Monday, July 01, 2013

SNAP Theatrics Fall Flat

It has become a set piece of political theater for liberal Democrats, carried out in recent weeks by everyone from New York mayoral candidate Anthony Weiner to Connecticut senator Chris Murphy and a bevy of congressmen: attempting to eat on the $4.50-per-day food budget supposedly provided by the Supplementary Nutrition Assistance Program (SNAP), the program formerly known as “food stamps.” While always good for a headline, and generally accompanied by amusing photographs of the bizarre meals the politicians cobble together on their meager budget, the so-called SNAP challenge is also arrant nonsense.

To start with, virtually no one in America actually has to eat on just $4.50 per day. That number is derived by simply dividing the SNAP program’s budget by the number of recipients, arriving at an average benefit of $133.44 per month, or roughly $4.45 per day. However, that doesn’t tell us much about the size of the benefit that most families actually receive. For instance, SNAP benefits increase with family size. Thus, a family of four would receive $668 in benefits.

More important, the SNAP payments are not intended to be a family’s sole food income. As Washington Post fact checker Glenn Kessler pointed out, in pulling out a pair of Pinocchios for the SNAP challenge: “Note that the name of the program refers to ‘supplemental’ assistance.” SNAP benefits vary with income. Individuals with low incomes receive much higher SNAP benefits. Conversely, those individuals receiving the lowest benefits — say, $4.50 per day — are doing so precisely because they have other sources of income.

Indeed, the poorest SNAP recipients are almost universally receiving other welfare benefits, especially Temporary Assistance for Needy Families (TANF) and Medicaid. We should remember that there are actually 126 separate federal anti-poverty programs, and while no one receives benefits under every one of those programs, most poor people are eligible for benefits under multiple programs. SNAP isn’t even the only federal food program: There are currently 21 different programs providing food or food-purchasing assistance, administered by three different federal departments and one independent agency.

The latest dustup over SNAP was spurred by $20.5 billion in cuts to SNAP over the next ten years that were included in the late, unlamented farm bill. Democrats complained that those cuts were “a poison pill” that forced them to vote against the bill. Their votes, together with those of anti-spending Republicans, killed the farm bill, in a major setback for House Speaker John Boehner. Granted, the farm bill, a bloated and costly giveaway to special interests and one of the wealthier segments of society, should have been poisoned; but the Democratic objections to SNAP cuts were much ado about nothing.

The proposed SNAP cuts would have eventually reduced spending on the program all the way back to levels slightly higher than those of 2010, a year not particularly noted for mass starvation, and still higher than those of any year before that.

Indeed, few welfare programs have grown faster in recent years than SNAP. As with most federal spending, the increase started under President Bush, then escalated rapidly under President Obama. Since 2000, spending on SNAP increased from just $17 billion per year to more than $78 billion in 2012, a greater than fourfold increase. The increased spending was driven both by an increase in the number of recipients (a surge from 17 million in 2000 to more than 48 million today) and an average benefit per person that has almost doubled. Today, nearly one out of every six Americans receives SNAP.

Of course, some of this increase could be considered countercyclical, because welfare programs automatically expand during economic downturns, such as in the recent recession. However, increases in both participation and spending were bigger during this recession than in previous ones. For example, during the 1980–82 recession, enrollment in food stamps increased by only 635,000, and spending rose by just $124 million (in constant 2012 dollars). During the 1990–92 recession and jobless recovery, enrollment increased by 5.2 million, and spending rose by $9.1 billion. During the current recession (over a comparable three-year period), enrollment increased by 12 million people, while spending increased by $30 billion, which suggests that much of the increase was due, not to the economy, but to deliberate policy choices.

Moreover, looking forward, the Congressional Budget Office projects that both enrollment and spending will remain above pre-recession levels, even as the recovery limps along and unemployment declines. According to CBO, spending will never fall below $73 billion per year over the next decade and enrollment will remain above 34 million (enrollment will also still be as high as 45 million in 2016).

In fact, SNAP’s eligibility requirements have been significantly relaxed. This is no longer a program targeted at the poorest Americans who may need some temporary help, but has become part of an ever-growing welfare state. Nearly 17 percent of SNAP households have incomes above the poverty line. Almost 4.5 million recipients are able-bodied adults without children, more than 10 percent of the beneficiaries.

