Tag Archives: food stamps

The SNAP-ping Turtles Attack: Food Stamp Fraud Myths and Legends

Food Stamps

Among the most depressing of the many Republican attacks on people who are the least able to defend themselves are the ones snapping away at the SNAP program, aka Food Stamps.  It’s even more depressing that the attacks are based on myths and urban legends.

The attacks are continuous.  As of April 16, 2016 approximately 41,000 lost access to food assistance as a result of the Walker Administration’s work rules, although his department of Health Services admits it doesn’t track people who find work on their own. [WEAU]  Another 1,000 will lose access to food assistance in West Virginia. [Dpost]  Add yet another 5,000 in Georgia who’ve lost access because of work rule changes. [USAPP] Louisiana hacked off the access for 30,000 in late 2015. [AJA] And, then, of course, there’s the viral display of the lady who took it upon herself to embarrass a fellow human being for using assistance to feed his children.

The tantrum, if true, illustrates the extent to which the myths and urban legends about the food assistance programs have become part of the Republican narrative about food stamps and the people who use them.

One of the more persistent myths is that there is an abundance of food stamp fraud, and the fraud is the result of misuse of the assistance by the recipients.  

First, the food assistance program is actually one of the most efficient and honest programs in government.  And, most of the fraud is on the part of retailers, NOT the customers.

“SNAP fraud has actually been cut by three-quarters over the past 15 years, and the program’s error rate is at an all-time low of less than 3 percent. The introduction of EBT (Electronic Benefit Transfer) cards has dramatically reduced consumer fraud. According to the USDA, the small amount of fraud that continues is usually on the part of retailers, not consumers.” [HC.org]

Even during the last Recession, SNAP problems were miniscule: “SNAP has one of the most rigorous quality control systems of any public benefit program, and despite the recent growth in caseloads, the share of total SNAP payments that represent overpayments, underpayments, or payments to ineligible households reached a record low in fiscal year 2011.” [CPBB]

The USDA, which administers the program has taken notice of the allegations of “waste, fraud, and abuse,” continually leveled at the assistance, and presented a report in 2013:

“The report indicates that the vast majority of trafficking – the illegal sale of SNAP benefits for cash or other ineligible items – occurs in smaller-sized retailers that typically stock fewer healthy foods. Over the last five fiscal years, the number of retailers authorized to participate in SNAP has grown by over 40 percent; small- and medium-sized retailers account for the vast majority of that growth. The rate of trafficking in larger grocery stores and supermarkets—where 82 percent of all benefits were redeemed—remained low at less than 0.5 percent.”  (emphasis added)

More specifically, most of the fraudulent use can be attributed to these small retailers:

“While the overall trafficking rate has remained relatively steady at approximately one cent on the dollar, the report attributes the change in the rate to 1.3 percent primarily to the growth in small- and medium-sized retailers authorized to accept SNAP that may not provide sufficient healthful offerings to recipients. These retailers accounted for 85 percent of all trafficking redemptions. This finding echoes a Government Accountability Office (GAO) report that suggested minimal stocking requirements in SNAP may contribute to corrupt retailers entering the program.” [emphasis added]

However, the lady in the supermarket screaming at the customer, is probably thinking  it’s the food assistance recipient who commits most of the fraud and not the retailer.  She’s likely not concerned that the USDA has initiated rules to sanction 529 retailers, and permanently disqualifying 826 outlets for trafficking in benefits, or falsifying their applications.  Or, that in 2012 the USDA reviewed more than 15,000 stores and permanently disqualified nearly 1,400 for various program violations. She’s also not likely concerned that the USDA has expanded the definitions of fraud to include newer schemes. [USDA]

snapping turtle

Let’s conjecture that the screaming-mimi is associating food assistance with lazy do-nothings who are eating from her hard earned sacred tax dollars. Again, she’s wrong.

Using Nevada (pdf) as an example for the moment, the median income of SNAP recipients in the state was $20,479 per year, or about $1700 per month, and 49% of the households had at least one person working in the previous 12 months; 29% had two or more workers, and only 21.8% had no one working in the previous year.  Why might the person not be working? Try acknowledging that more than 1/2 of SNAP beneficiaries nationally are either children or the elderly. [StoH]  And, no – they are not undocumented individuals: “Undocumented immigrants are not (and never have been) eligible for SNAP benefits. Documented immigrants can only receive SNAP benefits if they have resided within the United States for at least five years (with some exceptions for refugees, children, and individuals receiving asylum).” [StoH]

On a national basis, children account for 44% of food assistance, the elderly and the disabled account for another 20%.  That leaves 36% who are non-elderly, and not disabled, of whom 22% have children to support and feed, and 14% are childless.  [CBPP]

SNAP recipients Those interested in the SNAP statistics for every Congressional District in the nation can find the pdf files here.

Those interested in living in the fact based universe will also find that far from munching on the taxpayer’s dime, every $1 dollar in food assistance generates $1.80 in economic returns to the community. [USDA]

snapping turtle However, we can publicize every FAQ, every article, every report, in the land and there will still be screamers at the Wal-Mart who are convinced that low-life no-gooders mooching on the dole are taking their earnings and wallowing in sin and sloth.  The right wing echo chamber has done a good job of vilifying children, the elderly, the disabled, and the down on their luck to find an excuse to cut spending for at risk citizens. 

snapping turtle

The snapping turtles have also done a good job of associating African Americans with food assistance programs.

