Friday, April 17, 2009

Runaway Federal Spending in One Program: Food Stamps

One of the arguments of the Tea Party protestors was about the massive increase in the deficit and runaway federal spending.

A good example of this is the food stamp program.

Again, a local look. The following numbers are for the Dayton MSA; Darke, Greene, Miami, Montgomery, and Preble counties. These are the total payments over the past 10 or so years.

Note that food stamps were not indexed to inflation until 2008. So this is real program growth without the masking effect of inflation. And this is a program where participants have to be recertified annually at minimum and single able-bodied adults are time limited in getting aid.

With all these restrictions the program still grew by $46 million since 1999.

Taking the long view one can see how this wasn't always the case. Food stamp expenditures dropped in the 1990s until rising again in the 2000s, perhaps due to the business cycle.

And there seems to be a bit of a correlation based on the unemployment rate. Low unemployment <--->lower expenditures on food stamps, with a higher level of unemployment meaning more food stamp expenditures....

...except that unemployment leveled off in the later 2000s, but food stamp expenditures kept rising. One guess as to why this was is the ongoing loss of the living wage jobs in the 200s.

This chart, colored in a nice blue-collar blue, shows how jobs in manufacturing and construction shrank during the 2000s, the same period were food stamp expenditures were rising , even after the 2001 recession ended.

Just a guess as to what is behind runaway spending in one program.

For others one could expect inflation to cause growth, as well as higher rates of lower income work meaning more people are eligible for benefits than before. Then there is the increasing senior citizen population in the region, meaning more expenditures for Social Security and Medicare. And medical costs keep increasing across the board, which would drive more and more spending in Medicaid as well as Medicare.

Perhaps we can only afford a welfare state if there are fewer people eligible for aid. The concept behind a social-democratic welfare state (even the limited US version) was cradle-to-grave social insurance, but it also assumed socio-cultural factors of a work ethic and relatively healthy economy providing high employment that paid a living wage. Social insurance was just that, insurance against the troughs of the business cycle (as well as against old-age poverty).

If the regional economy is typical of the nation and is generating low paying work for more and more people the Feds just can't afford the various income supplements like food stamps and Medicaid, not to mention subsidizing old age pensions and medical care.

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