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In early July, House Speaker Nancy Pelosi explained to reporters that unemployment benefits would, yet again, be extended because, of course, those benefits are actually a job creator and among the best forms of economic stimulus available…

This assault on common sense and reasoning is not well received when coming from a Democrat, but most especially not from one who clearly believes she is Queen of the Universe.

But, what about those who advertise themselves as promoting limited government and personal responsibility and who state a mission that includes researching economics and educating the public about it?

On August 27th, the Platte Institute for Economic Research (Platte) sent out an email newsletter with a feature article entitled “The Economic Benefits of SNAP” in Nebraska. (Click HERE for a snapshot of the newsletter and see full text at the very bottom of this article.) SNAP stands for “Supplemental Nutrition Assistance Program“, and is the new name for the now-combined programs formerly known as Food Stamps and WIC.  According to the former Platte intern, Kelly Dunlap, who authored the piece and who is now a SNAP Outreach Specialist, “[t]he name change reflects an increased focus on nutrition and an effort to eliminate the stigma associated with the program.”

In plain language, the name change amounts to a marketing ploy to convince people who are now dependent on the program to feel more comfortable in their dependency.  After all, it’s not charity or welfare; they’re entitled to it.  The “entitlement mentality” so encouraged is problematic.  An argument can be made that the extension of unemployment benefits to 99 weeks has resulted in a higher overall level of unemployment and a higher incidence of long-term unemployment, in essence, turning what was a temporary misfortune into a chronic problem.  How much more dangerous to individual self-sufficiency is the SNAP program, whose benefits apparently extend so long as need persists? (See notes.)

In 1996, Democrats and Republicans recognized welfare programs do nothing more than create cycles of dependency. The result was across the board welfare reform. Programs like SNAP are on the march to reversing those reforms. Ms. Dunlap noted, “In recent years there has been a nationwide effort to assist eligible citizens to claim these benefits.” We wonder if citizens have won a lottery prize? To imply people should “claim” something is to imply it already belongs to them, they are entitled to it. What will happen to all of the people who accept the idea they are entitled to the many benefits handed out by the federal government when the funding runs out? Considering the state of the federal government’s finances and debt levels, we simply cannot sustain all of these programs. Having been rendered dependent and feeling entitled, all of these efforts to get people to “claim their benefits” will only result in large numbers of Americans who are less prepared to care for themselves and their families.

Much of the rest of the article sounds freakishly like Nancy Pelosi. Pelosi thinks unemployment benefits create jobs, and the Platte Institute’s former intern thinks the “SNAP” program stimulates Nebraska’s economy.  Any hope of a reasoned analysis is dashed when Ms. Dunlap begins by implying that the program itself is, essentially, free of cost to Nebraskans because “SNAP benefits are fully funded by the federal government.”  Nebraska taxpayers are, apparently, only financially responsible for half the program’s administrative costs.  What a deal!  Sign us up!

Where does Ms. Dunlap and those economic czars at the Platte Institute think the federal government gets the money it funnels into SNAP and other entitlement programs?  In order to give to some, the federal government must first take away from others in the form of taxes.  Because Ms. Dunlap seems oblivious to this fact, it’s a near certainty Nebraska taxpayers’ contributions to the federal purse used to fund SNAP benefits did not figure into her rosy economic outlook.  Her failure to take these costs into account, however, is just the tip of the iceberg.

Ms. Dunlap and, by association, the Platte Institute subscribe to the idea that government spending can stimulate economic growth.  In fact, they clearly believe that government spending has a multiplier effect that allows the money to re-circulate through the economy multiple times; so, in effect, for every dollar of government spending, more than a dollar of economic benefit is produced.  Ms. Dunlap assures her readers, “only $50 in [SNAP] benefits pours $92 into the local economy,” and “a temporary increase in food stamps [is] the fastest way to stimulate the economy, even better than stimulus measures such as infrastructure spending.”  (NOTE:  If this is true, why don’t we all just quit working and apply for SNAP benefits?  Nebraska’s economic woes would be solved in a SNAP — Right?)

But, again, Ms. Dunlap, just where does the money come from?  Yes, $50 in SNAP benefits can be spent at a grocery store, which, in turn, can use that $50 to pay salaries and support other jobs. The total amount of additional economic activity will be well above $50; but because government must first take the $50 from taxpayers, that same money is now unavailable to the private sector — which would have spent the same $50 with the same multiplier effect formerly http://www.heritage.org/Research/Commentary/2010/01/Why-Government-Spending-Does-Not-Stimulate-Economic-Growth-Answering-the-Critics.