“The 2013 data shows, white people are nearly three times less likely than African-Americans to live in poverty; yet, white people claim more food stamps.  According to the data, not only do white people benefit from food stamps, they also benefit from not having politicians and cops target and malign them as lazy, unproductive welfare queens who take advantage of a social safety net. As the chart indicates, racist ideas about welfare have come to overshadow statistical facts that reveal that the face of food stamps is in fact white.” [AnHQ]

There is support for this conclusion  in Nevada statistics.  In Congressional District One 58% of food stamp recipients are white, in Congressional District Two 80.3% are white, in Congressional District Three 66.3% are white, and in Congressional District Four 52.9% are white.  According to the Census Bureau Nevada District 1 has a population of 693,623 of whom 380,587 are white; District 2 has 697,426 residents of whom 580,111 are white; District 3 has a population of 734,973 of whom 499,767 are white; and District 4 has a population of 713,077 of whom 470,799 are white. As much as the popular right wing mythology may want to reinforce the narrative of the Welfare Queen it just doesn’t fit with the statistical reality.

snapping turtle  When statistics don’t fit … try ideological mythology. Food Stamps make you dependent on Government, and dependency is evil incarnate because it is a disincentive to work.  This, flat out, makes no sense at all.  For example, I live in an area with a public water system. Does hooking up to the water system mean that I’m lazy and have no incentive to walk to the spring for the daily bucket? Or, that I should have to dig my own well, and install my own septic tank?  Perhaps this is plausible if I live far enough from my neighbors to put in a septic system, but I don’t so the result would be “my septic tank next to your well.”  Not a pleasant nor hygienic prospect.  Do public roads make me a lazy dependent? Does having a police department make me less independent – should I have to hire my own rent-a-cop?  Maybe in some radical libertarian  landscape no one depends on anyone else, but this is only a fairy tale of dystopian proportions.  Not a land in which any rational soul would want to reside.

snapping turtle

There’s another element not often discussed in polite circles – good old fashioned selfishness.  The trick is to make selfishness acceptable. Perhaps some of the snapping turtles harbor an unhealthy notion that someone out there somewhere is taking money out of their shells, someone who is undeserving of assistance.  I’d be willing to bet that a right wing snapping turtle would never agree that food assistance should be denied to an octogenarian, or to a disabled person, or to a small child, or to a young mother trying to keep food on the table while going to school to complete her education. So, the “undeserving” must be meanly labeled.  They’re Lazy, they’re druggies, they’re people who “have too many children.”  (I’m particularly appalled at the argument which goes: “They” have too many children,” while the next contention is that funding for family planning must be eliminated.)  The line “I saw people at the food bank who are driving better cars than mine,” illustrates the issue.

This example is a visceral reaction – not a questioning skepticism.  Is the vehicle the only asset of any significant value in the entire household?  Does “better” mean newer? If so, then what was traded in to buy it? The comment better illustrates a definition of poverty that would have only the totally destitute ‘deserving’ of assistance, not someone with a functioning vehicle, an air-conditioner, a television set, a refrigerator – as if these consumer items weren’t a necessity in modern American life. Define poverty harshly enough and all manner of selfishness can be justified.

snapping turtle

There’s one myth justifying selfishness we can dismiss. The one that says we should drug test SNAP recipients to see if they’re worthy.  Seven states spent more than one million dollars on drug testing welfare recipients only to discover that there wasn’t a reason to do it in the first place.  Missouri spent $336,297 testing 38,970 recipients to find 48 positive tests. (0.123%) Oklahoma spent $385,872 on tests for 3,342 people and got 297 positives. (11%) Utah’s results were less rational, 9,552 people were tested and 29 were positive. (3.03%) Kansas screened 2,783 persons, with 11 positive results, a 3.95% result costing $40,000. Mississippi tested 3,656 persons and got 2 positive drug tests. Tennessee tested 16,017 people and got 37 positives.  Arizona tested 142,424 persons and got a grand total of 3 positive results. [TP]  Not that it will put much of a chink in the armor of the snapping turtles, but the numbers certainly don’t justify the expense or the rationale for selfishness underlying the testing.

snapping turtle forbidden

I’d like to see the day when (1) Congressman Sludgepump launches his canards about SNAP recipients being lazy moochers, and a reporter asks if he knows the demographics of the recipients in his District, or  when (2) State legislator Gloomcryer decries the possibility of drug use by food stamp beneficiaries and he’s challenged to cite statistics to support his contentions, or when (3) we finally become outraged at the outrageous duplicity and mendacity of the Snapping Turtles. 

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Filed under conservatism, Nevada economy, Nevada politics, public health, Republicans

It Can Happen Here: Corporate Welfare and Nevada Jobs

NV Food Service Jobs WagesThe eligibility level for SNAP benefits for a family of four is estimated at 130% of the federal poverty level ($23,550).

“A household is defined as a person or a group of people living together, but not necessarily related, who purchase and prepare food together. Households, except those with elderly or disabled members, must have gross incomes below 130 percent of the poverty line. All households must have net incomes below 100 percent of poverty to be eligible. Most households may have up to $2,000 in countable resources (e.g., checking/savings account, cash, stocks/bonds). Households with at least one member who is age 60 or older or a member living with a disability may have up to $3,250 in resources.” [SNAP]

The median wage reports from NV-DETR should be interpreted to mean that half the employees in this job category fall below the annual income in the second column.

And the point of all this?

The point is quite simply, we don’t get to have it both ways.  We can’t continue to employ people at wages which make them eligible for public assistance and then expect not to have to pay for the public assistance to help (as in the case of SNAP) to put food on the table for their families.   The second point is that this isn’t a situation that occurs in some highly generalized national way — it’s right here in the Silver State.  Worse still, it’s happening in the most prominent sector of the Nevada economy — hospitality and food service.

And so, we get stories reporting a McDonald’s employee being advised to seek public assistance by her employee resource hotline. [BusinessInsider] A study finds that over one half of Wal-Mart’s employees make less than $25,000 per year. [BusinessWeek] It’s already been reported that one Wal-Mart in Wisconsin could cost taxpayers some $900,000 including such “subsidies” as Medicaid, home heating assistance, reduced price school lunches, and Section 8 housing assistance. [HuffPo]  These and other stories led one columnist to call Wal-Mart the new “Welfare King.” [Salon]

Why Do The Welfare Kings Worry?

Inflation.  There is nothing a lender (banker) likes less than inflation. Even the prospect of inflation causes the vapors.   Thus, the banker’s political allies offer such bromides as the following:

“Where would the money come from to pay minimum wage workers a higher rate of pay? It would come from the customers of those businesses. When the cost of doing business rises, those businesses have to raise the prices of their products. This happens across industries and across the economy. The end result is inflation. Workers are making more money, but that money is only buying what their former wage purchased.”

