The Fine Print In The Coming Bipartisan Agreement For Cutting Food Stamps

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food_stamps_tpftdSenate Democrats think they have found a way to satisfy Republican demands for food stamp cuts that largely preserves the Supplemental Nutrition Assistance Program (SNAP) but reduces already meager food assistance payments for 1.7 million people, according to reports.

The proposal relies on a technical change to the formula that state program administrators use to establish how big a SNAP benefit each enrolled household will get. Current rules for how low-income people’s utility costs get factored into their food stamp benefits give states an incentive to issue nominal $1 or $5 payments from the Low Income Home Energy Assistance Program (LIHEAP) to poor people who do not need that assistance. The new proposal would change those rules by setting a threshold of $20 for LIHEAP payments to trigger expanded SNAP payments.

The reported proposal comes out of the House and Senate conference committee that has been working to produce a compromise farm bill for the past several weeks. If no deal emerges, Congress would likely extend the current farm bill for another year just as it did in January, saving hungry Americans from further cuts but also delaying reforms to farm subsidy programs. While the two chambers’ conference representatives largely agree about farm program reforms, House conservatives have sought drastic cuts to SNAP that would drop at least 3.8 million and as many as 6 million people from the anti-hunger rolls. The House’s bill cut $40 billion from food stamps — about a 5 percent slice over 10 years — and the Senate’s bill cut $4 billion. The Senate’s cuts came from the same mechanism that underlies the newly reported deal.

The details of that mechanism are important. The formula for SNAP benefits is similar to the tax code: the enrollee reports her total income, then takes deductions to it based on the SNAP law to produce an adjusted gross income, which is then used to calculate her benefit level. One of those deductions is for the cost of keeping her home adequately heated or cooled. The size of this utility cost deduction is supposed to depend upon how much the recipient spends on heating or cooling her home, but under current rules states are allowed to take a cost-shaving shortcut by automatically giving the maximum utility deduction to anyone who receives a payment from LIHEAP. There are currently 17 states that use even a single dollar in LIHEAP payments to boost SNAP payments, according to a Congressional Research Service report released in May. That practice is known as “heat-and-eat,” and in some cases it gives vulnerable people credit for utility costs they do not in fact incur. By imposing a threshold level of LIHEAP benefits that trigger the high food stamps benefit, Congress would remove the incentive states have to provide nominal $1 or $5 LIHEAP payments as a way of boosting SNAP levels.

The change would affect 850,000 households in 17 states. The 1.7 million people in those households would see a substantial reduction in their monthly SNAP check — typically a $90 decrease, according to the Center on Budget and Policy Priorities — but unlike many of the cuts Republicans want, the reported change would not kick anyone out of the program. Indeed, if someone who lost benefits due to the change in the SNAP formula could show utility bills demonstrating that he does in fact incur home energy costs that entitle him to the higher food stamps amount, his benefit would remain intact.

Those details allow Democrats to argue that this isn’t really a cut to food stamps: It doesn’t boot people from the program, and it cleans up a small but real problem with a key cord in the safety net while allowing people who actually do face high utility bills to be sheltered from the cut. The program cuts that House Republicans voted for, on the other hand, would have kicked millions off the rolls.

But the larger context doesn’t support any need to trim SNAP benefits. SNAP’s total cost is already falling as the economy improves, and will continue to do so without Congress lifting a finger. After an automatic benefit cut in November, the program provides less than $1.40 per meal to the average recipient. Meanwhile, there are about 50 million Americans living with hunger today. Food stamps are less abused than the farm bill’s crop insurance subsidies program, which has a higher erroneous payments rate than the anti-hunger program. And while the crop insurance program diverts billions of dollars to Wall Street coffers, SNAP spending pays immediate dividends for the whole economy. A dollar in SNAP spending yields about $1.70 in economic activity, one of the highest multiplier effects of any government program.