In fact, because government operates so much more inefficiently than the private sector, it is necessary for the federal government to confiscate more than $50 from taxpayers in order to provide $50 in SNAP benefits AND pay the fed’s one-half share of the program’s administrative costs (i.e., to process the paperwork to qualify each program participant and, ultimately, to deliver the money to beneficiaries).  When all administrative costs are taken into account, including those expended by the government in levying and collecting the taxes that fund SNAP and other programs,  the multiplier effect of federal spending tends to trend toward one or less.  And, since one times a number equals that number, there is no multiplier at all.  If the multiplier trends below one, then government spending actually produces a net loss to the overall economy.

Incidentally, when Linda called the Platte Institute to cancel her subscription to its e-newsletter, she pointed out these issues, rather stridently, she admits.  She was assured by Platte’s Director of Communications, Berk Brown, that he would be happy to remove her from Platte’s e-mail list.  She’s apparently the type of “narrow-minded” person Platte does not care to have reading their publications.  Pity.  They might have learned something.

Notes:

On the SNAP program website, the following information is listed about work requirements to qualify for the program:

Employment Requirements

*The American Recovery and Reinvestment Act (ARRA) eliminated the time limit for able-bodied adults without dependents (ABAWDs) during the period from April 1, 2009 through September 30, 2010, unless a State chooses to offer a qualifying work activity. *

Generally ABAWDS between 18 and 50 who do not have any dependent children can get SNAP benefits only for 3 months in a 36-month period if they do not work or participate in a workfare or employment and training program other than job search. This requirement is waived in some locations.

With some exceptions, able-bodied adults between 16 and 60 must register for work, accept suitable employment, and take part in an employment and training program to which they are referred by the local office. Failure to comply with these requirements can result in disqualification from the Program.

FULL TEXT OF MS. DUNLAP’S ARTICLE:

(Note – as a government employee, Ms. Dunlap’s work product is in the public domain.)

“The Economic Benefits of SNAP in Nebraska”

By Kelly Dunlap
SNAP Outreach Specialist

The food stamp program is the largest of the federal nutritional assistance programs, which also includes programs such as the Women, Infants and Children (WIC), school meals and disaster relief. Last year, its benefits helped an average of 33 million low-income people purchase nutritious food each month. The program has been renamed the Supplemental Nutrition Assistance Program, or SNAP. The name change reflects an increased focus on nutrition and an effort to eliminate the stigma associated with the program.

Though some stigma remains, a recent New York Times article tells of how the recent recession has caused some who were once critical of the program to become dependent on its benefits to put food on the table. In March of 2010, 163,320 Nebraskans, about 9 percent of the total population, received nutrition assistance from SNAP. From August 2003 to August 2008, there was a 16 percent increase in the number of SNAP participants, according to the Food and Research Action Council. Despite this recent increase, about one-third of eligible Nebraskans still do not receive the benefits for which they qualify. In recent years there has been a nationwide effort to assist eligible citizens to claim these benefits.

Increased participation rates in SNAP not only results in feeding the hungry and helping people transition to self-sufficiency; it can also have a positive impact on Nebraska’s economy. SNAP benefits are fully funded by the federal government, and states are only financially responsible for half of administrative costs. According to USDA estimates, each dollar of SNAP benefits received by a Nebraskan generates an additional $1.84 of economic activity; therefore, only $50 in benefits pours $92 into the local economy. In fact, economist Mark Zandi from Moody’s Economy stated that a temporary increase in food stamps was the fastest way to stimulate the economy, even better than stimulus measures such as infrastructure spending.

As an example, SNAP dollars spent at local grocery stores trigger the cycle of need and demand leading to increased income and spending in the state. In doing so, local businesses feel less of an impact from financial hardships, perhaps helping to keep them in business and keep individuals employed rather than potentially laying off workers who may then find themselves in need of assistance.

Nebraska’s SNAP program is also a model for a well-run system; its exceptionally low error rates recently garnered national recognition and substantial performance bonuses. In such difficult times more people have an appreciation for the benefits of programs like SNAP. It does not just directly assist the families in need, but truly helps the state as a whole as we attempt to trudge out of the recession as unscathed as possible.

http://www.frac.org/data/
FSPparticipation/2010_03.pdf#page=4

http://frac.org/pdf/
SOS_2008_withcover_nov08.pdf

http://www.fns.usda.gov/
snap/outreach/pdfs/bc_facts.pdf

formerly http://www.economy.com/mark-zandi/documents/
assissing-the-impact-of-the-fiscal-stimulus.pdf

http://www.dhhs.ne.gov/newsroom/
newsreleases/2010/June/snap.htm