Mike Shedlock

Inquiring minds are digging into the alleged "Draconian Cuts" in Food Stamps as championed by the Daily Koz. Of course the Daily Koz is not alone in whining about "draconian" cuts.

Note: The food stamp program is now called "SNAP" Supplemental Nutrition Assistance Program.

"The Unthinkable"

On December 5, Greg Kaufmann, writer for The Nation wondered Why Is a Senate Democrat Agreeing to Another $8 Billion in Food Stamp Cuts?

On the same day that President Obama eloquently described his vision of an economy defined by economic mobility and opportunity for all, Senate Agriculture Committee Chairwoman Debbie Stabenow was busy cutting a deal with House Agriculture Committee Chairman Frank Lucas to slice another $8 to $9 billion from food stamps (SNAP), according to a source close to the negotiations.

“That was the first time in history that a Democratic-controlled Senate had even proposed cutting the SNAP program,” said Joel Berg, executive director of the New York City Coalition Against Hunger. “The willingness of some Senate Democrats to double new cuts to the program…is unthinkable.”

Mother Jones Says "Kill the Farm Bill Entirely"

Bitching and moaning would not be complete without Mother Jones getting in on the act. On November 12, Mother Jones proposed House Dems Can Block GOP Food Stamp Cuts—by Killing the Farm Bill

The food stamps program—which helps feed 1 in 7 Americans—is in peril. Republicans in the House have proposed a farm bill—the five-year bill that funds agriculture and nutrition programs—that would slash food stamps by $40 billion. But by taking advantage of House Republicans' desire to cut food stamps as much as possible, Democrats might be able to prevent cuts from happening at all.

To pull it off, Democrats would have to derail the farm bill entirely, which would maintain food stamp funding at current levels.

Where's the Beef?

On December 10, The Tennessean more evenly covers the issue in its report TN House Republicans back $40 billion in food stamp cuts.

The future of food stamps — the Supplemental Nutrition Assistance Program — remains the largest sticking point in House-Senate negotiations to finalize a new farm bill before the end of the year.

In September, the House approved a farm bill that cuts almost $40 billion from food stamps over 10 years — about 5 percent a year. The Senate earlier approved a bill that would cut $4 billion over that time.

At $80 billion a year, food stamps remain the single costliest item in the farm bill. The program serves almost 48 million Americans and 1.34 million Tennesseans — about 20 percent of the state population.

Among House members from Tennessee, all but Reps. Jim Cooper of Nashville and Steve Cohen of Memphis — the two Democrats in the state’s congressional delegation — voted for the bill making $40 billion in cuts.

Groups such as the Center on Budget and Policy Priorities, a liberal-leaning Washington think tank, say cuts of that magnitude would result in denying benefits to 3.8 million low-income Americans in 2014.

“Those who would be thrown off the program include some of the nation’s most destitute adults, as well as many low-income children, seniors and families that work for low wages,” the CBPP said in an analysis of the House bill. “The House SNAP bill is harsh.”

Rep. John Duncan, R-Knoxville, complained that administrators of the program “have no incentive to keep people off.”

“They will get bigger offices, staffs and funding if even more people get food stamps,” he said.

Close Inspection of "Draconian" Cuts

Please note that the alleged $40 billion in cuts is really only $4 billion in a close to $80 billion program. They arrive at $40 billion by multiplying $4 billion by 10 years.

OK Fine. The cuts then are $40 billion in an $800 billion program. And I actually doubt we will ever see those "cuts" in the first place.

A few charts from reader Tim Wallace will help explain.

SNAP Growth in Benefits



click on any chart for sharper image

SNAP Benefit Facts

  • SNAP benefits more than doubled between 2000 and 2007.
  • Between 2007 and 2013 snap benefits went up another 150%.
  • Trendline growth would have annual benefits at about $32.5 billion.
  • Instead benefits are more than double.
  • Liberals are whining about a 5% cut when a cut to the trendline would be a 50% cut


SNAP Participation



SNAP Participation Facts

  • Participation is nearly double what it was in 2007.
  • Participation in 2013 is 275% of the 2001 total.


SNAP Per Person Benefits



SNAP Per Person Benefits Facts

  • Monthly benefit goes up over time because of inflation.
  • Benefits per person jumped in 2007.
  • Monthly per person benefit is now $133.
  • Trendline benefit is $117.


Supposedly a 5% cut is draconian.

The Problem

  • Growth in the number of participants is on an unsustainable trend.
  • Growth in benefits per person is also on an unsustainable trend.
  • Multiply the two together and you get the first chart.


As is typical with government programs, there is no incentive by the administrators to eliminate waste or fraud.

The more funding for food stamps, the bigger the salaries and staffs of the administrators.

I suggest that we need a way to provide necessary safety-net benefits while simultaneously providing an incentive to get off the program and get a job.

I repeat my proposal.

Mish SNAP Proposal

  • Prohibit food stamp purchases of potato chips, snacks, soft drinks, candy, pizza, frozen foods of any kind except juice.
  • Limit food stamp users to generic (store brand vs. name brand) dried beans, rice, peanut butter, pasta, fresh vegetables, fresh fruit, frozen (not bottled) juice, canned vegetables, canned soup, soda crackers, poultry, ground beef, bread, cheese, powdered milk, eggs, margarine, and general baking goods (flour, sugar, spices).
  • Calculate a healthy diet based on current prices, number in the family, ages of recipients, and base food stamps allotments on that diet.
  • In the interest of health and cleanliness, expand the food stamp program to include generic soap and laundry products.


My proposal will not only lower the cost of the food stamp program, the resultant healthier diets would lower Medicaid and Medicare costs as well.

Moreover, my proposal would give people a strong incentive to get off the food stamp program without intrusive, costly big-brother ideas like drug testing which cannot possibly work for the simple reason that anyone who fails will steal to get food rather than starve.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com


Mike Shedlock

Mike Shedlock is a registered investment advisor representative for Sitka Pacific Capital Management.
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