July 6, 2016

Regulating the Poor—It’s a SNAP



Earlier this month Rep. Gwen Moore introduced a bill into the house, the “Top 1% Accountability Act,” that would have required tax filers to submit proof of a clean drug test in order to claim itemized deductions in excess of $150,000 a year.

Moore’s goal was to highlight the remarkable double standard that exists in how we deliver public spending in this country. Despite not needing them, Congress has granted middle and upper income folk dozens of itemized deductions, tax credits, and other direct and indirect subsidies with few or no strings attached.

Even when spending is through the tax code, these are cash transfers, plain and simple. The only reason it’s not called cash assistance is because it goes to people who need no real assisting. The double standard kicks in when the recipient is poor. Only then do lawmakers begin acting like the transfer is OPMother people’s moneyin order to justify adding so many strings one begins to lose count.

Thus over the years we have:

I call these buckets Spending Paternalism, Virtue Surveillance, and Cognitive Taxation, respectively. Over the next weeks and months I will be highlighting examples of each. But make no mistake, it’s not just conservative Republicans going after welfare queens. Regulating the poor is a truly bipartisan issue.

Can You Socially Engineer a Foodie?

The latest case of Spending Paternalism involves SNAP (formerly known as Food Stamps). Under SNAP, eligible households receive an electronic benefit transfer (EBT) card that gets reloaded with money once a month to spend on food and groceries. There are already myriad rules and restrictions about what SNAP benefits can be spent on, built directly into the card. While many of the country’s poor would clearly prefer cash, buying and selling an EBT card is illegal. Punishments vary by state. In Missouri for example, if it’s the recipient’s second strike, or if the value of the transfer is over $500, the state government can pursue Class D felony fraud charges that can result in disqualification from SNAPand even jail time.

Nonetheless, SNAP is well understood to be one the most effective and efficient anti-poverty tools in the US government’s toolkit, helping to keep over ten million people out of poverty annually. Yet if the poor weren’t regulated by SNAP restrictions enough already, new USDA regulations aim to restrict recipients’ choices by adding tough requirements on what food retailers and grocers must stock to be eligible to redeem SNAP payments.

Here’s a bit from the Wall Street Journal’s excellent coverage of the rule change:

By year end, the U.S. Department of Agriculture wants to adopt rules that require stores redeeming food stamps to stock a wider variety of meats and vegetables and sell fewer hot meals, like pizza. The aim is to increase access to healthy food for low-income people. … The USDA’s proposal more than doubles the varieties of meats, dairy products, breads, and fruits and vegetables that SNAP retailers have to stock, requiring at least six of each item on shelves. … The USDA suggests that stores add shrimp, lamb or tofu to reach the higher bar, but convenience store owners say those aren’t foods their customers want—or can afford—to buy.

House and Senate committees have been holding hearings on the issue, mainly in response to an outcry from smaller stores and chains that would become ineligible for SNAP and lose significant revenue from the rule change. As the Journal explains,

Big supermarket chains like Wal-Mart already happen to meet the tougher requirements because of their breadth of inventory. But some 195,000 smaller stores would have to add dozens of new items in multiple quantities—a move they say would be costly and unprofitable, citing limited shelf space and spoilage issues for fresh food. …Walgreens said pharmacies don’t have the space or logistics to consistently display six of each required food. … Going further, the USDA’s proposal bars retailers from SNAP if they receive more than 15% of their sales from hot food, or if a fast-food chain, like KFC or Subway, operates under the same roof. … 7-Eleven said many of its 8,000 U.S. locations would be kicked out, based on hot food sales. … Wawa Inc. said its 700 convenience stores would stop accepting SNAP because of hot food sales, causing it to lose 7 million transactions a year.

With the American Cancer Society supporting the rule change, it’s hard not to see this as a Bootlegger and Baptist situationthe classic political coalition between crony capitalists and well-intentioned advocates for the intemperate poor. In this case the bootlegger is Wal-Mart, which, in 2013, said it “received about 18% of SNAP funds, which amounted to some $14 billion, or 9% of its U.S. grocery sales.” That number will only grow if Wal-Mart’s smaller competitors are pushed out of eligibility.

Adding Injury to Insult

This highlights an intrinsic problem with programs like SNAP. Once benefits are made to be in-kind rather than cash, it opens a Pandora’s Box of special interest scrambling over which kinds. Such debates have mutated a poverty relief program into a channel for addressing other interests, like public health or retail and agricultural support. Or worse, an avenue for policy makers to codify foodie fashions into law (after all, there is nothing particularly healthy about lamb chops, sliced ham or goat milk).

Nor is controlling retailers a particularly effective policy lever. SNAP recipients are still free to walk past Wal-Mart’s fresh produce to the frozen food aisle. And while obesity and poor nutrition are felt disproportionately by the low-income, rich people eat unhealthily too, and nothing stops them from using a tax rebate to do so. Thus a more direct policy would be to simply tax people based on their waist line, as is done in Japan, and keep SNAP’s policy goal from being complicated.

Of course, a “fat tax” would never fly in the U.S., and nor should it. It’s too directly paternalistic to the point of being insulting. And yet obscuring a fat tax through less effective and indirect measures, targeted solely on vulnerable populations, while adding tangible costs to small businesses, only adds injury to the insult.

Left out of the discussion, as usual, is what the poor themselves want: namely, the dignity to make their own shopping choices, both what and where. Is that too much to ask?