WHEN the dismal news came on July 8th that the unemployment rate had risen fractionally to 9.2%, both Republicans and Democrats declared the data proof of the folly of the other party’s policies. How, Republicans asked, could Democrats even consider raising taxes when the economy is so weak? How, Democrats retorted, could Republicans advocate big cuts in the safety net when so many Americans are in desperate need? As the haggling over raising the legal limit on the federal government’s debt reaches a climax (see Lexington), the feeble state of the economy is making the budgetary trade-offs involved ever less appealing.
Take food stamps, a programme designed to ensure that poor Americans have enough to eat, which is seen by many Republicans as unsustainable and by many Democrats as untouchable. Participation has soared since the recession began (see chart). By April it had reached almost 45m, or one in seven Americans. The cost, naturally, has soared too, from $35 billion in 2008 to $65 billion last year. And the Department of Agriculture, which administers the scheme, reckons only two-thirds of those who are eligible have signed up.
Republican leaders in the House of Representatives want to rein in the programme’s runaway growth. In their budget outline for next year they proposed cutting the amount of money to be spent on food stamps by roughly a fifth from 2015. Moreover, instead of being a federal entitlement, available to all Americans who meet the eligibility criteria irrespective of the cost, the programme would become a “block grant” to the states, which would receive a fixed amount to spend each year, irrespective of demand. The House has also voted to cut a separate health-and-nutrition scheme for poor pregnant women, infants and children, known as WIC, by 11%. (The Senate, controlled by the Democrats, is unlikely to approve either measure.)
Advocates for the poor consider such cuts unconscionable. Food stamps, they argue, are far from lavish. Only those with incomes of 130% of the poverty level or less are eligible for them. The amount each person receives depends on their income, assets and family size, but the average benefit is $133 a month and the maximum, for an individual with no income at all, is $200. Those sums are due to fall soon, when a temporary boost expires. Even the current package is meagre. Melissa Nieves, a recipient in New York, says she compares costs at five different supermarkets, assiduously collects coupons, eats mainly cheap, starchy foods, and still runs out of money a week or ten days before the end of the month.
It is also hard to argue that food-stamp recipients are undeserving. About half of them are children, and another 8% are elderly. Only 14% of food-stamp households have incomes above the poverty line; 41% have incomes of half that level or less, and 18% have no income at all. The average participating family has only $101 in savings or valuables. Less than a tenth of recipients also receive cash payments from the Temporary Assistance for Needy Families programme (TANF), the reformed version of welfare; roughly a third get at least some income from wages.
Spending on food stamps has risen so quickly because, unusually, almost all the needy are automatically and indefinitely eligible for them. Unemployment benefits last for a maximum of 99 weeks at the moment, and that is due to fall to six months from next year. No one knows exactly how many people have exhausted their allotment, as the government does not attempt to count them. But almost half of the 14m unemployed have been out of a job for six months or more, and so would no longer qualify for benefits under the rules that will apply from January 1st.
Medicaid, America’s main health-care scheme for the poor, does not cover childless adults in most states, no matter how destitute they are. Housing assistance is not an entitlement, and only a small fraction of those who qualify for it actually receive it. The food-stamp programme has a rule limiting able-bodied, childless adults to three months on food stamps every three years—but it is suspended at times of high unemployment, leaving only recent immigrants and those convicted of drug offences to go hungry.
Stacy Dean of the Centre for Budget and Policy Priorities (CBPP), a think-tank, argues that the rapid growth of food stamps in recent years is a sign that they are working as intended, responding promptly to hard economic times. In contrast, she points out, block-grant programmes grow much more slowly when times are tough, since funding for them does not increase in line with demand. Food-stamp participation rose by 45% between December 2007 and December 2009, CBPP calculates, while the number of families receiving cash grants under TANF, a block-grant scheme, rose by just 13%.
Food stamps also help stimulate the economy more than other forms of government spending, points out Jim Weill of Food Research and Action Centre, a charity, since their recipients are so poor that they tend to spend them immediately. When Moody’s Analytics assessed different forms of stimulus, it found that food stamps were the most effective, increasing economic activity by $1.73 for every dollar spent. Unemployment insurance came in second, at $1.62, whereas most tax cuts yielded a dollar or less. All the talk in Washington these days, however, is of cutbacks—even for the hungry.
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