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Friday, February 24, 2023

Forget Junk Food Restrictions. It’s Time to Scrap Food Stamps Altogether

Roughly $27 billion in food stamps was spent on junk food in 2022. But that’s hardly the only problem with this program.

Image Credit: iStock

The Supplemental Nutrition Assistance Program (SNAP)—more commonly known as food stamps—has seen sharply rising costs in recent years. The costs have been slowly ballooning ever since the program’s inception in 1961, but due to a variety of policies and economic factors that arose during the pandemic, SNAP spending is rapidly escalating.

For context, SNAP expenditures in fiscal year 2000 totaled $17 billion (FY 2000 was Oct. 1, 1999 – Sept. 30, 2000. All annual costs that follow are for fiscal years). That’s a lot more than the $9.2 billion spent on the program in 1980—even after adjusting for inflation—but with population changes and such, perhaps one could argue that doubling the spending over two decades was reasonable.

But the growth in SNAP spending hardly stopped there.

In the following years spending on the program continued to increase, and by 2010-2019 annual expenditures were hovering around $70 billion per year. And when the pandemic hit, all bets were off. In 2021 SNAP costs soared to $113.7 billion, by far the highest in the program’s history. In 2022 costs were $119.2 billion. And for 2023, Congress has generously provided $153.8 billion for the program, roughly double what was spent just 5 years ago.

The causes of these increasing costs largely trace back to policy changes. As Angela Rachidi of the American Enterprise Institute explains, “SNAP was already on an increasing trajectory stemming from years of policy changes that relaxed eligibility and increased program take-up. However, actions since the pandemic have increased SNAP expenditures well beyond caseload increases, with considerable effect.”

One pandemic-related change was the introduction of SNAP emergency allotments, which allowed all households to receive the maximum benefit allowed. Congress finally ended these payments in the FY 2023 omnibus bill, but various other policy changes are setting the stage to make $100 billion+ levels of SNAP spending the new normal.

A Brief Primer on Food Stamps

With costs reaching unprecedented levels, it’s worth taking some time to understand what exactly this program does and what people have been saying about it in recent years.

To the first point, SNAP is a federal nutrition assistance program administered by the US Department of Agriculture (USDA) that provides funds to low-income households to help them buy groceries. Participation in the program has been growing steadily in recent years, from 17.2 million Americans in 2000 to 41.2 million in 2022—which is about 12.5 percent of the US population (or 1 in 8 people).

The main eligibility requirement for SNAP benefits is that a household must have an income below 130 percent of the federal poverty level ($32,000 for a family of three). Other eligibility criteria include things like work requirements, though there are exceptions for certain groups such as students, those caring for children, and the elderly.

SNAP participants are allowed to buy almost any foods and beverages they want with the funds, with the main exceptions being alcoholic beverages, vitamins, and hot foods (such as fast food). In 2018 the average monthly benefit for a SNAP participant was $125, though this number has increased in recent years due to the aforementioned policy changes.

The Junk Food Problem

Much of the discussion around SNAP in recent years has revolved around the nutritional value of the food being purchased with SNAP funds, and for good reason. A 2016 USDA study found that 9.3 percent of the average SNAP household’s grocery bill is spent on “sweetened beverages” like soda and pop (the number was 7.1 percent for non-SNAP households).

Zooming out to junk food more broadly, the study found that 22.6 percent of a SNAP household’s grocery bill is spent on a combination of sweetened beverages, prepared desserts, salty snacks, candy, and sugar, while non-SNAP households spend 19.7 percent of their grocery budget on these items.

Doing the math, American taxpayers subsidized junk food purchases to the tune of $26.9 billion in 2022.

Experts were sounding the alarm on this even before the 2016 study came out. “We’ve analyzed what [food stamp] participants are eating and it’s horrible food,” said Walter Willett, chair of Harvard University’s Department of Nutrition, in 2015. “It’s a diet designed to produce obesity and diabetes.”

In the wake of the 2016 report, the pressure to reform the SNAP program has only grown. “In this sense, SNAP is a multibillion-dollar taxpayer subsidy of the soda industry,” said Marion Nestle, a professor of nutrition, food studies, and public health at New York University. “It’s pretty shocking.”

Should Sugar-Sweetened Beverages Be Excluded from SNAP?