Sounds right, but … the issue at the present is that wages aren’t keeping up with current levels of inflation, much less drive any inflation.  [CSMonitor] Even if we calculate that the full cost of the wage increase is passed along to customers, the research doesn’t support the contention that a wage-price spiral will ensue from improving the minimum wage:

“Past research on how business costs rise with minimum wage hikes indicates that a 10-percent minimum wage hike can be expected to produce a cost increase for the average business of less than one-tenth of one percent of their sales revenue. This cost figure includes three components. First, mandated raises: the raises employers must give their workers to meet the new wage floor. Second, “ripple-effect” raises: the raises employers give some workers to put their pay rates a bit above the new minimum in order to preserve the same wage hierarchy before and after minimum wage hike. And third, the higher payroll taxes employers must pay on their now-larger wage bill. If the average businesses wanted to completely cover the cost increase from a 10-percent minimum wage hike through higher prices, they would need to raise their prices by less than 0.1 percent.” [BTFE]

However, nothing seems to alleviate the never-ending terror of the financial sector (banks) that something will cause the dollars they lent to customers will be repaid in dollars of slightly less value (inflation).

…even if this costs us more to sustain the individuals and their families hired at current minimum wage levels. Out of Our pockets.  Not to put too fine a point to it, but American taxpayers — including Nevadans — are being asked to subsidize corporations which do not pay living wages to their employees, at the same time those corporations and banks are demanding that the federal government reduce its expenditures for social safety net programs.

If lower income workers are feeling like they are in a Grand Bind — it’s because they are.

*Annual median wages are not included because the levels of wages do not include earnings from tips.  The Nevada minimum wage for tipped employees is $8.25 per hour.

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Filed under Economy, Politics

Who Shouldn’t Be Eating?

The right wing is fond of this verse: “For even when we were with you, this we commanded you, that if any would not work, neither should he eat.”  2 Thessalonians 3:10

So, …..

Congress UnproductivePew Research full article.

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Filed under Politics

Bits and Interesting Pieces

Jig Saw PuzzleThe loopholes and other crafty bits of the Nevada statutes on guns isn’t going unnoticed.  See Launce Rake’s post in City Life for what gun sale check advocates are doing in the Silver State.   There’s more in the ever vigilant Nevada Progressive.  And, more from The Sin City Siren.  No, this discussion isn’t going away quietly, not while the First Lady “shines new light on the gun debate.” Jon Ralston reminds us Nevada Democrats were part of the push for a SYG law in Nevada.  I’m intrigued by the response from the radical right — if the President talks about gun violence, he’s “attacking our 2nd Amendment rights,” but if he says nothing then he’s insensitive to the plight of young people in Chicago?  And, speaking of the radical right…

Oh, Heck! He’s playing every old card in the deck in Nevada’s 3rd Congressional District.  This is further explained by Hugh Jackson, in a highly informative and, as always, entertaining article.  Some wit tweeted today: “Liberals protest war; Conservatives protest health care.”    If there’s one War Representative Heck is delighted to wade into it’s on a woman’s right to select the health care she needs during a pregnancy.   In May 2011 he voted in favor of H.R. 3, to prohibit federal funds from being used to pay for abortions (in spite of the fact that federal funds are already prevented from funding abortions by the Hyde Amendment).  In October 2011 he voted for an amendment to prohibit private insurance companies from offering health insurance companies from covering abortion services.  In May 2012 he voted for PRENDA, and in July 2012 he voted for a bill to prohibit abortions in the District of Columbia.  His last assault on a woman’s right to choose came on June 18, 2013 when he voted in favor of H.R. 1797.   [VoteSmart]  It’s all about being “pro-life” until it comes to feeding the little critters — Representative Heck doesn’t believe Food Stamps should be part of an agriculture bill, leaving a person to wonder where he thinks food comes from? [LVSun]

The NRDC blog has a lovely piece of correspondence from Senator Dean Heller (R-Wall Street) in which he weasels quite nicely out of taking any position on the nomination of Gina McCarthy to head the EPA.   Opposition to the junior Senator’s participation in GOP obstructionism in the Senate is supposed to be assuaged by saying, “I’ll keep your perspective in mind?”  It doesn’t appear that happened — Senator Heller was one of 40 members of the Senate who voted against McCarthy’s confirmation. [roll call 180]  Heller also voted against the confirmation of Labor Secretary Thomas Perez. [roll call 178]

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Filed under abortion, Gun Issues, Heck, Heller, Nevada politics

More? Heck, Amodei answer Oliver Twist’s Question

Oliver TwistRepresentatives Heck (R-NV3) and Amodei (R-NV2) voted in favor of H.R. 2642, the Food Stamp Free Farm Bill, which passed the House on a 216-208 vote on July 11, 2013. [roll call 353]  Lovely.  However, might I be excused for asking about the “Pro-Life” bona fides of the two conservative representatives from the Silver State when it’s laudable to decry a woman’s right to choose the medical procedures necessary to terminate a problematic pregnancy, or even to deplore the use of contraceptives  — BUT once the child is born it is equally laudable to criticize the profligacy of women who have “too many children” and therefore require public assistance to feed them?

That said, two of Nevada’s Congressional representatives have voted to cut food assistance to approximately 156,319 households in this state.

“In 2011, 12% (332,959) of the population participated in SNAP in Nevada, which is 3% less than the average for all SNAP Participation and Benefits.

In 2011, 16% (156,319) of the households participated in SNAP in Nevada, which is 2% less than the average for all SNAP Participation and Benefits.”  [NVSNAP]

What benefit has been slashed?  The average individual benefit in NV as of 2011 was $124 per month.   Who are the people assisted by this meager benefit?  71% of all SNAP participants are families with children.   26% of all Nevada SNAP participants are families with elderly or disabled individuals. 42% of all Nevada participants are WORKING. [CBPP pdf]

The GOP’s stereotypical imagery of the food stamp recipient as a loafer consuming brew on the porch steps while “hard working” Americans underwrite his existence is just that — an marketable image for ideological consumption, a stereotype suitable for assuaging the I Got Mine You Try To Get Yours Sucker self-serving philosophy of selfishness.

It appears this stereotype is alive and well and vivid for at least two of Nevada’s Congressional representatives, Dicken’s beadle would have been proud.  Representative Titus (D-NV1) voted against the bill, Representative Horsford is recorded as not voting.

