Before I decided to become a Lady Economist, I was a professional troublemaker in the anti-hunger nonprofit community, advocating for expansions to federal nutrition programs. In recent weeks I have been amazed by the news – first that the Farm Bill that would have cut Food Stamps failed – after President Obama promised a veto – and now, that the House Republicans have passed a Farm Bill that doesn’t even include Food Stamps (technically called SNAP, or the Supplemental Nutrition Assistance Program).
Over the years, I have heard conservatives and liberals express confusion and concern that the Farm Bill contains both farm subsidies and Food Stamps. But it’s no accident that the Farm Bill combines corporate welfare in the form of subsidies and direct payments to agricultural producers (supply-side economics) and a major means-tested transfer program to low-income consumers (demand-side economics). The Farm Bill was designed to support American agriculture, and used both of these mechanisms to strike a deal between urban and rural interests. As noted in a recent New York Times article, “By splitting farm policy from food stamps, the House effectively ended the decades-old political marriage between urban interests concerned about nutrition and rural areas who depend on farm subsidies.” If the two are split, urban and rural interests, and supply-side and demand-side economic theories, can’t all be satisfied in one neat piece of legislation.
This political marriage started in the 1970s, the same decade that “modernized” the Food Stamps and made it an entitlement program and an extremely effective booster of aggregate demand. Since then, the U.S. welfare state has been gutted, especially during the Bad Old Days of the Clinton Administration and the Personal Responsibility and Work Opportunity Act (PWORA). Due to stagnating wages, rising inequality, and a weaker welfare state, the Food Stamp Program became an increasing important part of the social wage. This is because, while it was means-tested for people with very low incomes, it included a broader eligibility than many other programs (unemployment insurance, cash welfare, Social Security, etc). Meanwhile, the anti-hunger community became more engaged in advocating for expansions for the program (which happened in the last Farm Bill, and temporarily, in the Stimulus Act) and helping getting people enrolled. And let’s not forget another major beneficiary of Food Stamps: food producers, retailers, and distributors. So, this program which helps so many poor people, also helps plenty of rich people too.
There are two perspectives as to why now, when so many people are still suffering, Republicans would want to cut Food Stamps. 1) Republicans really believe that the best way to get the economy back on track is to cut government spending and reduce any sort of “labor market rigidities” caused by say, a strong welfare state or labor protections. Cut these programs, and everything will run smoothly again, as businesses will be able to hire and fire and make and break stuff. This argument would be sorta compelling (and I use the term “sorta” generously here), if these same Republicans weren’t giving their bros tax breaks and subsidies left and right. 2) Another explanation is that Republicans are using the Great Recession and rising government debt as an opportunity to cut social programs, not because it’s necessary for growth, but because it’s convenient for their political and economic agenda. By eroding protections for the poor, workers are increasingly desperate when looking for work – and then they will have less bargaining power, and will accept lower wages and even more pathetic benefit packages (if any at all).
This doesn’t explain why Republicans don’t want to help their grocery-store owning friends make a few more dollars, but it’s sufficient food for thought for today. I’ll save the really exciting topic of how taxes and financing of these welfare programs plays into this for a later post.