Why, again, would it make sense to cut SNAP?

Food insecurity has grown in Iowa, we have not recovered from the Great Recession, and SNAP benefits — which only augment household food budgets and are already scheduled for cuts this fall — may be slashed.

Mike Owen
Mike Owen

This week, the U.S. House of Representatives will be considering severe cuts in the Supplemental Nutrition Assistance Program, or SNAP, formerly known as food stamps. Already, SNAP benefits are scheduled to be cut in November because Recovery Act improvements will expire. Any discussion among Iowans about even more SNAP cuts should not miss this context:

Food security remains a serious challenge. In Iowa, the latest report from USDA suggests this has risen by almost one-third in the last decade, from 9.1 percent in 2000-02 to 12.6 percent in 2010-12. (three-year averages) The increase is even greater proportionally for families in more severe situations. See this information from the Iowa Fiscal Partnership.

SNAP use certainly has risen in the last several years — just as it was supposed to in tough times. We have not fully recovered from the Great Recession, but things are getting better and SNAP use will level off and decline as we recover. CBO predicts SNAP spending nationally to fall to 1995 levels by 2019. See this report from the Center on Budget and Policy Priorities.

SNAP is only a supplemental benefit, but a critical one even at only about $1.25 per meal per person in Iowa. We show the share of Iowans who benefit from SNAP, by county and by congressional district, in maps on our Facebook page  (compiled from Iowa Department of Human Services reports and U.S. Census data). By the numbers, here is the share of the population in each Iowa congressional district receiving food assistance in July:

1st District — 12.3 percent; about 94,000 people.
2nd District — 15.8 percent; about 121,000 people.
3rd District — 14.7 percent, about 115,000 people.
4th District — 12 percent, about 91,000 people.
Here’s the county-by-county look (note, the golder and greener a county, the greater percentage of the population receives food assistance):

The House bill would end categorical eligibility, which permits states to provide access to SNAP benefits for families just above the SNAP earnings limit of 130 percent of poverty. Iowa in 2008 used this option to expand gross income eligibility to 160 percent of poverty. An Iowa Fiscal Partnership policy brief last November noted this is particularly important for low-income working families with children, particularly when child care takes such a big bite out of their budgets.

SNAP is a work support. Contrary to the claims of detractors, SNAP is one of those benefits that enable people to take jobs they otherwise would not be able to accept. When we have an economy that is producing jobs that pay below what is needed to get by, these work support programs are critical. We have illustrated the issues there with our Cost of Living in Iowa research, where we have demonstrated that even at median wage, many Iowa families would not get by were it not for work support programs.
Posted by Mike Owen, Executive Director

A few facts to know about Social Security

Even though Social Security is about one-fifth of the U.S. budget, it does not add to deficits because of the way it is funded.

Hear IPP’s David Osterberg discuss Social Security on “The Devine Intervention” radio show with Michael Devine, 1400-AM KVFD Fort Dodge.

There is much misunderstanding routinely presented about Social Security and its impact on federal deficits. Some portray it as a problem; in fact, Social Security not only does not add to deficits, but supports millions of Americans and, thus, the economy. Consider these points from the Center on Budget and Policy Priorities (CBPP) and the Economic Policy Institute (EPI):

Social Security keeps 21 million Americans out of poverty

Social Security benefits play a vital role in reducing poverty. Without Social Security, 21.4 million more Americans would be poor, according to the latest available Census data (for 2011). Although most of those whom Social Security keeps out of poverty are elderly, nearly a third are under age 65, including 1.1 million children.
157,000 fewer elderly poor (Figure 1)
—Without Social Security, 47.3 percent of elderly would be in poverty; with it, only 5.6 percent (Table 2)
Beneficiaries: 592,000 in Iowa, including 435,929 age 65 and older, 130,205 ages 18-64, and 25,866 under age 18. (Table 3)

Social Security is a fifth of the U.S. budget …

Social Security: Another 20 percent of the budget, or $731 billion, paid for Social Security, which provided retirement benefits averaging $1,229 per month to 35.6 million retired workers in December 2011. Social Security also provided benefits to 2.9 million spouses and children of retired workers, 6.3 million surviving children and spouses of deceased workers, and 10.6 million disabled workers and their eligible dependents in December 2011.

… but it is not driving the deficit …

Social Security can only spend what it receives in tax revenues and has accumulated in its trust fund from past surpluses and interest earnings. It cannot add to the deficit if the trust fund is exhausted because the law prohibits it from borrowing (if current revenues and savings in the trust fund are not sufficient to pay promised benefits, these have to be cut). Though modest changes will be needed to put Social Security in balance over the 75-year planning period, the projected shortfall is less than 1% of gross domestic product (GDP). …

… and it helps to finance the debt.

Money that the federal government borrows from the public or from Social Security is used to finance the ongoing operations of the government in the same way that money deposited in a bank is used to finance spending by consumers and businesses. In neither case does this represent a “raid” or misuse of the funds. The bank depositor will get his or her money back when needed, and so will the Social Security trust funds.
Thank you to CBPP and EPI for offering important resources to the public on these issues. See links above.

Posted by Mike Owen, Assistant Director

Nonsense from the Far Right

Fortunately, the discerning Iowan can find the facts about the federal budget by looking for them, and not buying into Dick Morris’ spin.

Political consultant Dick Morris slipped into Iowa last week, and the Spin-O-Meter was in overdrive.

Now, rather than repeat Mr. Morris’ misinformation, here is a link to a Des Moines Register story about his appearance at a rally orchestrated by the national right-wing organization Americans for Prosperity.

What Iowans need to know is that (1) Morris is wrong about what is driving the federal budget deficits, and (2) the causes are clear: You can’t cut taxes and fight two wars at the same time without digging a big budget hole.

