Policy Response to Unexpected Developments

Monica Potts explains how we got to the point of cutting nutrition assistance programs to pay for improved child nutrition programs:

It’s worth noting that the increases in the food stamp program were designed in the stimulus bill to be phased out once food price inflation caught up to the expanded benefits, but because inflation was lower than expected, the benefits were going to last longer than anyone originally expected. It’s hard to imagine a situation in which politicians wouldn’t view those bigger-than-expected increases as free money. And it’s a small comfort to know the pot was raided for good rather than for ill.

If you want some anti-comfort, consider that the original proposal was to pay for it by trimming farm subsidies but I believe that died in committee.

But I think the important thing to note here is a point about the appropriate policy response to unexpected development. A lot of people are taking the opportunity today to revisit the moment when Christina Romer said we needed $1.2 trillion in stimulus, Larry Summers said that was overblown, and political strategists said a lower “ask” would make more sense. She was right, Summers was wrong neener neener. But realistically, the nature of the world is that policymakers are going to frequently make inaccurate forecasts. The question is what do you do next? When problems turn out to be worse than you thought they would be, what’s the response?


This ties into the food stamps thing, because the slower-than-expected increase in food prices has been, in part, a symptom of the unexpected depth of economic problems. By making these cuts, congress is acknowledging that the state of the world is not what they thought it would be. But they’re not doing nearly enough about it.