Is the U.S. Economy Sustainable with the Current Levels of Government Assistance Payments?

An ethical question I ask my students is whether the government should proactively seek out people who may be SNAP-eligible to apply for the “food stamp benefits” available under the Supplemental Nutrition Assistance Program (SNAP).

The broader question is whether the government should take steps to sign up people who may be eligible for government benefits or wait for them to apply on their own. Should we extend the Snap-mentality to unemployment insurance and target those who may be eligible rather than wait for them to apply? One the one hand it seems to me critical thinking skills can be stimulated by providing the opportunity for someone to figure it out on their own that they are eligible, how to apply/fill out the paperwork, and the process to follow to file for benefits. On the other hand, a case can be made that if those eligible could think through a decision that well, then perhaps they would have a job and one that pays more than minimum assistance.

The SNAP costs for all of 2013 are on target to reach about $56 billion. Add to that almost $200 billion spent on unemployment compensation, and we have a recipe for disaster (this doesn’t count the more than $1 trillion spent on social security and supplemental income, Medicare and Medicaid). Here is a summary of SNAP benefits for the past four years from the Congressional Budget Office.

Let me clarify that we have to feed the hungry in the U.S. It is a travesty that so many of our citizens go to sleep without adequate nourishment. The SNAP program is the nation’s most important anti-hunger program.  In 2012, it helped almost 47 million low-income Americans to afford a nutritionally adequate diet in a typical month.

Nearly 72 percent of SNAP participants are in families with children; more than one-quarter of participants are in households with seniors or people with disabilities.

After unemployment insurance, SNAP is the most responsive federal program providing additional assistance during economic downturns.  It also is an important nutritional support for low-wage working families, low-income seniors, and people with disabilities with fixed incomes.

The federal government pays the full cost of SNAP benefits and splits the cost of administering the program with the states, which operate the program.

Unlike most means-tested benefit programs, which are restricted to particular categories of low-income individuals, SNAP is broadly available to almost all households with low incomes.  SNAP eligibility rules and benefit levels are, for the most part, uniform across the nation.  Under federal rules, to qualify for SNAP benefits, a household must meet three criteria (although states have flexibility to adjust these limits):

• Its gross monthly income generally must be at or below 130 percent of the poverty line, or $2,069 (about $24,800 a year) for a three-person family in fiscal year 2013.  Households with an elderly or disabled member need not meet this limit.
• Its monthly net income, or income after deductions are applied for items such as high housing costs and child care, must be less than or equal to the poverty line (about $19,100 a year or $1,591 a month for a three-person family in fiscal year 2013).
• Its assets must fall below certain limits:  households without an elderly or disabled member must have assets of $2,000 or less, and those with an elderly or disabled member must have assets of $3,250 or less.

A controversial issue is whether undocumented illegals receive SNAP benefits. The government claims that undocumented illegals are not eligible for SNAP benefits. However, The Daily Caller points to a Judicial Watch story on how Mexican officials have, in the past, put out flyers that explain in Spanish how undocumented parents of citizen children can obtain food stamps in the U.S. for their children without disclosing their own immigration status.

In practice, these federal entitlements would presumably flow directly to the responsible undocumented parents even though they themselves are ineligible for the same benefit. The line between this arrangement and a violation of federal law barring undocumented immigrants from receiving federal benefits is arguably somewhat blurry as a result, and there may be a legitimate controversy over exactly how the government should distribute benefits to mixed-citizenship families. 

I do not believe the U.S. economy is sustainable if we continue down the path of having an increasing number of citizens dependent on government help for their well-being. The percentage increase in the dollars spent on assistance programs exceeds that for growth in the gross domestic product. Some will tell you that assistance payments are good for the economy – they stimulate the economy. Whether or not this is true, one fact remains: this is not the way we want to stimulate our economy. It doesn’t help to build in sustainable growth. At the same time, the growing numbers of the needy are not learning the technological skills so important for the U.S. to remain competitive with China. What they are learning, in all too many cases, is how to ‘game’ the system so they receive sustainable benefits and government assistance.

The legitimacy and amount of money spent on public assistance creates an ethical dilemma because while we want to provide for all the needy who legitimately qualify for government assistance, it is taking an enormous amount of money to do so. Our economy is not growing at a pace fast enough to sustain the level of benefits needed. The sad part is politicians are not addressing this important issue.

Blog posted by Steven Mintz, aka Ethics Sage, on August 22, 2013