Though many would like to exclude all junk food from being purchased with SNAP dollars, the most widely supported reform is the more modest proposal to exclude sugar-sweetened beverages (SSBs) like pop and soda. This may seem like a no-brainer to some, but there is actually considerable debate about whether this is a good idea. Importantly, the USDA has historically come down on the side of the status quo, and it has denied many requests from states for SSB restrictions over the years (something the sugar lobbyists no doubt appreciate).

Proponents of SSB restrictions on SNAP funds justify their position by pointing to the clear negative health effects of these drinks. “A nutrition assistance program that permits the purchase of SSBs is blatantly ignoring decades of research documenting the harm associated with these products,” writes Nicole E. Negowetti of Harvard University in a 2018 paper on the subject.

Some studies have indicated there is a lot of potential for good in such a restriction. For instance, a 2014 Stanford University study concluded that SSB restrictions on SNAP funds would prevent 141,000 kids from becoming obese and save a quarter million adults from Type 2 diabetes.

Proponents also point out that the Supplemental Nutrition Assistance Program should be funding things that are, you know, nutritious. This isn’t mere wordplay either. The program used to be called the Food Stamps Program, but Congress changed the name to SNAP in 2008 specifically to emphasize the shift in focus from its historical purpose of just getting people enough calories to its more modern purpose to “permit low-income households to obtain a more nutritious diet.”

If the goal of SNAP is to improve nutrition, is it really so much to ask that SNAP funds not be used on sugary drinks?

Yes, actually, say the detractors in this debate, and they have their reasons. These reasons broadly fall into two categories: practicalities and ethics.

On the practical side, some SSB restriction opponents argue that such a measure would create logistical difficulties because it would impose significant burdens on those administering the program.

Another argument is that the measure would be ineffective because people would just use the SNAP funds for the non-SSB parts of their groceries and spend their own money on SSBs. Money is fungible, as they say. This is probably one of the stronger arguments against an SSB restriction, but proponents argue that even if this substitution does take place, it might not be one for one, so the SSB restriction could still help. And given that this is essentially an empirical question, wouldn’t it make sense to at least authorize a pilot project and see what happens?

On the ethical side, some detractors argue that an SSB restriction could lead to stigmatization for those on SNAP. By singling out the poor, the argument goes, this restriction could make it seem like overconsumption of SSBs is a “poor-person” problem, when in fact this is a problem that affects all Americans more or less equally.

A related argument is that such a restriction would amount to a demeaning paternalism, where the government is taking away the free choice of SNAP beneficiaries “for their own good.” “A restriction on SSB is considered by some to be a patronizing attempt to ‘micromanage’ the lives of the poor,” writes Negowetti. “The message conveyed through the restriction on SSB purchases with SNAP is that poor people make bad choices, therefore requiring government intervention to manage their food choices whereas higher income persons do not.”

The Case against Food Stamps

Drawing on that last point, many would argue that the pro-freedom side of this debate is the side against SSB restrictions. After all, we don’t want the government limiting people’s freedom of choice, right?

This is a tempting perspective, but it’s not quite that simple. The key thing to remember is that this isn’t the SNAP beneficiary’s own money. This is taxpayer money. And that changes things.

“No one is suggesting poor people can’t choose what they want to eat,” notes Dr. David Ludwig, a Professor of Nutrition at Harvard. “But we’re saying let’s not use government benefits to pay for foods that are demonstrably going to undermine public health.”

Though some portray SSB restrictions as a “ban” on soft drinks, this rhetoric is misleading. The government would not be “infringing on the freedoms of low-income Americans” by specifying what they can buy with the money provided. It would simply be saying that if you’re going to take taxpayer money, taxpayers would like a say on how that is spent. The rights of SNAP beneficiaries aren’t being violated simply because taxpayer money comes with conditions.

In fact, the only rights being violated here are the rights of taxpayers to keep their own money and spend it as they see fit. When you rob Peter to pay Paul, Peter is the victim, and giving him a modicum of control over what Paul can spend the money on is little consolation for being forcibly deprived of what is rightfully his money.

This is where the framing of this entire issue needs to be challenged. The debate people are having is whether SSB restrictions should be put in place. But the debate we need to be having is whether this program should exist at all.

