When the Mayor of Newark lives this week off food stamps, he will join one in every three children in America.
The number of Americans on food stamps has increased 70% since 2007, with now 45 million families on low-incomes receiving them. Last year, $78 billion was spent on food stamps federally. That’s more than double the entire federal spending on tax-credits. This sharp rise suggests that food stamps are extremely responsive to the economic crisis of the Great Recession – and the ways that the main welfare and work programs are not.
The 2009 American Recovery Act included an addition $29 billion for food stamps over three years. This money has now run out. But the Center for Budget and Policy Priorities does not project the spending on food stamps to return to pre-crash levels for a decade. That’s because the growth in food stamps not only reflects the impact of the Great Recession, but also the limits of welfare reform.
While food stamps may be a “band-aid” for poverty, its an essential one. In 2010, SNAP prevented 1.3 million children from falling below the poverty line – far more than welfare did. Although worth less than $5 a day, the program is a major source of income for families who are ineligible for TANF (Temporary Assistance for Needy Families). Unlike welfare in America, food stamps don’t come with time-limits and in many cases stringent work-requirements; and you can claim them whether, month-to-month, you are in or out of work. States and city governments also like food stamps, in part, because, while state block-grants for welfare are capped (at 1997 levels), SNAP is funded by the feds.
If there is one lesson to learn from the rise in food stamps, it is the limits of welfare reform. America must surely now have the toughest, most punitive, welfare model of any developed nation: benefits are time-limited and funding to states is capped in nominal terms. Initially such reforms did dramatically reduce caseloads (although the drop reached at plateau the in mid-2000s). It meant some parents moved into work and – with the help of tax-credits, and food stamps – out of poverty. But what it didn’t do was reduce the overall public spend on poverty.
Even before the recession, and as the value of welfare declined in real-terms, eligibility tightened and caseloads fell, means-tested ‘safety-net’ spending grew. And, in the face of a jobs and wage crisis of the scale of the Great Recession America the costs of poverty have grown, even when the welfare rolls have not. Although far less than the spend on universal Medicare and Social Security entitlements, America’s ‘safety-net’ now comprises 13% of its federal budget. The simple way to reduce spending might seem to be to restrict the safety-net further. But the only sure way to is, through restoring work and work that pays, reduce the numbers needing it.