Welfare: Subsidizing States, not the Poor

Let's try a little thought experiment. First, think of your extended family, and pick out which ones you would consider poor. Next, imagine you meet Bill Gates and he says he'll give $10,000 to each of your relatives who is poor, and asks you for a list of those people. You may find a few more poor people the second time.

This is the position the states find themselves in with the food stamp program, or SNAP as it is known nowadays. When the federal government comes and asks for a list of low-income people to give benefits to, the states tend to look beyond helping the truly needy. As a result, SNAP – Supplementary Nutritional Assistance Program – is less about helping the poor and more about getting federal funds into the states.

SNAP is federally funded but administered by the states. The federal government pays for the entirety of benefits provided by SNAP, but lets the states determine the final criteria for who receives the benefits. Originally, there were fairly tight federal constraints on who could be a food stamp recipient. To qualify, a household needed to have:

• a net income below the poverty line,
• a gross income below 130% of the poverty line, and
• be within certain limits on liquid assets.

Additionally, the original model automatically provided food stamps to those who received benefits from Aid to Families with Dependent Children (AFDC), Supplemental Security Income, or General Assistance. These programs were generally restrictive in who they would aid, and contributed only a small part of the food stamp program's beneficiaries.

The program began to change in 1996, when welfare reform replaced AFDC with Temporary Assistance to Needy Families (TANF). Unlike AFDC, TANF provided more kinds of benefits than just the basic direct payments made to families meeting federal standards under AFDC. The states were allowed to create new benefits under TANF based on what would best reduce poverty in their own situation.

This in and of itself was a reasonable idea, letting the states experiment and innovate. However, a rule change by the Department of Agriculture in 2000 led to unintended consequences for food stamps. Any TANF benefit, not just the ones carried over from AFDC, now qualified someone for food stamps. States could create whatever "anti-poverty" program they wanted and suddenly get more federal funds through food stamps.

Unsurprisingly, this has caused changes in the food stamp program. Under the Obama administration, the USDA has gone so far as to encourage states to use the TANF loophole. 40 states have gone along with this and created literally paper-thin TANF benefits to give people food stamps:

• In Idaho, the benefit is a flyer;
• In Alabama, Hawaii, and five other states, it's a brochure;
• Vermont's "benefit" is a bookmark.

As a result of these "programs," between 2006 and 2012, the proportion of SNAP recipients eligible due to noncash TANF benefits grew from 18.7% to 68.3%. That same time span saw a growth in the number of recipients from 27 million to 47 million. One in seven Americans today gets SNAP aid.

This isn't just because of the bad economy either: only 10 million dropped into poverty at the recession's worst, not 20 million.

The inevitable conclusion is that the aim of food stamps has fundamentally changed. It is no longer to help poor people buy food. Alabama's fliers reading "Be a patriot, bring your food stamp money home" give away the game. The true goal of the program is to shovel as many federal dollars as possible into the states. This helps grow people's dependency on government and feed the bureaucracy that runs the program.

Were the program truly there to help people, states wouldn't be training hundreds of recruiters to overcome people's sense of pride and self-reliance. Armed with responses like "you worked hard and the taxes you paid helped create SNAP," the recruiters are there to change people's minds because if they don't receive aid, they're not bringing in the federal dough.

Perhaps if the program actually focused on the needy, it might stand a better chance of living up to its goal. Categorical eligibility through sham TANF programs takes the program away from its purpose. If there is any good it can do at all, it won't come through being used to inflate state budgets.

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