Not only is this robbery on a massive scale, the program also seems to be doing a pretty bad job at promoting nutrition. “One of the great mistakes,” Milton Friedman reminds us, “is to judge policies and programs by their intentions rather than their results.” The fact is, nutrition and health among low-income Americans remain terrible despite decades of food stamps and astronomical levels of funding. While approximately one third of adults are obese in the US overall, that number is 40 percent for Americans on food stamps. In short, SNAP isn’t working. Could an SSB restriction help? Sure. But it’s hardly a silver bullet.

There comes a point where we need to acknowledge that despite being designed with the best of intentions, this program has simply failed to accomplish its stated goals. Nutrition is tremendously important, but that’s precisely why we need to explore alternative solutions that might actually fix the problem, rather than throwing more and more money at solutions that clearly aren’t getting results.

So what would be a better solution? For starters, private charities can play a big role in this fight, especially if taxpayers are no longer saddled with a $100 billion program every year. True, charities probably wouldn’t get an equivalent amount of funding because they’d have to rely on voluntary donations, but they’d also likely be much more effective with the money they do get, and it’s quite possible that the increased effectiveness could more than outweigh the lower funding.

The reason charities would likely be more effective is that they have to compete for donations, which means they will succeed as an organization only to the extent that their programs actually work. Whereas government programs tend to get funded regardless of performance, charities are directly accountable to their benefactors and are quickly dissolved if they prove ineffective.

As with every other sector, a multiplicity of charities allows us to collectively “try out” different ideas, and then the market can select for the best ones.

One charity might run a program similar to food stamps, except they only allow the recipients to use the money on healthy food. Another charity might provide money for groceries on the condition that you agree to not buy any junk food for the month, not even with your own money (thus getting around the fungibility problem). Yet another charity might take a completely different approach, promising to pay people a certain sum of money if they reach certain health-related targets like walking for 30 minutes a day or losing a certain amount of weight. These groups can then do studies to demonstrate how effective their programs are at improving people’s health, and benefactors can review these studies when deciding where to put their money.

Another great way to help the poor would be to just get the government out of their way, starting with not taxing them. The marginal tax rate on taxable income up to $11,000 is 10 percent, and the marginal rate on taxable income from $11,000 – $44,725 is 12 percent. Using the standard deduction for 2022 and assuming no tax credits, that’s $58.75 a month for an individual filer making $20,000 a year, just from federal income taxes.*

And we wonder why people struggle to put food on the table.

On top of taxes, governments also maintain a litany of regulations, trade barriers, land-use laws, licensing laws, and permits that make the cost of living vastly higher than it needs to be. Then there’s inflation, which disproportionately hurts the poor since they tend to receive the newly printed money only after all the prices have gone up.

And that’s just scratching the surface. We could be here all day talking about how the government makes life hard for the poor.

A New Perspective on Poverty

To many, the prospect of abolishing SNAP sounds callous and cruel. Even many who are otherwise staunchly anti-government are sympathetic to programs like this, because the plight of the poor is so compelling.

But abolishing SNAP is not about turning our backs on the poor. It’s about recognizing that there are far better ways to help them. In particular, it’s about a paradigm shift from seeing government as the solution to seeing government as the problem.

The harms the government creates are largely invisible. Food stamp programs, on the other hand, are easy to see. But as Hazlitt famously pointed out in Economics in One Lesson, we need to look beyond the salient and conspicuous to those policy impacts which are less obvious yet still very real.

Those who care most about hunger and nutrition should be the most eager to shift the conversation away from bad solutions like robbing Peter to pay Paul and toward better solutions like having the government get out of Paul’s way. There are ways to solve these problems, but they require a radical departure from our usual way of thinking about them.

The goal is not some cruel dystopia where the poorest among us are simply left to starve. The goal is to reduce taxes and regulations so much that absolute poverty becomes a thing of the past. We oppose food stamps not because we want poverty to persist or get worse, but because we care enough about poverty to insist on better solutions, solutions that actually work.

*Correction: An earlier version of this article erroneously stated the amount was $182/month.

This article was adapted from an issue of the FEE Daily email newsletter. Click here to sign up and get free-market news and analysis like this in your inbox every weekday.

  • Patrick Carroll is the Managing Editor at the Foundation for Economic Education.