Dependency Uber Alles

New York Governor Andrew Cuomo is a such a clever guy. He has just milked the social welfare system out of over $450 million per year that Congress and President Barack Obama allegedly did not wish to spend. For doing so, he is being treated as a hero. Other state governors have already copied Cuomo’s gambit.

That the program commonly known as food stamps, technically known as SNAP (Supplemental Nutrition Assistance Program), is badly in need of reform should be beyond dispute. The number of households receiving SNAP benefits grew from 26.9 million at the end of fiscal 2007 to a peak of 47.8 million in December 2012, an increase of 78 percent. Total program costs and benefit payments are well over double what they were six years ago.

Though its post-recession performance has been the least impressive of any since the Great Depression, the economy has still managed to generate just over 8 million additional jobs in the 48 months since February 2010, the last month during which employers shed jobs on a seasonally adjusted basis. Until very recently, that growth in jobholders did little to halt the program’s runaway caseload, which grew by over 8 million during the first 33 months after that employment trough.

The first indications of a long overdue post-recession reversal in program participation occurred this past November and December. The total number of recipients fell by over 700,000 during those two months, and came in below 47 million for the first time since July 2012. Unfortunately, Cuomo and his copycats appear determined to slow down even that minimal amount of progress.

The Empire State governor’s move gets around a loophole many in Congress thought it had eliminated.

Here is the foundation under which Cuomo was able to pull off his con:

… to calculate disposable income, the state takes your total income and subtracts some allowable deductions for essentials. Since things like rent and utilities are considered household necessities, they’re subtracted. To calculate how much a potential food stamp recipient spends on utilities, states used to collect multiple utility bills from each and calculate the average. To streamline things, they came up with a standard utility allowance.

I would argue that the “streamline” was also designed to grow the dependency rolls and increasing dependents’ degree of dependency. Out of thin air, the “standard utility allowance” creates phantom expenses applicants don’t really incur, thus qualifying more households for benefits, and others for higher benefits.

Sadly, this aspect of the law’s administration hasn’t changed. The fact that it hasn’t is why Congress failed to fix the problem it thought it had solved, and why the advertised cost savings won’t occur. Here’s what the law does:

… The measure … involved stopping a practice in multiple states — the use of a program popularly called “heat and eat” that allowed residents who receive as little as $1 in federal heating assistance to also qualify for additional Supplemental Nutrition Assistance Program benefits.

The 2014 farm bill raises the minimum threshold in state LIHEAP (Low Income Home Energy Assistance Program) contributions to $20 for families to qualify for the extra food stamps.

States were even sending the $1 checks to households which don’t pay a utility bill for the sole purpose of increasing their SNAP benefits.

Even hardened leftists like Michigan Senator Debbie Stabenow, advocacy groups like the Center for Budget and Policy Priorities, and press outlets like Mother Jones recognized Congress’s move as an attempt at genuine reform.

So how did Andy Cuomo ruin things? I’ll explain on the next page.

He simply increased the annual LIHEAP checks sent to affected families from $1 to $20.

Presto: 300,000 families will continue receiving excessive SNAP benefits. New York will spend $6 million (300,000 times $20) to ensure that an estimated $457 million per year in benefits continues to be overpaid.

Cuomo’s maneuver has proven too much for other governors to resist. Connecticut Democrat Dannel Malloy quickly followed suit, at an annual taxpayer cost of $67 million. Even alleged Republican Tom Corbett of Pennsylvania has sold out, at a cost of $300 million. Thus, barring new legislation or President Obama using his authoritarian instincts to actually save money (good luck with that), about half of the $8.6 billion Congress allegedly claimed it would save over five years has already evaporated. Other states will surely follow suit.

The social welfare community is naturally pleased as punch, because it believes that SNAP benefit levels are too low. They seldom if ever make serious arguments about benefit levels or how the calculation formulas should be changed in front of Congress, which I take as an indication that they don’t have a case.

Most local press accounts clearly favor the governors’ moves. National press coverage has been sparse, perhaps because Politico, which at least described Cuomo as having “gamed” the law, is often the go-to place where stories worthy of wide national attention get buried. (Other national outlets seem to say, “Well, Politico already covered it, so we don’t have to.”)

On Friday, Republicans in Congress signaled their intention to try to, in House Speaker John Boehner’s words, “stop this cheating and this fraud from continuing.”

If President Obama or any Democrat in Washington really objects to what Cuomo and his co-conspirators have done, I haven’t heard about it. Their silence makes me wonder if they let the farm bill become law because they knew that “creative” governors would quickly get around it. If so, the “stupid party” once again got outsmarted.

SNAP’s goal should be to keep people with inadequate financial resources from inadequate nutrition. Unfortunately, the real objective for far too long has been to convert the program into an automatic entitlement any time one suffers even a small break or a temporary steep reduction in their income.

Thirty-eight states have eliminated the program’s old “asset test,” which kept households with over $2,500 in the bank from receiving benefits (oh, the inhumanity!). Over 30 states have also increased the program’s income eligibility threshold from the long-established 130 percent of the federal poverty level to as high as 200 percent. This has enabled some normally high-earning and well-off households with tens of thousands of dollars in liquid assets whose breadwinners are temporarily unemployed to qualify.

This whole episode demonstrates how difficult if not impossible it will be to get federal spending, 70 percent of which consists of payments to individuals, under control before national insolvency “solves” the problem in a very painful way.