Poverty Myths Busted: Food Stamps are a waste of money

Food Stamps

False, the Supplemental Nutrition Assistance Program (SNAP, or "Food Stamps") has been shown to lift 4.7 million people out of poverty.

With new legislation in Congress looking at cutting back on the Supplemental Nutrition Assistance Program (SNAP or Food Stamps), the question, “Are food stamps a waste of taxpayer money?” is on everyone’s lips once again.

There are really two questions rolled up into one: Do Food Stamps work to fight hunger? And if they do: Is the impact they have a worthwhile investment of our tax dollars?

Food Stamps work to fight hunger!

The stated goal of the SNAP program includes “raising the level of nutrition among low-income households and maintaining adequate levels of nutrition by increasing the food purchasing power of low-income families.” [1]. According to the Center on Budget and Policy Priorities (CBPP), in a typical month of 2017, “SNAP helped about 42 million low-income Americans afford a nutritious diet.”[2] That translates to a reduction in food insecurity of over 30%. Moreover, about 40% of beneficiaries are children – and food insecurity can have particularly adverse effects on developing bodies. One study found that half of American children will be fed by food stamps at some point in their lives.[3]

Because SNAP helps so many people avoid hunger and incentivizes the purchase of healthy food, that nutritious diet translates into lower healthcare costs for people who are on the program. The same CBPP analysis found that, “SNAP participants are more likely to report excellent or very good health than low income non-participants [in SNAP].” Simply having enough food in a household is connected to lower rates of chronic illness, including hypertension, coronary heart disease, and cancer, to name just a few. This translates to 25% less in medical costs each year for people who participate in SNAP than low-income families who do not.

And that benefit in healthcare costs is no joke – many low-income families who participate in SNAP also participate in Medicaid, meaning that a portion of their healthcare costs are covered by the state they live in. This means that states could significantly reduce their own Medicaid budgets simply by ensuring that every eligible Medicaid participant was also receiving SNAP. With Medicaid representing up to a quarter of state budgets, we are talking about serious savings.

But how much does SNAP cost?

SNAP costs the federal government $68 billion in 2017.[4] This represents less than 2% of the federal budget ($4.2 trillion in 2017), and an average cost of around $1,600 per year per participant. Of course, actual benefits individuals receive vary greatly, and the average benefit of $1.30 per person per meal per day is by no means universal – many people receive much less.

Because SNAP benefits are spent within the United States and cannot be saved, that investment brings economic growth along with it. In testimony before the Congressional Joint Economic Committee in 2012, Mark Zandi, founder of Moody’s, calculated that every $1.00 spent on SNAP brought about $1.71 in economic benefits.[5]

To put this in perspective – 141,204,625 Americans paid income taxes in 2015[6]. Because of our progressive tax rate, the top 5% of taxpayers (the 7 million wealthiest Americans, those earning over $350,000 a year) cover 60% of the program’s cost. This means that SNAP cost the remaining 95% of taxpayers just $200 a year. That $200 a year led to $342 in economic growth.

But what about Food Stamps fraud?

Critics of the SNAP program put a lot of effort into the idea that fraud is rampant. Usually they claim that benefits are being sold, or that, in the words of one Missouri state senator, people are “purchasing filet mignons and crab legs.”[7]

An analysis done by Forbes Magazine, however, showed that this kind of fraud is highly uncommon, putting the rate of fraud in SNAP, based on government figures, at 0.9%.For a government program, that is as close to nothing as you’re going to get, and compared to other government programs it is an exemplary level of integrity. Take defense for instance: An internal Pentagon report identified $25 billion a year that could be saved by the Department of Defense simply by eliminating waste.[8]

Part of the reason that fraud is so low is that the government has been extremely thorough in prosecuting both stores and individuals who even attempt fraud. But the way SNAP works is part of it too – benefits come on electronic EBT cards with individual pin numbers, which are a real disincentive to even trying to sell benefits.

When you add it all up it becomes clear that attacking SNAP and cutting back on food benefits for low-income families is not about creating value for taxpayers or eliminating government waste or fraud – it’s not even about promoting economic growth. Instead it’s just another step in the war on the poor that prevents families from escaping poverty.

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SOURCES:

[1] IOM (Institute of Medicine) and NRC (National Research Council). 2013. Supplemental Nutrition Assistance Program: Examining the evidence to define benefit adequacy. Washington, DC: The National Academies Press.

[2] “SNAP is linked with Improved Nutritional Outcomes and Lower Healthcare Costs.” Center on Budget and Policy Priorities.

[3] “Study: Half of US Kids Will Receive Food Stamps”http://usatoday30.usatoday.com/news/health/2009-11-02-food-stamps_N.htm

[4] Data is from the USDA Food and Nutrition Service as published on June 08, 2018: https://www.fns.usda.gov/pd/supplemental-nutrition-assistance-program-snap

[5] Bolstering the Economy: Helping American Families by Reauthorizing the Payroll Tax Cut and UI Benefits” https://www.economy.com/mark-zandi/documents/2012-02-07-JEC-Payroll-Tax.pdf

[6] Numbers are from the US Gov, via the Tax Foundation: https://taxfoundation.org/summary-federal-income-tax-data-2017/

[7] “Missouri Republicans are trying to ban food stamp recipients from buying steak and seafood” https://www.washingtonpost.com/news/wonk/wp/2015/04/03/missouri-republicans-are-trying-to-ban-food-stamp-recipients-from-buying-steak-and-seafood/?utm_term=.3b5b6c61adee

[8] https://www.washingtonpost.com/investigations/pentagon-buries-evidence-of-125-billion-in-bureaucratic-waste/2016/12/05/e0668c76-9af6-11e6-a0ed-ab0774c1eaa5_story.html?utm_term=.6586f6ad17d0