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Food (Stamps) for Thought
Focus on cutting crop subsidies to the rich, not transfer payments to the (mostly) poor.


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314
Henry Olsen

The conservative war on food stamps is the most baffling political move of the year. Conservatives have suffered for years from the stereotype that they are heartless Scrooge McDucks more concerned with our money than other people’s lives. Yet in this case, conservatives make the taking of food from the mouths of the genuinely hungry a top priority. What gives? And why are conservatives overlooking a far more egregious abuse of taxpayer dollars in the farm bill?

The Heritage Foundation is leading the charge on this, and its argument (which has been largely adopted by congressional conservatives and House majority leader Eric Cantor) boils down to four points: Food stamps (a.k.a. the Supplemental Nutrition Assistance Program, or SNAP) cost too much, have grown too quickly, encourage government dependency, and discourage work. They note that SNAP now costs around $80 billion a year, up fourfold from the program’s cost in 2000. One in seven Americans, about 47 million, now receive food stamps. About 4 million of these are able-bodied adults without dependents, many of whom work fewer than 20 hours a week or do not work at all.

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The problem with the war on food stamps is that there’s one subsidy program in the farm bill that promotes greater dependency than food stamps and is growing just as fast: government-financed crop insurance. Yet conservatives say virtually nothing about this bailout of the rich and focus their ire on payments to the poor.

I can see why conservatives would find the rise in food-stamp enrollment troubling. People who don’t need government benefits could always be tempted to take advantage of loosely structured government programs. Conservatives are rightly worried about this, and thus are eager to tighten eligibility standards and enforcement to ensure that people aren’t gaming the system. However, crop insurance provides even greater temptations to people with far less justification for government aid.

America’s crop-insurance program is obscene. Farmers receive government subsidies averaging 70 percent of their premiums to purchase insurance that protects them against declining crop value. There’s no income limit for this subsidy: The vast majority of this taxpayer money goes to farmers who make in excess of $250,000 a year. The insurance policies are sold by private companies, and the government also pays those firms about 20 percent of the premium cost to cover their expenses. The companies get to keep the profits from the policies, so taxpayer money makes crop insurance a largely risk-free investment for insurance companies. Thus, the government uses taxpayer money to pay rich farmers to buy insurance from wealthy insurance companies, whom the government also pays to sell the policies to the farmers. Talk about a “free” market.

Every problem conservatives complain about in food stamps is even worse in crop insurance. As you might expect when a program essentially offers intelligent, entrepreneurial people free money, they take it, and costs have exploded. From 2000 to 2011 — the same time period Heritage uses to analyze the growth in food-stamp expenditures — annual crop-insurance costs have also increased fourfold, from $2.2 billion to $8.6 billion. But at least with food stamps a significant portion of the cost growth since 2007 — between 30 and 50 percent, according to University of Chicago economist Casey Mulligan — occurred because the recession made more people eligible. Crop-insurance subsidies are not means-tested, so their increase is not necessarily due to falling income resulting from bad economic times.



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