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Filed under agriculture, Amodei, Economy, Heck, Politics

Yes, We Could Be Having A Serious Deficit Reduction Discussion?

Tea Party FlagAt some point in the ongoing discussion about federal debts and budget deficits everyone needs to get serious.  Serious, that is, about doing that which will reduce our federal deficit spending.  Really serious, not as in “let’s wave a Debt Crisis Flag every three months to advance an agenda including the privatization of Social Security and the voucherization of the Medicare program.”

Let’s start with the obviousSocial Security doesn’t add a dime to the national debt.  If the words of a progressive blogger won’t suffice, how about listening to former President Ronald Reagan?  (video here)  So, discussing “reforms” to the self funded Social Security program as a means to reduce the national debt is extraneous to any serious deficit reduction discussion.

One way to approach the privatization of Social Security is to change the frame of reference, such as altering the connotation of “entitlement” from some earned benefit to which we are entitled because we paid for it, to one which has a tinge of “welfare” about it.  Social Security is not a welfare program — it is an earned benefit.  People who have paid into it all their working lives have every right to expect to be getting something back.  Social Security is not a retirement program.  It is a program which seeks to prevent abject poverty for elders.   Nothing in the Social Security program prevents anyone from maintaining a self-contributory retirement account of any shape or form.   Indeed, the benefits from Social Security are low enough that retirement to the Gated Golf Paradise Of Your Choice can only happen if you have a self-contributory retirement savings program. Anyone suggesting that “entitlements” such as Social Security “have to be reformed” to ease the burden on the federal debt (1) doesn’t have a clue what they are talking about, and (2) is regurgitating anti-safety net talking points from radicals who want to privatize all retirement income programs to the benefit of Wall Street investment firms.

Medicare does have some issues.  The first, and most readily apparent, is that the Medicare Part D (prescription drug) segment is, and always has been, underfunded.  However, the really big monster under the Medicare bed is the increasing cost of health care in America.  When private health care corporations started buying up religious organization/private, state, and locally supported hospitals the profit motive surged in the sector.  Health care must now generate a profit.  Savings, which were once achieved for the purpose of reducing costs for local tax payers or donors to religiously based institutions, now accrue to the corporate bottom line — not to taxpayers, donors, or patients.

The second factor is technology.  We do have the best medical treatment providers in the world.  However, best often translates into “most expensive.” We have all manner of devices and gadgets and equipment and gear to save or sustain lives.  Our hospitals take it as their mission to save or sustain life, which is all well and good until the emotional meets the economical.  There are “death panels” in this country, but they aren’t governmental — they are familial, with families making ‘end of life’ decisions which horrifically in some instances are based on what the family can afford.   Frankly speaking, we don’t do a very good job of educating our citizens about advance directives.  Some conservatives set up a howl when they noticed the Affordable Care Act provided for paying physicians or other medical professionals who provided ‘end of life’ counseling for their patients — however, a little counseling might go a long way toward reducing the anxiety of hospital personnel and the trepidations of family members.  It could also provide some savings in the long run.

Returning to the Big Problem — the Medicare Part D component; we knew in 2003 that the Part D segment would  cost approximately $534 billion.  [Foster pdf] Simply put, “the drug benefit had no dedicated financing, no offsets and no revenue-raisers; 100% of the cost simply added to the federal budget deficit,..” [Forbes]  The part about “dedicated financing” is important.  While the Social Security trust funds have dedicated financing (payroll taxes) there were no provisions to increase the revenues available to finance the Part D enhancement.   There is something unappealingly ironic about the current GOP insistence on “entitlement reform” because “Medicare is broken,” when it was the GOP majority in 2003 that Broke the Program.

Ways to ‘reform’ the Medicare program have been suggested which do not require “voucherizing” the entire thing and sending seniors back to pounding pavement in order to find affordable health insurance plans.  We could consider means testing for the prescription drug benefit.  We might take under advisement lifting the earnings cap for payroll taxes from the current $110,000 level and dedicating a portion of the revenues toward the Part D program.  We could allow the Department of Health and Human Services to negotiate for prescription drug prices the way the Veterans Administration bargains for prescription drugs for VA hospitals and clinics.

If we are REALLY REALLY SERIOUS about ‘reforming’ Medicare then it would be helpful to get past the silly voucherization proposals, referred to as “structural reform” in Speaker Boehner’s response to the President, [Boehner pdf]  and get to the core of what makes health care expensive — we could talk about health care cost containment, dedicated financing for Medicare, and lifting the earnings cap.   We might also want to take a deep breath and see if the Affordable Care Act’s provisions, such as eliminating tax payer subsidies for profitable private Medicare Advantage insurance policies, could achieve some savings over the next decade.

However, it’s getting relatively obvious that the Republicans aren’t terribly serious about deficit (debt) reduction when their offers are strictly ideological (privatize and voucherize) and the proposals don’t address the monster of their own creation — the lack of financing for Medicare Part D.

Buzz Words and Generalities.   Speaker Boehner is offering (pdf) “pro-growth tax reform that closes loopholes and deductions while lowering rates.”   This phrasing is coming perilously close to the older verbiage: Waste, Fraud, and Abuse.  As if we could make up any gaps in program funding by simply cutting out the WFA.  Most anti-tax advocates cite the WFA as some massive potential figure which if reduced could cure all our fiscal woes.  When pressed to provide total figures associated with the largely mythical WFA these advocates provide outlier examples of welfare fraud, some particularly egregious Pentagon payments to contractors, and perhaps a bit of information from Internet e-mail chain letters.  The WFA numbers have yet to yield up the level of financing needed to close budget gaps in the Pentagon or any other government activity.

The arithmetic from “loopholes and deductions” doesn’t add up either.  The same sort of fantastical thinking is required to equate the WFA savings and the L&D revenues.  These mythological creatures are based on the same gossamer upon which anti-tax advocates conjure up the notion that an inordinate amount of the U.S. budget is allocated to foreign aid.  The average American has come to believe that foreign aid takes up 10% of the federal budget, when if fact it consumes only 1%. [NYM]

The Republicans also appear to be consuming their own rhetoric on savings associated with reductions in federal employee compensation.

