The routine renewal of a federal bill that provides subsidies to farmers and food assistance to low-income families is igniting an age-old debate about government responsibility, poverty and entitlement.
At the center of the controversy is a messy economic equation that the U.S. Department of Agriculture (USDA) uses to determine monthly allotments of electronic food stamp benefits. The benefits formula is based on income, assets and household composition. It takes inflation into account but does not adjust for it automatically, and politicians tinker with it during each five-year review of the Farm Bill, which sets the program’s benefit guidelines.
The USDA has requested nearly $60 billion for the national Food Stamps Program in fiscal year 2008 - which is $27 billion more than it spent in 2006 - in part because of increased enrollment. More than 26 million Americans receive food stamps each month, and one in five receives them in the course of a year, for an average of nine months. Three quarters of food stamp benefits go to households with children. Twenty-three percent of recipients have a disabled resident, and 17 percent have an elderly person.
The USDA bases the maximum value of benefits on a self-generated Thrifty Food Plan, a low-cost model program adjusted periodically for food price inflation. But the agency is mandated by Congress to cap benefits at 100 percent of the plan's cost, compared with 103 percent in the early 1990s. The plan is also revised infrequently. Seven years elapsed between the release of the last Thrifty Food Plan and the USDA's 2007 version.
Earlier this month, as Congress prepared to debate the 2007 Farm Bill that must be passed by October, a handful of elected officials spent a week living on one quarter of the average monthly benefit for 2005. They did this to show the difficulty of eating healthy food on an allotment that does not directly correspond to inflationary trends in the economy.
Representatives Jo Ann Emerson (R-MO) and Jim McGovern (D-MA) were among the politicians who took the "Food Stamp Challenge," spending only $21 for a week's worth of food to call attention to their bill to increase food stamps funding and eligibility.The Feeding America's Families Act would amend the 1977 Food Stamp Act to change the minimum individual benefit from $10 per month to 20 percent of the Thrifty Food Plan. Over four years, it would also roll back the three-percentage point reduction for maximum benefits that was made as part of the 1996 national welfare reform law.
Senator Charles Schumer (D-NY) also proposed a bill to amend the 1977 act so that maximum benefits would be adjusted every October 1 to the nearest $100 increment reflecting inflation over the past year ending in June. The Farm, Nutrition, and Community Investment Act calls for an automatic adjustment based on the Consumer Price Index (CPI) for All Urban Consumers. The CPI tracks changes in average retail sales of all goods and services in the nation and is the most widely used economic indicator for inflation.But June O'Neill, Professor of Economics at Baruch College and a former director at the Congressional Budget Office, said it is more logical to adjust benefits according to fluctuations in food prices than to changes in the CPI. "Food prices are highly volatile so an increase based on a food price index sometimes would be more than the CPI increase and sometimes less," he said in an email.
Michael Tanner, Director of Health and Welfare Studies for the conservative public policy research foundation Cato Institute, called the Food Stamp Challenge "street theater" and said the value of benefits should not rise automatically because many recipients have other sources of government assistance."The adjustment would make very little difference in terms of the average family. It would be just a few dollars per week," Tanner said about the proposal to adjust benefits for inflation. "The reality is that most people who get food stamps also receive other entitlements. The reality is that very few people live on $21 a week."
According to the USDA, inflationary adjustment of benefits was cut off by the 1996 welfare reform law, which also froze the standard deduction for households of one to three people at $134. The 2002 Farm Bill restored inflationary adjustment for households of four or more, but not for smaller families. Average monthly benefits per person, in 2006 dollars, have risen dramatically since the program's inception, from $37.12 in 1969 to $94.27 in 2006.But the increase has come at an inconsistent and unpredictable pace, and the value of average benefits has sometimes backtracked along the way. The average benefit topped $90 in 2006 dollars for the first time in 1979 and peaked at $93.16 in 1981, but then dropped by more than $9 in 1982, and another $3 by 1987. The next year it rose by $4 in 2006 dollars.
In 1990, the average monthly benefit per person in 2006 dollars rose above $90 again, hitting $95.03 in 1991 and a record-high of $97.91 in 1992 - both of which trump the current average. Benefits fell below $90 again in 1997, and stayed there until 2003. In 2005, the average benefit in 2006 dollars hit $95.71 - or a little more than $3 a day - which is second only to the 1992 average."This fluctuation has been the result of a complex interaction between changes made by Congress and a number of other factors, including as a gradual decline in the average household size," the USDA said in a statement.
The 2006 national average - adjusted for inflation - is the fourth highest since the program began. But that comes as little consolation to Denise Jones, Field Supervisor for the Food Card Access Project - a program to increase food stamps access in East New York, Brooklyn - who argues that the Food Stamps Program is flawed because it lowers the benefit value for seniors who also receive Social Security, does not adequately account for rising rent and bills in New York City, and fails to grow in proportion to inflation.
“It’s totally insufficient," Jones said about the value of benefits. "It does change year to year by three or four dollars, but it's not that much to sustain the cost of living and how things are rising in New York. It’s just a rate that they come up with and I don’t know what they base it on.”
The average benefit per household in New York State was $199.63 in 2006 - a drop of $10.28 from 2003, in 2006 dollars, and about $8.50 less than the 2004 average. The average individual benefit in New York was $104.52 last year - which is almost $3 more than the 2002 average, in 2006 dollars, but nearly $1.50 less than the next year's average.
"I have a lot of seniors that literally all they get is $700, $600 a month - three or four hundred goes to rent and they have $200 to live on," said Jones. “I think that’s very sad because they’ve worked their whole lives and if they don’t have a pension they’re really lost.”
But a 52-year-old mother who lives in East Flatbush, Brooklyn, and received food stamps for the first time this month after being laid off from an executive receptionist job said the less than $200 she received was more than enough for her and her 15-year-old son. Despite the shaky formula used to determine the value of benefits, the woman, who declined to be named, said adjusting food stamps for inflation would make little difference to recipients.
"I think it's very unpredictable, but I will say this: for anyone that has a child, they can still eat," the woman said. "I think the ones who are on it are not the least bit moved by inflation because it doesn't affect them."This article was written for a business reporting class at the City University of New York Graduate School of Journalism.
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