Last week, the U.S. Department of Agriculture issued a report (in PDF format here) that shows just how well our economy is recovering [snark]:
- As of January 2012, the most recent month available, 46.5 million Americans or 20% (22.2 million) of U.S. households are in the Supplemental Nutrition Assistance Program (SNAP) or food stamps program.
- The average household in SNAP receives $277/month; the average participant receives $132/month.
- Less than half of the SNAP benefit paid monthly actually goes to buying food.
- SNAP is not supposed to be the only source of food purchasing for a household in the program. SNAP money represents about 30% of their income. The typical SNAP recipient also receives other “government transfer payments”: Social Security (21%), Social Security Insurance/Disability (21%), and child support payments (10%).
- Households with children account for 71% of all demand for SNAP. The typical SNAP participant is a child under the age of 18; children account for 47% of the program. Surprisingly, the elderly are only 8% of the program.
- Food stamps appear to be a long-term dependency. Those who were enrolled in the SNAP program in the early-to-mid 2000s remain enrolled for 7 years on average. Over half of those who left the program returned within 2 years.
Writing for ZeroHedge.com on April 20, 2012, Nic Colas of ConvergEx puts the numbers into perspective for us:
- If the 46.5 million Americans on food stamps were a state, it would be the largest state in the Union.
- If the adults enrolled in the SNAP program (about half the 46.5 million total) all voted for one Presidential candidate in the Fall, they would represent over 2x the margin of victory in the 2008 election.
Colas also gives us the historical background.
The SNAP or Food Stamps program got its start in the Great Depression — an effort to give some of the surplus produced by America’s agricultural system to the urban poor. The poor could buy “stamps” that entitled them to buy both regular foodstuffs as well as discounted surplus produce. The program went dormant during World War II but President Kennedy resurrected it in 1960, altering it from a pay-for-stamps system to a straight entitlement. With some tweaks and alterations, this is the program we have today – a nationwide system of evaluating those who are deemed to be at risk of food insecurity (typically those making less than 130% of the poverty line) and giving them money to purchase food.
Mindful that long economic recessions have a way of forming permanent habits among Americans, Colas warns that the Food Stamps program has all the signs of becoming a permanent entitlement:
The trouble, as I see it, is that the SNAP program has become wildly successful. That is not a slam against the people that use it – I personally agree that no one, especially a child, should go to bed hungry in America. But it’s not hard to see where this program is creeping its way from counter-cyclical stimulus and support to a lasting entitlement program that will be very hard to change.
[...] a large percentage of the population – 20% of households is a big number – is locked into this program. There are endless studies in the world of behavioral finance that show that people are very quick to budget increases in disposable income as permanent. And don’t forget that by the USDA’s own numbers, most of the benefit is effectively NOT being spent on food. In the narrowest sense, the money spent on the SNAP program is tiny relative to the Federal budget – $6 billion a month, or a drop in the $270 billion/month government spend.
But this is where I wonder about the long shadow of the last recession. Have we reached a point where Americans want a clear and potentially permanent social safety net? And how far should it go? Again, the current SNAP program is a cheap way to provide this, so from a budgetary or societal standpoint it is hard to argue that it breaks the bank. But what if it is an emblem of something greater? In many ways I think this is a big chunk of what the November election will be about, and at least the Food Stamp program seems to show that Americans have made up their minds.
Add to Colas’ observations the fact that 47% of SNAP recipients are children — and there is even more reason for us to wonder if new generations of Americans are growing up with a permanent sense of entitlement and dependency on Big Government to provide for them.