“Cutting pensions and benefits for government workers is popular, but once again most Americans overestimate how much that costs the government. On average, Americans think the federal government spent 10 percent of its 2010 budget on pensions and retiree benefits; the OMB figures indicate the real number is about 3.5 percent.” [CNN]

The moral of this story is that if the amounts of spending on pensions and benefits, or the amounts that can be retrieved by closing loopholes and eliminating deductions, are grossly inflated, then the resulting policy and budget decisions will be widely off the mark.

Unfortunately, the same type of ideologically based proposals which are the core of Speaker Boehner’s “structural reforms” i.e. voucherization and privatization of Medicare appear to inform his suggestions about federal employee compensation, and another favorite GOP target, SNAP (food stamps.)

The program is already under assault from all sides, considering the appropriations being entertained in the agriculture bill.

The Senate’s version of the farm bill would reduce overall funding by $23 billion, with a reduction in food stamps of $4.5 billion over five years. The House Agriculture Committee is proposing to cut funding by $35 billion — with nearly half the overall cut coming from reductions in food stamps by $16 billion over five years. [Atlantic]

But there’s a problem here.  Food stamps have a beneficial effect on the national economy.

“Those who believe in cutting SNAP funding as a cost-saving measure should know that food stamps boost the economy — not put a strain on it. Supporters of federal food benefits programs including President George W. Bush understood this, and proved the economic value of SNAP by sanctioning a USDA study that found that $1 in SNAP benefits generates $1.84 in gross domestic product (GDP). Mark Zandi, of Moody’s Economy.com, confirmed the economic boost in an independent study that found that every SNAP dollar spent generates $1.73 in real GDP increase. “Expanding food stamps,” the study read, “is the most effective way to prime the economy’s pump.” [Atlantic]

If the object of the game is to increase federal revenues by generating a higher GDP along the formula proposing that a growing economy produces jobs, and more jobs yield more taxable income, and more taxable income means more revenue — then the GOP has the SNAP portion of the argument exactly backwards.  They are proposing to cut a program which actually generates more economic growth.   If one seriously believes that economic growth means more revenue and hence less indebtedness, then one can’t seriously advocate cutting programs which elevate levels of economic growth.

All Pain and No Gain.  The two sides don’t seem to be speaking to the same fiscal slope, cliff, gully, whatever.  From the Republican perspective the damage to the economy might be done by The Specter of Rising Taxes.  Those legendary Job Creators — who are now seeing record corporate profits while wages continue to stagnate — might not invest, and hence there will be no economic growth.  This is fundamental Supply Side Hoax thinking.  That it has been, and still is, a hoax is demonstrated neatly by this graph from the Federal Reserve Bank of St. Louis:

Corporate Profits Low Wages

The blue line represents wages, the red line corporate profits.  If corporate well being were the driver of overall economic growth and  well being then why has the blue line been trending downward since 1970?  The answer is simplicity itself: Supply Side Economics is a Hoax of the First Water.

A deficit reduction plan predicated on ideology, urban legends, misunderstandings, and economic illiteracy isn’t SERIOUS.   That conclusion further advances the argument that the Republicans aren’t really serious about debt or deficit reduction, but merely see the issue as a flag to be waved in the van of their attack on the social safety net, a banner of privatization signaling their allegiance to Tea Party politics.

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Filed under Economy, Health Care, health insurance, income tax, Medicaid, Medicare, national debt, Social Security

What’s A Small Business?

Small businesses are defined in the eyes of the beholder.  A small business seen through the eyes of a large commercial bank any enterprise with less than $20 million revenue is “small.”   The FDIC defines a “small business loan” as one for $1 million or less. The Small Business Administration uses the FDIC definition for its reporting.   [HuffPo]  Programs for small business lending in the Treasury Department are based on different criteria.

The Treasury Department identifies criteria for a small business in two programs.  The one-shot State Small Business Credit Initiative provides for loans not exceeding $5 million to businesses with less than 500 employees. [Treasury pdf] The second program is the Small Business Lending Fund, ” Enacted into law as part of the Small Business Jobs Act of 2010 (the Jobs Act), the Small Business Lending Fund (SBLF) is a dedicated investment fund that encourages lending to small businesses by providing capital to qualified community banks1 and community development loan funds (CDLFs) with assets of less than $10 billion. ” [Treasury]

This is the point at which the IRS definitions can be inserted because for the purposes of implementing the Small Business Jobs Act of 2010 the IRS defines a small business as including a corporation which is not publicly traded, and the owner must have  $50,000,000 or less in average annual gross receipts over the three preceding tax years. [IRS] Those who would like to plow further into these weeds should see IRS publication 334. (pdf)

Just to make matters more complicated the Small Business Administration splits out its definition of a small business into sectors.  The agency makes its determinations based on the average number of employees over the previous 12 months, or on the sales volume averaged from the previous 3 years.   A manufacturing firm can have as many as 1500 employees depending on the product, and wholesaling operations from 100 to 500.   Services are based on revenue, the maximum ranging from receipts of $2.5 to $21.5 million depending on the service; the maximum range for retailing is $5 million to $21 million; construction company receipts are a maximum of $13.5 to $17 depending on the type of construction, special trade construction receipts ‘max out’ at $7 million.  An agricultural small business may be eligible if its receipts are under $500,000 to $9 million depending on the product.

What’s the point?  One point is that both political parties are overly fond of helping Small Business — and no one appears to have determined what that means.

As demonstrated in the opening section of this post, the definition of a small business can easily range from the Bechtel Corporation company to Barney’s Barber Shop.

What matters is how policies are shaped to assist economic growth, and how they define small business operations in terms of economic expansion.   The popular notion of a small business as exemplified by Barney’s Barber Shop, Charlie’s Catering, or Delilah’s Home Designs, is  perfectly acceptable if the policy objective is to promote local economic growth.

If our objective is to encourage the manufacturing of solar panels in the United States of America, then a “small” manufacturing business employing 450 meets the criteria for receiving assistance in lines of credit and in terms of tax breaks for a small business.

If the objective is to encourage financial transactions hedging risk and other financial manipulations, then a 499 person hedge fund can be classified as a small business.