Especially in conjunction with other welfare programs, SNAP helps breed dependency and undermines the work ethic. Like much of the American welfare state, it is designed to make poverty a little more comfortable, not to get people out of poverty.

SNAP suffers from numerous other problems as well. The program’s administrative costs are extremely high, as much as $4.5 billion per year. Additionally, SNAP has a high rate of fraud and abuse. According to the Department of Agriculture, food-stamp fraud costs taxpayers at least $750 million annually, much of it committed not by recipients but by vendors.

Largely because of the switch from cash benefits to EBT cards, the fraud rate has improved somewhat in recent years; but because the program has ballooned in size during that same time period, the amount of money lost to waste and fraud is still significant.

And, finally, it should be noted that SNAP frequently subsidizes unhealthy food. At a time when obesity is a major national problem, should the federal government really be subsidizing the purchase of “soft drinks, candy, cookies, snack crackers, and ice cream,” as noted by the DOA? Before we ban sodas for the rest of us, shouldn’t we stop forcing taxpayers to buy them for other people?

Backers of SNAP argue that food stamps have had a long history of bipartisan support. Indeed, they have. Liberal Democrats have unsurprisingly backed an expansion of the welfare state, while farm-state Republicans have been happy to have government-subsidized purchases of their states’ products. But “bipartisan policy” and “good policy” rarely mean the same thing.

No American should ever go hungry. But the best solution to poverty remains a growing economy that produces jobs and prosperity, not poorly targeted, bureaucratic welfare programs.

Perhaps Democrats worried about poverty should drop the stunts, have themselves a good meal, and do something to cut taxes, reduce debt, and revive economic growth.



The challenge to Turkey's Islamists depends on the economy

REBELLION has shaken Turkey since May 31. Is it comparable to the Arab upheavals that have overthrown four rulers since 2011, to Iran's Green movement of 2009 that led to an apparent reformer being elected president last week, or perhaps to Occupy Wall Street, which had negligible consequences?

The unrest marks a deeply important development with permanent implications. Turkey has become a more open and liberal country, one in which leaders face democratic constraints as never before. But how much it changes the role of Islam in Turkey depends primarily on the economy.

China-like material growth has been the main achievement of Recep Tayyip Erdogan and the party he heads, the AKP. Personal income has more than doubled during his decade in power, changing the face of the country. As a visitor to Turkey since 1972, I have seen the impact in almost everything, from what people eat to their sense of Turkish identity.

That impressive growth explains the AKP's increased share of the national vote in its three elections, from 34 per cent in 2002 to 46 per cent in 2007, to a shade under 50 per cent in 2011. It also explains how, after 90 years of the military serving as the ultimate political power, the party was able to bring the armed forces to heel.

But two vulnerabilities have become more evident, especially since the June 2011 elections, jeopardising Erdogan's domination of the government.

One is dependence on foreign credit. To sustain consumer spending, Turkish banks have borrowed heavily abroad. The resulting current account deficit creates so great a need for credit that the private sector alone needs to borrow $US221 billion ($240bn) this year, or nearly 30 per cent of the $US775bn gross domestic product. Should the money stop flowing into Turkey, the party (pun intended) is over, possibly leading the stockmarket to collapse, the currency to plunge and the economic miracle to come to a screeching halt.

The other is Erdogan's sultan-like understanding of his democratic mandate. The Prime Minister sees his election in 2011, when the AKP won half the popular vote, - as a carte blanche to do whatever he pleases until the next vote. He indulges his personal emotions (recall his confrontation with Shimon Peres in 2009), meddles in the tiniest matters (his decision on a different use for a city park prompted the present turmoil), attempts social engineering (telling couples to bear three or more children), involves Turkey in an unpopular foreign adventure (Syria) and demonises the half of the electorate that did not vote for him (calling them beer-guzzlers who copulate in a mosque).

