Food Stamps – The Black Hole You Enter and Never Exit

Have you heard the rumor that the number of food stamp recipients has increased during President Obama’s term from 28.2 million to 46.6 million? Have you heard that in only three years, the annual cost of the program, which was already astronomical at $35 billion, has soared to $76 billion? It certainly has been the talk of the town (if not the campaign), but does anyone really know how we got to this state of affairs? That is what I set out to discover.

20122502012-09-06T214135Z_1_CBRE8851O9E00_RTROPTP_3_FOOD-G20-CALL Food Stamps - The Black Hole You Enter and Never Exit

Even the most basic details about the program seem surreal. Why in the world is this welfare program administered through the Agriculture Department? We have been arguing about agriculture subsidies since the beginning of time, yet a program that really has nothing to do with farming or ranching now swallows up most of the budget. Just the idea that the Department of Agriculture (USDA) is running a $75 billion welfare program gives you a perspective of how screwed up this situation has become.

I contacted the House Agriculture Committee spokesperson, Tamara Hinton, to get some answers. What is the amount of attrition for the program, I asked. Given that the program has grown by 18.4 million participants in the past three years, is there anyone who has stopped receiving benefits? She stated that the USDA claims that the average duration of benefits is 9 months. I pointed out that if that were true, then about 160 million people have been on the program in the last three years.

It turns out that Katherine Bradley of the Heritage Foundation describes a much more plausible scenario. She claims that people participating in the program – now known as the Supplemental Nutrition Assistance Program (SNAP) – stay on it for an average of eight full years. When I challenged Ms. Hinton on the accuracy of the Heritage study, she informed me that the program is administered through the states, who only report the net change in the number of recipients, and not how many people have entered or left the program.

So nobody knows how many people – if any – are leaving the program. President Obama’s campaign incessantly reminds us that he has created 4.5 million new jobs in his term – a truly dubious claim that is credible only if you don’t count the 4.3 million jobs lost in the first 13 months of his term. But let’s pretend that he’s correct and that there are indeed 4.5 million new jobs. Then how come there are 18.4 million new people receiving SNAP benefits, and why has the yearly cost risen by an additional $37 billion? If people are finding jobs, then participation should be going down, and so it is only rational to come to the conclusion that this program has become a black hole where people keep signing up, but no one is signing off.

This occurs because the states, who administer SNAP, have every reason to maximize the number of people enrolled in their program. In simple terms, it brings more money into the state at no cost. There used to be a relatively stringent enrollment procedure to obtain SNAP benefits, but this was superseded by a provision in the 1996 Welfare Reform Act called “categorical eligibility.