What we have not had to date is a serious public discussion of What small business enterprises we want to encourage.

If our purpose is to promote economic growth in the manufacturing sector, then our public discourse should include proposals for the development of innovative products and technologies.  Merely propounding, for example, that the Trans Pacific Partnership will help small manufacturers find export opportunities isn’t enough.  We’ll need to talk about how to promote small business sales opportunities without having the outcome hijacked by multi-national corporate behemoths who are more interested in facilitating the flow of capital than they are about whether New Tech Innovations, Inc. can find buyers.

If our purpose is to promote small contractors and sub-contractors in their sector of the economy, then we need to ask if we are encouraging such infrastructure projects as will be of interest to and are attainable for those small contractors and subcontractors.  If there is still a surplus of unsold inventory in the single family housing sector, then why promote this kind of contracting when there is a need for affordable multi-family commercial properties?   Perhaps we should be asking questions like: What will be the economic  impact be of the (Fill in the Blank) project for our local contractors and subcontractors? Instead of obsessing on the project costs?

If our purpose is to promote the efforts of retailers, then do our tax policies and other public pronouncements, benefit small family owned enterprises, or can those enterprises benefit only as a segment of a sector dominated by big box corporations?   Worse still, are we creating a system in which the big box operations are given artificial advantages as they compete with smaller family owned enterprises?  Are we supporting the customers of those grocery, clothing, and other purveyors with “automatic stabilizers’  (food stamps, unemployment insurance benefits) during periods of economic volatility or contraction?

Singing the praises of Mom and Pop companies while promoting policies which give global corporations a leg up, is neither honest nor helpful.  Lauding the efforts of small business owners in 4th of July stump speech rhetoric isn’t productive unless it is backed up with proposals to encourage investment in new economic endeavors, and solicit assistance for local business activities.

We can dream that during this campaign season of specific plans to address equally specific needs in our local economies.   Small business owners are the first to feel the volatility in an economy. They are the first to feel it and too often are the last to recover from it.  They deserve more than to be told “It will all trickle back down on them…someday,” because they may have to make payroll tomorrow.

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Filed under banking, corporate taxes, Economy, employment, financial regulation

In The Reading Room

   Information concerning the relationship of Medicare to the Patient Protection and Affordable Care Act is bountiful, albeit not always accurate or informative.   Perrspectives explains “The Return of Republican Medicare Frauds” with clarity and fact based analysis.   Perrs quotes Jackie Calmes’ article in the New York Times; and, those wanting to place the issue in a political framework will want to read Calmes’ summary of why the Medicare messaging from the Republicans has become such a muddle.


Politicususa highlights a Republican provision concerning SNAP (food stamps) in the House version of the Farm Bill which is as draconian as it is nonsensical.   “The Republican plan eliminates “categorical eligibility” which means that a family living at or below the poverty line that owns a dependable car will be cut off of food assistance. According to Republicans, a dependable automobile will be figured in to the family’s income and when they are near the eligibility cut-off point, even a moderately-priced used car sends them over the limit.”   (emphasis added)   Think about this for a minute, or think back to the time in your early life when you need the car to get work and the work to keep paying for the car.

If a family doesn’t own a “dependable automobile” then they will be eligible for food stamps, thus in order to qualify for food assistance the family has to part with the means to get to work!  Precisely how this is supposed to incentivize people to find jobs escapes any logic, especially if they are required to give up the means to get TO a job in order to eat.  If one has an undefined “undependable automobile,” then must a person only be able to accept work from an employer who doesn’t care when or if he or she can show up?  Seen any of those recently?


This pathological perseveration about someone receiving any form of public assistance, lest they become “dependent,” leads right wing members of Congress into such silly statements as Rep. Allen West’s comment that Social Security is a 21st century version of slavery. [Think Progress]   Rep. West seems to have missed the obvious point wherein individuals receive Social Security benefits — because they paid into the system during their working lives.


Apparently pointing out that someone is very rich is now a “character assault?”   “In a statement, Romney spokesperson Andrea Saul said “The Obama campaign’s latest unfounded character assault on Mitt Romney is unseemly and disgusting.”  [WashMonthly]  ICYMI, Vanity Fair’sWhere The Money Lives” approaches being a primer on how the ultra-rich avail themselves of tax loopholes and other accounting treatments to avoid paying taxes.  Governor Romney is quite precise about it — stating he pays just what the law requires and not at dollar more.   And… about those arguments predicated on the assumption that Governor Romney can’t be blamed for any actions taken by Bain Capital since he left?

Because of his retirement deal with Bain Capital, his finances are still deeply entangled with the private-equity firm that he founded and spun off from Bain and Co. in 1984. Though he left the firm in 1999, Romney has continued to receive large payments from it—in early June he revealed more than $2 million in new Bain income. The firm today has at least 138 funds organized in the Cayman Islands, and Romney himself has personal interests in at least 12, worth as much as $30 million, hidden behind controversial confidentiality disclaimers. Again, the Romney campaign insists he saves no tax by using them, but there is no way to check this.”

Americablog observes that Governor Romney needs to answer some basic questions about his tax returns.


The Chart of the Day:  What would a graph of the Real GDP look like using data from January 1, 2009 to Q3 2012?  This:

Probably not something the Republicans are going to post on their campaign web pages?


More LIBOR.  Robert Reich calls it “a mammoth violation of public trust.” [BusInsider] The Guardian (UK) reports a Barclays whistleblower alleges Bob Diamond would have to have known about the rate rigging.   The BBC reports that the Serious Fraud Office has launched a criminal investigation. From the Telegraph, “Vince Cable: Banks are throttling UK recovery,” (Cable is the UK Business Secretary.) On Friday authorities said external audits were being conducted to see if Deutsche Bank was involved in the LIBOR rigging scandal, today it’s reported two bank employees have been suspended. [Reuters]

ZeroHedge has been following the story, and has several interesting analytical posts on the subject.  Pragmatic Capitalism yawns and tells us that the LIBOR scandal doesn’t tell us anything we didn’t already know. The main bit of evidence is the fact that the LIBOR and Effective Federal Funds rates are closely aligned — which is good, BUT it’s the little spaces in which the Big money can be gleaned.   And lost.

