Obama vs. Reagan: Food Stamp Failure


Posted by Jeremy Sawyer on Thursday, July 19th, 2012, 11:54 AM PERMALINK


This content is provided by Americans for Tax Reform Foundation.

Food stamps were once a ubiquitous symbol of destitution in America. The program, administered by the US Department of Agriculture (USDA), was instituted in 1969 with the goal of helping to stop the poorest fraction of Americans from going hungry. In that year, 2.878 million Americans received an average monthly benefit of $6.63.

By the time President Reagan had taken office, the program had expanded significantly. In fiscal year 1981, 22.43 million Americans were on food stamps and the average monthly benefit was $39.49. Yet, keeping in mind his own famous words, “No government ever voluntarily reduces itself in size,” Reagan took steps to halt the proliferation of food stamps and the accompanying culture of dependency. Many Americans substituted jobs for welfare benefits during the Reagan recovery.

After the growth that occurred and cuts that were instituted in Reagan’s first two years, the number of food stamp recipients actually fell to 21.625 million in FY 1983. Growth in the cost of benefits over those two years was a modest 4.59%, rising to $11.152 billion from $10.63 billion.

The nature of the food stamps program, newly christened the “Supplementary Nutrition Assistance Program” (SNAP), has been radically transformed under President Obama. It is not for nothing that former House Speaker Newt Gingrich labeled President Obama “the food stamp president.” When President Obama took office in FY 2009, 33.49 million Americans were enrolled in SNAP and benefits totaled $50.36 billion. By FY 2011, 44.71 million Americans collected $71.813 billion in benefits. In just two years, the number of recipients increased by 33.5 percent while benefits shot up by a whopping 42.6 percent.

The data from the Obama era look even worse when one takes into account population growth. If the population of the US were the same as it was during President Reagan’s first term and the same proportion of the population received food stamp benefits, 59.614 million citizens would be enrolled in SNAP. That number is nearly three times the figure from two years into the Reagan presidency.

Moreover, the rise of food stamps has not affected all Americans equally. In certain geographical areas such as inner cities, dependency on government has risen to shocking levels. In New York’s 16th Congressional district, for instance, more than 40 percent of households receive SNAP benefits.

Unbelievably, the USDA’s website informs visitors that “SNAP also has an economic multiplier effect with every $5 in new SNAP benefits generating as much as $9 in total economic activity.” Here lies the basic economic worldview of the Obama administration: simply spend as much as possible on transfer payments that create dependency on government and growth will come.

The trouble with this misguided view is that President Obama and his Keynesian friends have forgotten the fundamental axiom that there is no free lunch. In reality, as Nobel Prize-winning economist Robert Barro has noted, transfer payments such as food stamps increase deficits, necessitating future growth-killing taxes. Moreover, SNAP reduces the incentive to work, which depresses growth in and of itself. Unsurprisingly, economic facts continue to bear out these common sense observations as food stamp proliferation has not resulted in anything resembling rapid growth.

With the supposed magical multiplier effect of food stamps being trumpeted by important figures in the Obama administration including Agriculture Secretary Tom Vilsack, it is unlikely that the growth of the SNAP program will soon be curbed. As such, America appears to face a future in which more workers are converted to dependents of the government under President Obama.

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