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  • Food Stamps Don’t Stimulate Economic Growth

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    Newscom

    The number of Americans on food stamps, or the Supplemental Nutrition Assistance Program (SNAP), is at historic highs, but some on the left—like Paul Krugman—think that’s not such a bad thing because, as they argue, food stamps “stimulate” the economy:

    We desperately needed (and still need) public policies to promote higher spending on a temporary basis.… [E]ach dollar spent on food stamps in a depressed economy raises G.D.P. [gross domestic product] by about $1.70—which means, by the way, that much of the money laid out to help families in need actually comes right back to the government in the form of higher revenue.

    Others on the left have made similar statements about SNAP stimulus. What’s the problem with this argument?

    First, food stamps are intended to serve as a temporary safety net for those who face economic hardship, not as an economic stimulus. To justify food stamps as a stimulus to raise government revenue ignores the long-term economic consequences of welfare spending.

    Total government welfare spending has reached nearly $1 trillion annually, and the food stamps program is one of the largest of the government’s approximately 80 welfare programs, costing taxpayers roughly $80 billion a year.

    Additionally, food stamp dollars come from the taxpayers, meaning that as program spending increases, fewer dollars are available in the private sector. Heritage research explains that, for example, $100 of government aid “can be spent at a grocery store, which, in turn, can use that $100 to pay salaries and support other jobs.…[B]ut because government borrows the $100, that same money is now unavailable to the private sector—which would have spent the same $100 with the same multiplier effect.”

    Also, while food stamp spending might increase some spending on food, sound economics considers the long-term, less visible effects of policy. The argument for stimulus “assumes that consumption spending adds to immediate economic growth while savings do not.”

    However, private savings help lift people out of poverty and boost the economy, but high rates of government borrowing can weaken the economy and harm Americans. The United States just hit the debt ceiling with $16.7 trillion in debt, and spending on means-tested welfare programs, which include food stamps, is the fastest growing component of government.

    Not only can high debt from increased spending reduce opportunity, but welfare spending itself can impose substantial non-economic costs: discouraging work, rewarding government dependence, and eroding personal dignity. As President Franklin Roosevelt, certainly no conservative, said in 1935:

    Continued dependence upon relief induces a spiritual and moral disintegration fundamentally destructive to the national fibre. To dole out relief in this way is to administer a narcotic, a subtle destroyer of the human spirit.

    When President Lyndon B. Johnson launched the “War on Poverty” in the 1960s, he stated that it would strike “at the causes, not just the consequences of poverty,” and also said that the goal “is not only to relieve the symptom of poverty, but to cure it and, above all, to prevent it.”

    Yet, for the past five decades the federal government’s approach to helping those in need has meant getting more people onto welfare. Policies over the past decade or so, for example, have loosened the requirements for food stamp enrollment, and today the U.S. Department of Agriculture even operates food stamp outreach programs. For example, government-paid recruiters hold bingo games and “parties” to try to get more people on food stamps who might not otherwise seek taxpayer assistance.

    A growing welfare system is not only bad news for the economy, but bad news for Americans in need. Instead of continuing on this same failed course, Congress should work to ensure that welfare programs like food stamps promote self-sufficiency through work. Also, the continuous growth in welfare spending which has taken place—recession or not—should be rolled back when employment rates recover. Not only is this sound fiscal policy, but it is policy that puts the best interests of individuals first.

    Posted in Culture [slideshow_deploy]

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