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Filed under banking, Medicare, Politics, Republicans, Romney

Ripping the Safety Net: The Conservative Welfare Mythology

One of the cherished myths of conservative ideology is the comfortable welfare recipient cashing in checks which amount to “more” than a poorly paid job. This isn’t the real picture in Nevada.  Or, anywhere else for that matter.  Consider the following chart for a moment:

Life gets a little more complicated when eligibility or need calculations are added.

Liquid and non-liquid resources are evaluated to determine whether or not they are countable. Countable resources cannot exceed $2,000 per TANF household. When resources exceed this limit the case is ineligible.

“Types of countable resources are cash on hand, stocks, bonds, mortgages, deeds of trust, bank accounts, real property, etc. There are certain types or resource amounts which are not counted when determining eligibility such as:

  • One automobile.
  • The home, including any contiguous land, which is the usual residence of the assistance unit that the household owns or is buying.
  • One burial plot for each member of the household.
  • Burial funds up to $1,500 equity value for each household member
  • Household goods and personal items.”

Let’s go back to the “countable resources” for a moment.  In the FAQ section the Nevada Department of Welfare describes some assets that count against eligibility or need:

“However, these are some of the items counted as assets: checking and savings accounts, Individual Retirement Accounts (IRAs), certificates of deposit, stocks and bonds. Recreational vehicles and property other than that listed above.”

Here’s the Catch 22.  One vehicle, probably needed to get to work, doesn’t count against the recipients, nor do the clothes on their backs, or the furniture and appliances, or the burial funds and plots.  Or the house with the roof over their heads.  BUT keeping these items is another matter.  While conservatives bemoan the lack of “savings” evidenced by the poorest among us, the rules of the game are rigged so that if a person does manage to put some money away for retirement, educating children, paying for medical services (like a Health Savings Account) — THEN those are countable assets which diminish the support for the family because Heaven forefend! They’d be Welfare Queens.  In short, damned if they do and damned if they don’t.

Gee, if “those people” would “just save” then they wouldn’t need public assistance, but if they are eligible for public assistance and DO save they are penalized. If, of course, they don’t save then they can get the help they need to keep the family afloat for the month.

Quite recently a Republican candidate for the presidency of the United States said he wasn’t worried about the very poor because they have a “social safety net.”  This would be former Governor Romney’s classic: “We have a safety net there. If it needs a repair, I’ll fix it,” Romney said. “We have food stamps, we have Medicaid, we have housing vouchers, we have programs to help the poor.” [HuffPo]

Yes, as we’ve seen we do have TANF. We have nutrition assistance programs.  What used to be called food stamps is now the SNAP program.  The chart for SNAP benefits looks like this:

Getting out the calculator and punching in the numbers yields an average SNAP benefit of about $4.40 per day in FY 2011. [CBPP]  The latest reports compiled by the Bureau of Labor Statistics [pdf Table 723] show food prices for FY 2010, and demonstrate rather quickly that the $4.40 isn’t going too far too fast.  Apples? $1.20 per pound. Oranges? $1.02 per pound, up from $0.62 in 2000.  Bread? $1.39/loaf, up from $0.99 in 2000.  Milk? $3.32 per gallon, up from $3.11 the year before.  Meat? Bringing home the bacon isn’t what it used to be. It was $4.06 per pound in FY 2010, up from $3.57 in 2009.

Thus far we have people living in poverty, who are admonished to be thrifty savers — but find their monthly benefits reduced (or eliminated) if they do, being asked to feed family members for $4.40 per day.

“If it needs a repair, I’ll fix it,…”

After trying mightily to get Governor Romney on record supporting the Ryan Plan the Democrats watched as the Romney campaign did it for them last December.  [WashMonthly]

And, what would the Ryan Budget Plan do to SNAP recipients?  Slash approximately $127 billion from the program for the next ten years.  [CBPP]

And more, what would the Republican Budget Plan do to TANF (Temporary Assistance to Needy Families)?  This program has already stagnated, tied as it is to block grants which in turn are linked to out-of-date levels: “basic federal TANF block grant funding has eroded substantially in inflation-adjusted terms over the years available.  The value of the TANF block grant has declined about 30 percent in real value since 1996. ”  [CBPP] (emphasis added)  In Nevada, the value of TANF benefits for a single parent with three children declined by 22.7% since 1996.

Rep. Ryan was pleased to call this state of affairs an “unprecedented success.” [MC]  Here’s a picture of what he was speaking to:

Quite simply, it doesn’t do to describe the block grant TANF program as an unqualified success if it is insufficiently funded to meet the current needs of families faced with reduced circumstances, and worse still to contemplate it as the “model” for further reducing federal expenditures for SNAP.

Therefore, convinced as Governor Romney may be that the poor are secure, that ephemeral security means severely limited resources for daily living, indexed to long out of date base numbers (TANF) supposedly supplemented by SNAP funding which requires recipients to limit their expenditures for food to $4.40 per day.

Anyone with a $4.00 plastic calculator and 6th grade arithmetical skills can determine that the Romney/Ryan prescription for the social safety net is more likely to shred the net than secure it.

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Filed under conservatism, Nevada economy, Romney

Eating Our Own: Food Stamps in Food Deserts

Don’t miss this insightful piece in the Las Vegas Sun, “Experiencing hunger in Las Vegas.”  The article is especially useful for those who think food stamps are a giveaway to lazy people — try feeding your family on $3.39 per day, or about $105.09 per month. It’s also time to debunk some common myths and urban legends about the food stamp program.

Myth:  Food Stamps cause obesity.   Right wing news outlets jumped on a study by a University of Maryland researcher which purported to connect the rate of obesity in the United States with food stamps.   What should have been a red flag were the researcher’s initial assumptions that (1) “In a time of mass obesity, encouraging the poor to consume more food makes no sense at all,” said the researcher, University of Maryland Professor Douglas Besharov.”  And, (2)  “Food stamps and other federal meal programs, he said, were launched at a time when hunger was a serious threat to the underprivileged. Today most of the poor have no problem getting enough to eat, according to Besharov.” [Fox]

The first and most obvious problem is that Correlation Is Not Causation.  Arguing that food stamps cause obesity is like proposing that gasoline purchases cause automobile accidents.  More credible research suggests that women participating in food stamp programs are at greater risk for obesity than men or children, and this hints at possible factors not attended to in the anti-food stamp arguments.  For example, are there genetic factors involved? Are there dissimilar levels of daily exercise?  Eating patterns?  Level of nutritional information in the home?

