Don’t Feed the Animals

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food stamps costs

Last August Obama's Secretary of Agriculture Tom Vilsack said:

"Well, obviously, it's [the food stamp program] putting people to work. Which is why we're going to have some interesting things in the course of the forum this morning. Later this morning, we're going have a press conference with Secretary Mavis and Secretary Chu to announce something that's never happened in this country -- something that we think is exciting in terms of job growth. I should point out, when you talk about the SNAP program or the food stamp program, you have to recognize that it's also an economic stimulus. Every dollar of SNAP benefits generates $1.84 in the economy in terms of economic activity. If people are able to buy a little more in the grocery store, someone has to stock it, package it, shelve it, process it, ship it. All of those are jobs. It's the most direct stimulus you can get in the economy during these tough times."

food stamps usage vs. economy

Mr. Vilsack is not entirely wrong in his statement. Food stamps do provide continued economic support where, without them, there would be less. However, the problem with the statement is simply this - if food stamps are the most direct stimulus you can get in the economy then why not just put everyone on food stamps and snuff out the whole "workin' for a livin'" thing?

The reality is that in order for an economy to grow there must be production. The more production that is occurring within an economy the stronger the growth rate will be. Production leads ultimately to more consumption which in turn leads to higher levels of employment and increased wages. Rising wages means more tax dollars for the government and fewer indiviudals on the food stamp dole. If you look at the overlay of the food stamp usage versus the economy you can see this relationship. As food stamp usage has increased in the U.S. - economic growth rates have declined.

food stamps vs. unemployment

The same goes for employment. Higher levels of dependency on food stamps, obviously, goes hand in hand with higher levels of unemployment. With currently high levels of unemployment, rising food and energy prices and declining real incomes more and more individuals are becoming depending on nutritional assistance to make ends meet. The problem with food stamps is that the money that is used to pay out benefitis is derivedf rom taxes on personal incomes. Even if the government borrows the money to provide the assistance eventually the taxpayer has to pay to tab. The problem is that for the average American after tax income is barely sufficient to support an average standard of living. Rising costs from food and energy quickly sap any excess discretionary spending which in turn impacts economic growth due to lower consumption.

transfer receipts as percent income

The issue of dependency, as more and more of the nation's population receives nutritional assistance as well as other forms of support, is that it actually leads to decreased productivity over time. Yes, on an immediate basis, individuals are able to buy the necessities of life but reduces their ability to produce at higher levels in the future as long term unemployment leads to degradation of job skills. As consumption is inhibited due to lack of productivity; increased dependency leads to lower standards of living. Today a little more than 35% of incomes consist of some sort of government transfers and the dependency ratio is at the highest level on record.

In the ultimate irony the Supplemental Nutritional Assistance Program (SNAP) is part of the Department of Agricultural. While Mr. Vilsack is pleased to be supporting the economy by distributing the greatest amount of "food stamps" ever on record - the Parks Service Department, which is also part of the Department of Agriculture, consistently puts out notices asking citizens to "Please Do Not Feed The Animals". Why, because animals may grow dependent on handouts and will not learn to fend of themselves.

Maybe the lesson that needs to be learned by Mr. Vilsack and our current Administration is that maybe we should focus less on the "feeding" of our population and more on giving them the ability to produce so they can feed themselves.

Source: Street Talk Live

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About Lance Roberts