. Unfortunately, due to recent changes in the U.S. Department of Agriculture’s food assistance policy, there’s a very real possibility it could begin carrying all too much drama for many Americans.

Guest Writer

Eric Schuck serves as a professor of economics at Linfield College. He also heads the school’s Environmental Studies Program. A specialist in agricultural economics, he holds a doctorate in the field from Washington State University. He is entering his 13th year on the Linfield faculty. The views expressed here are his own.

At issue is a program known as “categorical eligibility” or CEP.

Established during the height of the Great Recession, it basically allowed people who were eligible to receive one category of federal assistance to automatically qualify for federal food support programs, including SNAP — the Supplemental Nutrition Assistance Program, commonly known as the food stamp program — and RFL — the free and reduced-price school lunch program. But the Trump administration is pressing the USDA for sharp cuts.

The root of the idea was simple: The last thing families in crisis needed was having to fill out more paperwork to get help. Besides, more often than not, folks eligible for one program were also eligible for others.    

Is the system flawless? No. It can lead to some families receiving assistance beyond what their income would typically allow. However, this doen’t exactly mean getting fat at the public trough.

Under standard SNAP eligibility rules, a family of four can qualify for benefits if its annual income falls under 130% of the federal poverty line, or about $33,000. Under categorical eligibility rules, the ceiling rises to 200% of the federal poverty line, or about $50,000, for families burdened with additional medical, housing or work-related childcare expenses.

Let that sink in for a minute. Most of us don’t consider paying for daycare so a parent can work to be a wild extravagance. Forcing people to choose between work-enabling childcare and food stamps is, to say the least, troubling.

More critically, SNAP and RFL work, and tremendously well.

Economists like to talk about “multipliers,” product of the financial ripple effect. It works this way: Every extra dollar spent by someone triggers additional spending by others as that dollar passes through various hands in the economy.

The most recent estimates by the USDA’s Economic Research Service peg SNAP’s multiplier at about 1.5. That is, every $1 of SNAP spending triggers about $1.50 of total spending across the larger economy.

By way of contrast, the Congressional Budget Office estimates the high income tax-cut multiplier — the additional economic activity from cutting taxes on higher income earners — tops out at about 0.9. And corporate tax cut multipliers usually range from 0 to 0.4.

As policies go, SNAP is one of those government programs that hits its target, thus proves particularly beneficial to the economy. Overall, it just doesn’t display the traits of a program that should be targeted for cuts.        

Even more problematic, the expected savings are relatively small. And they raise other questions.

The USDA projects the CEP changes it is proposing would save about $2.5 billion per year. That is less than 2% of the agency’s 2018 budget of $140 billion.

Unfortunately, other policy choices make it difficult to interpret this change solely as a cost-saving measure. Collapsing export markets for agricultural goods, due to US-imposed tariffs, have triggered increased spending on a whole range of crop support programs.

Soybeans alone have seen an increase in support payments on the order of $16 billion, including nearly $14.5 billion in direct payments to maintain farm income. And while no one wants to see soybean growers go bankrupt, the fact the USDA has the money to dramatically expand payments to one group, while simultaneously cutting payments to another, cannot help but raise eyebrows.

Whether intentional or not, simultaneously eliminating a successful anti-poverty program while substantially increasing farm subsidies gives the distinct impression that farmers matter more than the working poor.

This all calls for a pause.

CEP and SNAP achieve tremendous good in the economy, and the rationale for cuts seems decidedly suspect, given the dramatic increases in other portions of the USDAbudget. The USDA needs to provide a better explanation of what it’s doing to nutrition support programs.