Rising Food Stamp Dependency

April 20, 2010

Food stamp enrollment has reached a record high of almost 40 million people. You can blame the recession and legislated benefit increases under presidents Bush and Obama. According to Obama’s latest budget, the total cost of the program will reach $73 billion this year, or more than double the 2007 price tag. 


In reporting on this development, The Fiscal Times sought the opinion of three different left-wing organizations that, not surprisingly, were enthusiastic that government dependency is on the rise. The article uncritically regurgitated the claim made by government dependency advocates that “for every dollar invested in SNAP [food stamps] over $1.84 goes back into the economy.”
A more inquisitive reporter might have asked why then the government doesn’t just spend $200 billion on food stamps, or why not $500 billion, if the return is so high. Sadly, the Econ 101 idea that there are trade-offs in the allocation of resources is absent from nearly all reporting about government spending.
Every dollar the federal government spends on food stamps has to be taxed or borrowed out of the private economy. Taxing or borrowing for the $73 billion food stamp program costs the private economy much more than $73 billion due to the deadweight losses created. All people who don’t receive the food stamp benefits are thus made worse off.
Indeed, the individuals and families who get hooked on food stamps and other types of welfare may be worse off themselves in the long run if their work ethic and other behaviors are negatively altered. 
As this Cato essay argues, the solution is to get the federal government out of the food subsidies business, and allow private charities to help the less fortunate.




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