On 21 June the Senate passed a new farm bill, formally the Agricultural Reform, Food and Jobs Act of 2012 costing an estimated $969 billion over the next ten years. The bill passed 64-35 with leadership from Senators Debbie Stabenow and Pat Roberts, demonstrating a rare bipartisan achievement in a particularly partisan political climate. $77 billion of the spending is earmarked for the Supplemental Nutrition Assistance Program (SNAP) or more colloquially referred to as food stamps. The total figure would result in a reduction of $23.6 billion from current spending levels, including $4.5 billion from SNAP. Although senators rejected proposals for even deeper cuts, members from both parties are dissatisfied. Some Democrats are unwilling to consider any cuts in funding, whereas many Republicans think the current reduction is insufficient.
Before the Senate passed the farm bill with these associated cuts, Democratic Senator Kirsten Gillibrand fought to retain the $4.5 billion funding for food stamps, arguing that recipients of the funds are not responsible for causing the budget deficit and should therefore not be punished by bearing the cost of balancing it. She cited statistics which showed that for every $1 spent on food stamps, $1.71 returns to the economy. In an unsuccessful amendment, she proposed a reduction in subsidies to crop insurance companies to offset the projected SNAP cuts.
Funding reduction strategy
The $4.5 billion cut derives from Title IV, Section 4002 of the bill, which implements a new $10 annual minimum benefit from the Low Income Home Energy Assistance Program (LIHEAP) and the Standard Utility Allowance deduction of a $10 annual benefit from the utility allowance programLIHEAP. Allowance recipients from LIHEAP had previously been eligible for greater monthly SNAPfood benefits regardless of the amount of the allowance. Ostensibly, the cut is an attempt to better allocate funding to families who require greater assistance with both utility and food costs.
Current SNAP participation levels
In the USDA’s March 2012 report, “The Food Assistance landscape: Fiscal Year 2011″, participation data for the period of 1 October 2010 to 30 September 2011 showed that an average 47.7 million people participated in the SNAP program per month, a 10.9% percent increase over the previous year. Meanwhile, federal spending for SNAP grew by 10.3% in 2011, reaching approximately $75.3 billion. Although both the number of recipients and amount of government spending has reached record-high levels, the average benefits per person have not shown any increase.
The $4.5 billion funding cut, which is around 6% of the total spending allotted for SNAP, will have major implications for its participants nationwide. The Congressional Budget Office predicts that nearly 500,000 households participating in SNAP will have their benefits cut by an average $90 per month. Matt Sharp, a Senior Advocate at California Food Policy Advocates, estimates that four million food-insecure Californians will be at risk for reduced nutrition. These grim numbers stand to worsen pending increased funding cuts.
Title III of the bill discusses trade and global food aid, the amendments to which Dan Glickman and Richard Leach, former Agriculture Secretary and CEO of World Food Program USA, respectively, laud in their 14 June Politico op-ed: “Farm bill helps fight world hunger.” The piece praises the US food aid program as a keystone in the global emergency response system. The bill’s improvements, like the promotion of enhanced nutritional quality, is viewed as “an important statement about America’s values.”
While America’s leadership in global food aid is indeed worthy of recognition, the vast majority of the farm bill’s funding is directed towards domestic programs, particularly food stamps. Opponents of the cuts could argue that it may be premature to label the bill as “an important statement about America’s values” in advance of its debate in the House which will likely end in greater cuts to food stamp funding.
In an April 2012 report entitled “Alleviating Poverty in the United States: The Critical Role of SNAPBenefits”, published by the USDA’s Economic Research Service, the food assistance program was highlighted as being central to government poverty reduction strategies.
The report contends that beyond affecting an average annual decline of 4.4% in the poverty rate between 2000 and 2009, the average annual decline in the depth and severity of poverty was larger – 10.3 and 13.2%, respectively – and indicative of many more significant benefits.
Further, the evidence of SNAP’s effectiveness in reducing poverty is made even more apparent by considering the same measures of average annual decline in poverty rate, depth of poverty, and severity of poverty of children in poor families: 5.6, 15.5, and 21.3%, respectively.
Lastly, and perhaps most significantly in light of the current state of the US economy, the report found that the program’s effect on poverty was the strongest in 2009. The program’s countercyclical nature – growth during economic contraction – means that the onset of the economic recession in 2008 was matched by increased participation levels. Of particular note is the discovery that in a still-troubled economic state, SNAP’s effect on poverty was the strongest in 2009, stating that “totalSNAP benefits were quite successful in protecting the well-being of the poor during the 2007-09 recession.”
The positive impact of SNAP funding in poverty amelioration is well established and attests to the essential necessity of the program. The proportional rate of growth in the number of participants and the total amount of funding demonstrates that funding cuts, regardless of size, will have a disproportionate effect on average aid to households since the growth in participation is unlikely to abate in the near future.
Accounting for nutrition
A June 2012 independent report by Michele Simon of EatDrinkPolitics does offer some criticism ofSNAP, namely the lack of transparency in the types of items purchased with SNAP benefits. The report, entitled “Are Corporations Profiting from Hungry Americans?” addresses concerns over the nutritional value of SNAP purchases and its relationship with the large shares of revenue that retailers accrue from SNAP participants.
Her report recommends Congress avoid any cuts to the program, and suggests that the USDA be required to collect data about SNAP product purchases. The intent is to utilize the data collected to implement cost-effective changes to the SNAP.
Looking ahead to the House
The House will begin work on the bill 11 July. The Senate has urged for swift considerations so as to reduce any gap between the current law’s expiration of 30 September and the onset of the new legislation and in order to provide greater certainty for those in the farming industry.
Earlier this year, the Republican House proposed a budget that would incur cuts to food stamp funding of about $134 billion over the next ten years. The conservative argument for the cuts cites the growth of the federal costs of food stamps – which doubled since the beginning of the recession in 2008 as well as between 2001 and 2006 when unemployment stood at less than 6%. Research from the USDA attributes the first twofold increase to a growing poverty rate as well as structural changes to the program. Over the past decade, states have been endowed with greater flexibility in administering SNAP benefits in efforts to increase participation among poor working households and simplify the administrative processes of the program. In light of these considerations, it is fair to attribute the current high levels of participation to the poor state of the economy.
Commenting on the $23 billion savings accrued by the bill, Rich Pottoroff, the chief economist at agricultural analysis firm Doane, projects that the proposed cuts will not be enough to satisfy the Republican-held House. Indeed, a statement by House Agriculture Committee Chairman Frank Lucas in a 7 June interview seems to foretell a desire to implement further cuts.
Lucas said that the Senate “can’t take 80 percent of the farm bill and refuse to make the kind of reforms that will make real savings and then demand that the lion’s share of all the savings come out of the remaining 20 percent.” Along a similar rationale, Republican Senator Jeff Sessions – who proposed the amendment containing the $4.5 billion cut – had also suggested a further reduction of up to $11 billion over the course of the next decade.
While the House should endeavor to extend the bipartisanship exhibited so far by the Senate in order to properly address such an issue, it seems likely that new amendments will call for further cuts.