Another line of attack says that since food stamps can only be used for food the recipients are encouraged to purchase more groceries and therefore are at greater risk for obesity.  Stop. Think.  Expenditure doesn’t necessarily equate to Over Consumption.  There is a better explanation:

“But even if receiving food stamp benefits leads participants to spend more on food, it does not mean that the additional spending results in overconsumption and obesity. It is possible that food stamp benefits allow people to choose a different bundle of foods than they otherwise would. For example, participants may shift spending toward relatively more expensive foods that were previously out of reach (e.g., fresh meats versus canned beans or fresh fruit and vegetables instead of canned items). Or, since food stamps can be redeemed for food only in grocery stores, participation in the program may shift a household’s food spending toward foods prepared and consumed at home, as opposed to food away from home. In either case, an increase in food expenditures would not necessarily lead to overconsumption of calories or a poorer diet.”  [ERS usda]

Myth: Poor people can get plenty to eat. Lets make the same “deal” proposed by the initial article [LVSun] and make the logical assumption that food insecurity in the United States isn’t comparable to food insecurity in the Southern Sudan.  Those unwilling to make such a “deal” are in essence proposing that SNAP be available only to the 5% of Americans who, without assistance, could not put food on the table.  [TDB] To check for a bit of numerical bias, let’s rephrase that and say the advocates of profound cuts to SNAP assistance are saying that we need only provide assistance to a putative 16,500,000 people.   Now which number sounds like greater evidence for severe food insecurity in the U.S?  That 5% of our population is very severely food insecure? Or, that 16,500,000 Americans are very severely food insecure?

As the chart illustrates, there are three levels of food security definitions.  Food secure is obvious. We can drill down on other categorizations.  In general, “Food insecure” means that at some point during the year a household could not obtain enough food because of insufficient resources.  “Low food security” is defined as: “These food-insecure households obtained enough food to avoid substantially disrupting their eating patterns or reducing food intake by using a variety of coping strategies, such as eating less varied diets, participating in Federal food assistance programs, or getting emergency food from community food pantries.” [USDA]

The severity of the situation informs the Very Low categorical definition: “In these food-insecure households, normal eating patterns of one or more household members were disrupted and food intake was reduced at times during the year because they had insufficient money or other resources for food.” [USDA] In short, someone (or everyone) in the household went to bed hungry.

If 5.4% of the American population (or 17,820,000) is experiencing ‘hunger’ then it’s readily apparent that not all poor people can get “plenty to eat.”

Myth: All supermarkets are created equal.  Those comfortably ensconced in high income suburbs probably aren’t familiar with grocery stores in which you can find any kind of lettuce you want as long as it’s Iceberg.  Access to a variety of nutritious food is an important, but often overlooked factor.

Avoiding  a ‘food desert’ requires thinking in 3D:  There has to be a supermarket with a substantial offering of nutritious foods, and there has to be a way to get to it.  Of all U.S. households, 2.3 million (2.2%) live more than one mile from a supermarket, and do not have access to a vehicle to get there. Another 3.4% live within one half a mile or one mile from a market, and don’t have access to a vehicle to get there. [ERS pdf] It doesn’t help to have a grocery store in the area if you can’t get there.   However, most SNAP participants are making the effort, 86% redeem SNAP benefits at supermarkets or large grocery chain stores, which are an average of 4.9 miles from home. [ERS pdf]

Those unsure that “food deserts” exist may wish to consult the Food Environment Atlas,  Google Earth it isn’t but a couple of clicks on the interactive map will tell us that in Clark County as of 2006 there were 5,766 households with no car and with the nearest grocery over a mile away.  In Washoe County there were 1,402 families in the same straits.  Nye County had 506 families in that category, Humboldt had 152, and Elko had 302.

Perhaps if we’re serious about promoting better eating habits it might do to think equally seriously about our public transportation systems?  Or, how we  encourage the placement of full service food marketers in urban areas?

We do need to be careful that some in our current over-heated political environment don’t take satirist Jonathan Swift’s 1729 Modest Proposal too seriously: “I have been assured by a very knowing American of my acquaintance in London, that a young healthy child well nursed, is, at a year old, a most delicious nourishing and wholesome food, whether stewed, roasted, baked, or boiled; and I make no doubt that it will equally serve in a fricasie, or a ragoust. ” [Gutenberg]


Recommended reading:  “Food Stamps and Obesity,” Amber Waves, ERS USDA, June 2008.  Steven Cuellar, “Do food stamps cause overconsumption?” Sonoma State University, March 2003. (pdf)  FNS/USDA “Supplemental Nutrition Assistance Program, “Obesity, Poverty, and Participation,” February 2005. (pdf) VerPleog, Mancino, Lin, “Food Stamps and Obesity,” Amber Waves, ERS USDA, February 2006.  Shari Roan, “Obesity Rates in US…leveling off,” LA Times, January 17, 2012.  Drenowski & Specter, “Poverty and Obesity: The role of energy density, energy costs,” American Journal of Clinical Nutrition, January 2004.

Claudia Kalb, “Food Insecurity Rising in America,” The Daily Beast (Newsweek), August 2010.   USDA, “Food Security in the U.S. – Statistics and Graphics,” September 7, 2011.   ChildStats.gov, “America’s Children: Key National Indicators of Well Being,” Forum on Child and Family Statistics, 2011.   CDC, “Food Deserts,” feature article links.  Economic Research Service, “Access to affordable and nutritious food,” USDA, June 2009. (pdf) Chapter 5: “Food Access and Its Relationship to Food Choice,” ERS, USDA, June 2009. (pdf)  Chapter 6: The Economics of Supermarket and Grocery Store Locations,” ERS, USDA, June 2009. (pdf)  ERS Maps, “Food Environment Atlas,” USDA.

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