Center on Budget and Policy Priorities graph
Center on Budget and Policy Priorities

As shown in the graph at right from the Center on Budget and Policy Priorities, the economic downturn, President Bush’s tax cuts and the wars in Afghanistan and Iraq explain the vast majority of the deficit through 2019. One thing folks must recognize is that deficits caused by those factors cause more debt down the road, because we have to keep paying interest. Even after the Iraq war ended, we have to keep paying for it.

As we deal with these self-inflicted budget problems, we must maintain the fundamental and long-accepted responsibilities of our nation — to care for the most vulnerable and put them on their feet to get work and succeed in our economy.

Dick Morris has a big megaphone to try to instill something other than a factual presentation about what’s causing our deficits and debt. Fortunately, the discerning Iowan can find the facts by looking for them, and not buying into the conventional spin he delivers in his traveling medicine show.

Posted by Mike Owen, Assistant Director

Why the federal budget debate matters in the states

Want clean water? Good and safe schools and bridges? You get what you pay for.

There’s doggone near nobody who isn’t concerned about dealing with the nation’s long-term budget challenges of deficit and debt.

What not enough people will recognize, however, is the danger of diving headlong into a deficit-cutting approach that just digs a deeper hole, both for the economy and for the critical services that federal, state and local government spending supports.

Ryan budget impacts
Center on Budget and Policy Priorities

And that’s the problem with the so-called “Ryan Budget,” named for Congressman Paul Ryan. That approach, passed by the House, makes cuts to funding for state and local services that are far deeper than the cuts many expect to happen with sequestration, the automatic cut process demanded by last year’s Budget Control Act compromise.

A new report from the Center on Budget and Policy Priorities outlines the challenge for states generally with the Ryan approach:

  • Federal cuts of 34 percent by 2022 to Medicaid compared to current law, and by steadily larger amounts after that.
  • Federal cuts of 22 percent in 2014 and in later years to non-defense “discretionary” spending — which leaves Medicare and Social Security alone but hits local and state services in education, infrastructure such as roads and bridges, and public health and safety including law enforcement.

For Iowa, the non-defense “discretionary” cuts are projected at $237 million in 2014 alone, and $2.1 billion from 2013 through 2021.

Want clean water? If you live in Iowa, where the state routinely shortchanges environmental enforcement, how bad do you think things might get when the federal funds are cut as well? Concerned about the quality of your food? Or your kids’ schools? Maybe the safety of the bridge you’re approaching on the way to work?

Well, folks, you get what you pay for.

Posted by Mike Owen, Assistant Director

Iowa is not an island; jobless vote carries important impacts

Jobs are at stake, right here in Iowa, with the vote in the House today.

When your state is not showing the heavy impact of joblessness in the United States, it can be easy to miss the impact.

Iowa’s jobless rate is 6 percent, two-thirds that of the nation as a whole, but nevertheless high for what we’re used to and representative of the fact that our payroll jobs are significantly below where they were before the recession started hitting Iowa. In our state, jobs are about 44,000 below where they stood in May 2008.

Today in the U.S. House, legislation is expected to come to a vote to cut unemployment benefits. It would cut up to 40 weeks of benefits next year — most from the states hardest hit by the recent recession. Our neighbors in Illinois, Missouri, Wisconsin and Kansas would see varying losses of weeks of benefits by next July. See the map below from the Center on Budget and Policy Priorities (CBPP). map of projected UI losses by state

As Chad Stone of CBPP notes in a recent blog post, cutting off benefits in the hardest-hit states “greatly raises the risk that unemployed workers will run out of UI benefits before they find another job, imposing even greater hardship on them and their families. It also reduces the amount of support that UI — one of our highest-bang-for-the-buck stimulus programs — can provide for the struggling recovery.”

But even Iowa would be affected, if not with the benefit cut the way other states would be hit, then in the indirect impact on the state’s economy.

The cuts would shut off a flow of funds into the U.S. economy, the impact of which we cannot avoid. Sooner or later, it will hit our own stores, factories and services.

In short: We don’t need our lack of beaches to show us that Iowa is not an island. Jobs are at stake, right here in Iowa, with the vote in the House today.

Posted by Mike Owen, Assistant Director

Why a balanced approach is the only option

The Bush tax cuts, and plugging corporate tax loopholes, are on the table in the world of reality, if not the world of politics.

Mike Owen
Mike Owen

It has been said that there are many ways to skin a cat — not that I’d be willing to try any of them.

Likewise, there might be many serious ways to balance the federal budget — not that enough people in Washington are willing to try any of them. And some have closed the door on the only real way to do it: with balance.

Even the House speaker says all options must be on the table, except revenues. This, despite the fact that lost revenues holds a greater share of our building debt than any other single cause.

CBPP graph on deficit causes
This Center on Budget and Policy Priorities graph illustrates shares of the current and future deficits, by cause. Note the orange bar — Bush-era tax cuts.

As Kathy Ruffing and James Horney point out in their recent paper for the Center on Budget and Policy Priorities:

By themselves, in fact, the Bush tax cuts and the wars in Iraq and Afghanistan will account for almost half of the $20 trillion in debt that, under current policies, the nation will owe by 2019. The stimulus law and financial rescues will account for less than 10 percent of the debt at that time. …

The President and Congress could make major progress toward stabilizing the debt for the coming decade by letting all of the Bush tax cuts expire on schedule at the end of 2012.

The fact is, we cannot afford not to use a balanced approach to the deficit and debt challenges facing the United States now and in the future.

The Bush tax cuts, and plugging corporate tax loopholes, are on the table in the world of reality, if not the world of politics. It is impossible to avoid their relationship to the debt, even if, somehow, people are finding it possible to ignore them.

Posted by Mike Owen, Assistant Director