This attitude has won the fervent support of his once-downtrodden constituency but wrought the fury of the growing numbers of Turks who resent his authoritarianism, as well as the criticism of Europe leaders. German Chancellor Angela Merkel pronounced herself "appalled" by the police crackdown.

These two weaknesses point to the importance of the economy for the future of Erdogan, the AKP and the country. Should Turkey's finances weather the demonstrations, the Islamist program at the heart of the AKP's platform will advance, if more cautiously. Perhaps Erdogan will remain leader, becoming the next president, with newly enhanced powers; or perhaps his party will tire of him and - as happened to Margaret Thatcher in 1990 - push him aside in favour of someone who can carry out the same program without provoking so much hostility.

But if "hot money" flees Turkey, if foreign investors go elsewhere and if Persian Gulf patrons cool on the AKP, the demonstrations could end AKP rule and rupture the drive towards Islamism. Infighting within the party, especially between Erdogan and President Abdullah Gul, or within the Islamist movement, especially between the AKP and Fethullah Gulen's powerful movement, could weaken the Islamists. More profoundly, the many non-Islamist voters who voted for the AKP's sound economic stewardship may abandon the party.

Payroll employment is down by 5 per cent. Real consumer spending in this year's first quarter fell by 2 per cent over 2012. Since the demonstrations started, the Istanbul stockmarket is down 10 per cent and interest rates are up about 50 per cent.

To assess the future of Islamism in Turkey, watch the economic indicators.




Immigration bill shifts to US House after Senate OK:  "Attention is shifting to the House and its conservative [sic] majority after the Senate passed a landmark [sic] immigration bill opening the door to U.S. citizenship to millions while pouring billions of dollars into securing the border with Mexico. The bill’s prospects are highly uncertain in the Republican-led House, where conservatives rule"

Watchdog: Liberal groups not targeted by IRS: "The government watchdog that exposed IRS targeting of conservative groups gave a blunt response to Democrats' claims that the agency also targeted liberals: It never happened. 'We found no indication in any of these other materials that 'Progressives' was a term used to refer cases for scrutiny for political campaign intervention,' IRS Inspector General J. Russell George wrote in a letter to Democrats. Democrats have since turned on the IG's office, claiming it is only telling half the story."

Spy, monsignor and banker arrested in Vatican bank fraud “plot”:  "An Italian spy, a Vatican official and banker have been arrested on suspicion of corruption and fraud involving an alleged plot to bring 20 million euros in cash into Italy from Switzerland aboard a government plane. The arrests come just two days after Pope Francis appointed a special commission to oversee the Vatican's scandal-plagued bank, which is known officially as the Institute for Religious Works."

NY: Bloomberg to urge Cuomo to veto bill to allow sparkler sales outside of NYC over terror target fears:  "It could spark terrorism! Mayor Bloomberg will urge Gov. Cuomo to veto legislation that would legalize the sale of sparklers outside New York City, arguing that terrorists could resort to using even kiddie fireworks to ignite a bomb. And that’s a risk not worth taking, City Hall officials said. The mayor opposes the measure, which the Legislature passed last week, even though it wouldn’t apply to the five boroughs, where a ban on sparklers -- and all other fireworks -- would remain in effect. The bill would allow the sale of sparklers and other small 'novelty' fireworks only in counties outside the city."

Jesuits, and failed Jesuits:  "Don’t you hate it when people say, 'Let me be clear on one thing ... Let me make this perfectly clear?' Don’t you think, 'So, you’ve been unclear about all those other things, and you knew it, but you went on being unclear anyway?' Don’t you immediately conclude that these people are about to tell you some enormous lie? President Nixon was always talking in the 'clear' mode. He was always 'making one thing perfectly clear.' Now, President Obama has become an addict to the same approach."

Don’t tax my credit union:  "While the big banks have abandoned small businesses in droves because they just can't make enough money, credit unions promote their small business members in a struggling economy by providing low cost credit alternatives. This credit union investment means millions of jobs across America. Unfortunately, the big banks and some in Congress want to raise taxes and impose new fees on 96 million credit union members who represent 40% of all Americans, yet represent only 6% of the assets in financial institutions. And, they want to do this despite the fact that credit unions are not-for-profit and meeting their core mission every day."


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