Farms have always been an important part of the American mythology. The farm bill passed Monday by the Senate is no exception.
Behind the soaring rhetoric of its backers is a piece of legislation that justifies cruel cuts to poor Americans with self-serving myths about fiscally responsible nutrition assistance.
If you’re anything like most Americans, you’re probably not too familiar with the farm bill, unless a tractor and a 1,150-page piece of legislation is your idea of an afternoon.
You’d be forgiven for not realizing it actually has very little to do with farming. Mostly, it’s about food stamps.
Inserted in to the farm bill years ago to win the support of urban legislators, food stamps – or the Supplemental Nutrition Assistance Program (SNAP), as it’s formally known – now accounts for 80 percent of the bill’s $955 billion 10-year price tag.
How did this happen? For one, agriculture accounts for only about one percent of the U.S. economy. But the other reason is significant growth in SNAP, both as a result of the Great Recession and eased eligibility rules put in place by the George W. Bush Administration. Since 2000, spending on food stamps has increased by a factor of 4.5, from $17 billion in 2000 to $78 billion last year. Today, one in every seven Americans receives food stamps.
It’s this rapid expansion that has Congress concerned.
The Senate version of the bill, which passed 66-27, would cut SNAP by $4 billion during the next decade. The House offering, which has yet to see floor action, is even worse. Five times worse, in fact, cutting SNAP by $20 billion.
Apparently, if there’s one thing capable of garnering bipartisan consensus, it’s that poor people have too much to eat.
The Senate bill would achieve its savings by restricting a practice known in the social service community as “heat and eat.” Understanding it requires some knowledge of how food stamp benefits are calculated.
SNAP eligibility depends on income and assets. Households with income below 130 percent of the poverty line, or $25,000 for a family of three, are generally eligible, so long as they do not have more than $2,000 in countable assets (which exclude primary residence, primary vehicle, and things like retirement plans).
Benefit levels, in contrast, are determined after applying deductions to gross income for shelter costs, earned income, and other necessary expenses. The greater the deductions, the larger the benefits.
At issue in the farm bill is the way utility costs are treated in determining the shelter deduction. Under current law, states are permitted to include a “standard utility allowance” (SUA) in the benefit calculation for all households who participate in the Low Income Home Energy Assistance Program (LIHEAP), a formula grant to states to assist poor households with heating and cooling costs. The SUA reflects utility costs for a typical poor household and is independent of either actual household utility expenses or LIHEAP grant amounts.
As a result, 16 states have adopted “heat and eat” policies in which they give poor households nominal LIHEAP grants (usually $1) for the sole purpose of qualifying them for greater food stamp benefits. According to CBO, 1.3 million households receive an average of $90 extra in SNAP each month thanks to this provision.
The Senate bill would require households to receive at least $10 in monthly LIHEAP benefits to qualify for the SUA. The House version would raise the LIHEAP threshold to $20.
Does the LIHEAP loophole sound like a gimmick? Sure. But there are at least two good policy reasons to preserve it.
First, it greatly simplifies SNAP administration by simplifying documentation of utility expenses. This saves states money by reducing the number of caseworkers needed to process applications. Second, LIHEAP is not an entitlement, and many states have demand for energy assistance in excess of supply. Because poor households often face tradeoffs between food and fuel, linking the programs allows benefits to be spread over a wider base.
The House bill would go one step further, by restricting “categorical eligibility.” Permitted under the 1996 welfare reform law, categorical eligibility allows households receiving TANF or other means-tested public benefits to qualify for SNAP – even if income or assets would disqualify them for food stamps under standard SNAP rules.
Like the SUA, categorical eligibility reduces paperwork and simplifies administration. But it also reflects a reality in which many households with gross income just above 130 percent of poverty have far smaller disposable incomes after housing and child care costs are taken into account. At the same time, the $2,000 SNAP asset limit has not been updated for inflation in more than two decades.
Eliminating categorical eligibility would cut off nutrition assistance for an estimated 1.8 million Americans, according to CBO.
Both the LIHEAP loophole and categorical eligibility are exceptions to normal rules that make SNAP more expensive than it otherwise would be. For lawmakers squeezed by sequestration and looming debt, it’s an attractive target. But if you remove four myths from the debate, it becomes clear that it’s the wrong target.
The first myth is the caseload explosion. Yes, SNAP participation has nearly doubled since 2007, to nearly 48 million Americans. But that’s exactly what’s supposed to happen. Spending on social programs should increase during recessions. With unemployment still at 7.6 percent, it’s evidence SNAP is working. When jobs return to more normal levels, so too will the food stamps caseload.
Second, food stamps cost less than people think. Even at its recession-inflated level, SNAP represents just two percent of federal spending and a half a percent of GDP. The average food stamps recipient gets just $31 per week. Try eating on that.
Third, food stamp recipients are not who people think they are. Seven in 10 food stamp dollars go to families with children. 8.5 percent goes to the elderly. Just 14 percent of SNAP dollars are spent on able-bodied, childless adults who, with few exceptions, must work to receive assistance.
Fourth, food stamp benefits will be reduced soon anyway. The 2009 stimulus act temporarily increased SNAP benefits by about $20 per household, but this provision is set to sunset in October 2013.
For a bill that’s supposed to be about America’s heartland, the farm bill has surprisingly little heart (though it does have plenty of economically distorting and environmentally questionable subsidies for wealthy farmers). It’s not too late for Congress to restore the damaging cuts to SNAP. But don’t bet the farm on it.