Senate Cuts Food Stamps to Pay for Jobs

Which is more important? Minimizing teacher layoffs and other cuts in public service jobs or ensuring that kids (and their parents) don't go hungry?

This may seem like an absurd question. But it's what the Senate had to decide just before it broke for the August recess. It opted for the jobs. The House of Representatives will face the same choice when members take a break from their break to vote on the issue next week.

Here's the story.

As we've been reporting on this site, state and local governments have been slashing spending to balance their budgets. The recession has hit them with a double whammy — big drops in tax revenues, plus rising pressures on safety net programs.

As of early August, at least 46 states and the District of Columbia had reduced spending for health care, public education, services to elderly and disabled people or some combination of these. Some of the cuts, plus those others states have made, have put more pressure on local government budgets. These too have been subject to cuts.

Many experts have been urging the federal government to deliver more temporary financial assistance to the states because the spending cuts translate into job losses and job losses jeopardize our fragile economic recovery. The compassionate have additional concerns — notably the impacts of the cuts on laid-off workers, their families and the former beneficiaries of the curtailed public services.

Late last month, four Senate Democrats, including Majority Leader Harry Reid (D-NV), took another stab at delivering some fiscal relief to states and local school districts. They bundled together two measures that had been stripped out of other bills and attached them as an amendment to a totally unrelated bill to get them passed and on the President's desk. Nothing unusual about this.

One of the measures was the latest version of the FMAP (Federal Medical Assistance Percentages) extension, i.e., the higher federal match on state Medicaid costs that was part of the economic Recovery Act. The extension had been part of the jobs/tax bill that ultimately became the standalone extension of unemployment benefits.

Originally, it would have provided a straightforward six-month extension worth a total of about $26 billion. In a futile effort to get some Republicans on board, the Senate's Democratic leadership had changed it to a phased-down match worth $16.1 billion.

The other measure will deliver $10 billion to local school districts. The Education Department says it will save an estimated 140,000 teacher jobs. This too had been pared back. The jobs bill the House passed last December would have provided more than twice as much and saved an estimated 255,000 jobs.

More recently, the House had attached the $10 billion version to a supplemental appropriation for the wars in Iraq and Afghanistan. It was stripped out, along with some other domestic spending measures to get the magic 60 votes in the Senate.

To disarm the deficit hawks, the amendment's sponsors made sure that every penny of the fiscal relief was paid for, i.e., offset by a combination of spending reductions and revenue-raising changes to the tax code.

The pay-for had four major components. One of them cut three years off the projected end date for the food stamp benefit boost that was also part of the Recovery Act.

Some Senators objected to other parts of the pay-for. The sponsors retooled them, losing some money in the process. But there was a bigger gap to fill because the Congressional Budget Office had found that even the original pay-for wouldn't cover the costs.

So another year was lopped off the food stamp benefits increase. It became the single largest part of the final pay-for — $11.9 billion.

One might wonder how food stamps got into the pay-for at all. We've got a $3.6 trillion federal budget. Was there no other pot of money to be tapped?

Part of the answer, I think, is that Senate Democrats, plus the two Independents, had already agreed to change the food stamp benefits end date to help pay for the latest version of the jobs/tax bill — just as they'd already agreed to pare back the FMAP extension. So Reid figured he could count on everybody to go along with the cut again.

But the decision was more complex. When Congressman David Obey (D-WI), Chairman of the House Appropriations Committee, moved to put the $10 billion for education into the war supplemental bill, he planned to pay for it by tapping some of the unspent funds the Education Department has to prod states into reforming their public education systems in line with its priorities.

The White House said the President would veto the whole bill if that pay-for were used. Obey says it suggested cutting foods stamps instead. The argument here was that food costs have risen less than Congress expected when it passed the benefits increase. So recipients are getting a better deal than Congress thought they would.

As Washington Post blogger Ezra Klein notes, there may be another unspoken rationale. Far more people are getting food stamps now than when the Recovery Act was passed. In February 2009, the program was serving 32.6 million people. By May 2010, it was serving more than 40.8 million.

So the total cost of the program has "ballooned" to more than three times the projection. The pay-for could have been seen as a way to deal with "new price tag" scares without actually saying so.

Now, the pay-for might be well and good if food stamp benefits were giving families more than they need for a reasonably nutritious diet. But, as the Food Action and Research Center reports (pdf), today's benefit provides, on average, only $4.50 per person per day. This is far less than what low and moderate-income families report they have to spend on food.

Barring some unforeseeable change, the supplement will now end in May 2014. The maximum benefit for a family of four will drop by $59 per month. I figure this will leave each member less than $4.00 per meal.

The cut will thus end a modest but crucial buffer against out-and-out hunger. It will also end what stimulus guru Mark Zandi found was the most effective way to prime the economic pump — and thus save and create jobs.

So it's hard to feel good about a bill that would otherwise be a cause for celebration. Hard to believe that it makes good sense from even a strictly economic perspective.

Hard also to believe that the political conflicts hobbling the Senate ultimately forced people of good will (and there are some there) to choose between keeping public servants off the unemployment roles and ensuring that poor people have enough to eat.

But believe it or not, that's what happened.

Photo credit: Daquella manera