As the continuing federal government shutdown stands to suspend the nation’s “food stamp” program beginning Saturday, it’s important to recount two of the standard misrepresentations of the debate.
“Food stamps,” as the effort long was monikered, since have been rebranded as the SNAP program, that acronym standing for the Supplemental Nutrition Assistance Program.
And while we will stipulate that SNAP, generally, benefits its millions of recipients, we are forced yet again to quibble with two of the programs oft-touted ancillary “benefits” – that SNAP is 100 percent federally funded and that for every dollar spent with the SNAP program, it returns up to $1.80 to the community.
The first notion is silly. While SNAP is funded from money administered by the feds, taxpayers in every state send federal tax dollars to Washington that ends up in the SNAP kitty.
And that second notion is an ignorance of basic economics. As this scrivener noted nearly two years ago:
“As Gary M. Galles, an economics professor at Pepperdine University (and a member of the faculty at the Foundation for Economic Freedom) reminded in 2021:
“’For years, food stamps have been systematically promoted by reiterating multiple false and misleading claims about their effects on food consumption, nutrition, agriculture, income and job creation.
“’[Their] promoters’ rhetoric far outstrips reality, and serial repetition does not change that.”
To wit, on just one of those misleading claims:
“’The misrepresentation of economic stimulus effects is … exaggerated by using multiplier effects,’ Galles explains. ‘It is true that when one person gets more money, they spend more, increasing demands and income elsewhere.
“’But the same process occurs in the opposite direction, as those with reduced after-tax incomes from financing the benefits spend less, decreasing demands and income elsewhere. There is little net effect, but by ignoring adverse consequences, insignificant effects can be presented as major benefits.’”
Or, as Melissa Trussell, a professor in the School of Business and Public Management at the College of Coastal Georgia, summarized, five years ago, a 2014 white paper by economist Daniel Carroll of the Federal Reserve Bank of Cleveland:
“Theoretically, there is some dispute about the existence of a multiplier effect. This goes back to the definition of GDP. GDP is the sum of consumption, investment, government spending and net exports.
“Although an increase in government spending is a direct increase to GDP, that spending must be financed somehow, either through increased taxes, increased government debt or monetary expansion. Any one of these three options has the effect of decreasing private consumption or investment, or both.
“An increase in government spending will only increase GDP if the increase in spending more than offsets the effects of financing that spending.”
Given the average monthly household SNAP benefit is around $350, indeed, the promised suspension of SNAP benefits tomorrow — if the federal shutdown continues — will have a serious effect on recipients.
And while there should be plenty of debate about just how effective SNAP is, the debate should be considered over as to whether it truly bolsters the economy.
A level-headed review of the fundamental economics of the matter suggests SNAP does not. Pardon the flippancy, but those who continue to claim otherwise should snap out of it.
Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).
