Downsizing Blog
Food Stamps Cut?
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Prior to last week’s passage of another $26 billion in bailout money for state and local governments, I noted that the legislation wasn’t really offset:
Congressional Democrats say the measure is paid for with a combination of spending cuts elsewhere and tax increases. However, the new spending is front loaded and much of the spending cuts wouldn’t be realized until after 2013. For example, the Congressional Budget Office’s score of the legislation shows savings from the food stamps program of $12 billion from 2014-2018. Congress can come back any time before that and rescind the cuts.
It’s typical Beltway budgetary sleight-of-hand: increase spending up front and “cut” spending on the back-end to get a more deficit-friendly score from the CBO. Democrats don’t really intend to see these cuts actualized, and have indicated as much. That hasn’t stopped media outlets from across the ideological spectrum from running sensationalist headlines.
A headline from CBS news says “Food Stamps Slashed to Pay for Teachers Job Bill.” A hysterical headline at the leftish Huffington Post reads “Cutting Food Stamps to Save Teacher Jobs: A Hateful Trade-off.” And a headline on the conservative Human Events website claims “Democrats Rob Food Stamps to Pay Teachers.”
Adding to the heat is legislation moving through Congress that would “cut” future food stamps spending to help pay for increased child nutrition programs. But as was the case with the bailout legislation, the only change that’s being proposed is to move forward the expiration date for the temporary food stamp expansion contained in the 2009 stimulus bill.
In addition to unnecessary hand-wringing over the future, the near past is all but being ignored. As the following chart shows, the cost of the food stamps programs has exploded over the decade thanks to the recession and benefit increases under presidents Bush and Obama:
The food stamps program needs to be cut. In fact, the entire federal welfare system needs to be devolved to the states, or preferably, private charity. That phantom cuts following a massive increase in food stamps spending would cause such angst indicates that those of us who believe the needy aren’t best served by Uncle Sam have our work cut out.
Posted by Tad DeHaven on August 16th, 2010
Government Sugar Planners "Confounded"
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The federal government operates a complex system of supply controls, price supports, and trade restrictions on sugar. The system protects the incomes of sugar producers by guaranteeing a minimum price for sugar in the domestic market. As a result, U.S. consumers have been paying more than twice the world market price for sugar.
The federal sugar program invokes memories of Soviet-style central planning. This was recently illustrated by a National Journal article [$] that reports that planners at the U.S. Department of Agriculture have been “confounded” by tight sugar supplies.
From the article:
Contrary to expectations, the United States has not been flooded with foreign sugar, which in turn has resulted in tight supplies and high prices, and complicated the management of the U.S. sugar program, according to USDA officials.Lawmakers and analysts expected the U.S. sugar market to see a surge in foreign sugar, especially from Mexico and Brazil, but Mexico is exporting far less due to production and Brazil exports are delayed amid weather problems.Speaking this week at the American Sugar Alliance International Sweetener Symposium, USDA officials described how this unexpected tightening affected the sugar program. ‘Neither CBO nor USDA expected undersupply to be the issue,’ said Daniel Colacicco, director of dairy and sweetener analysis at USDA's Farm Service Agency.Higher sugar prices have pleased the U.S. growers but angered sweetener users.Because Congress expected an oversupply, the program includes detailed instructions on how to control supply, including a program to use surplus sugar for ethanol production. However, Colacicco noted, ‘there is no comparable mandate to ensure adequate supply at fair prices.’The farm bill orders USDA to operate the program so that prices do not become so low that sugar growers exercise their right to forfeit sugar to the government. As a result, USDA has been ‘conservative’ in making decisions to allow increased imports, Colacicco added. But sugar analyst Frank Jenkins said USDA has underestimated sugar demand, leading to "precariously low" inventory.
The government’s bungling of the sugar supply is a good example of what Friedrich Hayek called the “fatal conceit.” Try as they may, government planners cannot direct economic activity as efficiently and effectively as the market. Then again, the federal sugar program really only exists to enrich a particular interest at the expense of the broader public. Viewed this way, it has been a resounding success.
See this Cato essay on agricultural regulations and trade barriers for more on the federal sugar program.
Posted by Tad DeHaven on August 13th, 2010
Political Activities at HUD
A new Department of Housing and Urban Development’s inspector general report finds that the agency initially required, and then “encouraged,” recipients of HUD stimulus funds to post signs indentifying projects as being funded by the Recovery Act. In other words, HUD pushed recipients to engage in political advertising, and to do it with taxpayer funds.
As the report explains, HUD’s encouragement was not very subtle:
While the language used in the published guidance states that it is not a HUD requirement to post signs, the tone and other information (such as examples of sign templates) were clear indicators that posting signs was preferred. Further, an earlier e-mail from the Deputy Press Secretary stated that the posting of signs was highly recommended. That August 4, 2009, e-mail to HUD’s Recovery Act team also provided examples of graphics, cost estimates for various banner sizes and the Secretary’s preference to ‘highly recommend (not require)’ grantees to post signs.
Suggested sign templates weren’t subtle either as this example shows:
HUD engaging in politics is nothing new. For example, a Cato essay on HUD scandals discusses the agency’s politicking during the Clinton years:
HUD held a series of ‘standing up for communities’ rallies, financed by taxpayers, which encouraged local officials and special interest groups to lobby against Republican budget cuts. One piece of propaganda distributed by HUD's New York office warned that the budget cuts ‘would dramatically expand America's underclass’ and that ‘thousands of families, many with children, would end up homeless.’ HUD also sponsored a National Tenants Organization convention in Puerto Rico to defend the department. But that event was so political that even a HUD translator refused to take part and walked out of the proceedings in protest. According to HUD's inspector general, an NTO official responded that ‘he really didn't care whether HUD translated or not because the point was to get rid of Newt Gingrich.’
Posted by Tad DeHaven on August 12th, 2010
