Think Freely Media presents Common Sense with Paul Jacob

Yesterday, we discussed the Pennsylvania Department of Public Welfare’s new rule testing the financial assets of food stamp recipients to determine whether or not they qualify for the benefit.

Secretary of Agriculture Tom Vilsack recently traveled to the Keystone State to caution against restricting access to food stamps — officially known as the Supplemental Nutrition Assistance Program (SNAP) — on the basis of a person’s financial assets. He contended that implementing the means test would cost money and that it wouldn’t “save the Commonwealth a single dime.”Tom Vilsack points a finger

State officials suggest Secretary Vilsack is way off on the cost of implementation. Moreover, it seems odd to argue there will be no savings at a new conference stuffed full of shrill warnings that too many poor people would lose assistance.

But two of Vilsack’s other arguments really caught my attention. First, he claimed the SNAP program is an “economic extender,” which creates agricultural jobs and positions at grocery stores and convenience marts. Second, he asserted that for each food stamp dollar provided by government an additional $1.80 to $1.90 in economic activity is generated.

In other words, food stamps stimulate the economy. It’s almost as if, even if there were no folks down on their luck, we’d still want to spread around some food stamp money for all the good it does.

Vilsack made absolutely no mention of the economic activity interrupted when government took that same dollar from the person who earned it.

This is Common Sense. I’m Paul Jacob.

By: Redactor

7 Comments

  1. 2WarAbnVet says:

    If each food stamp dollar actually provided by government an additional $1.80 to $1.90 in economic activity, then everyone should receive food stamps and economic activity would almost double. What a remarkable opportunity to solve our economic problems! After all, something-for-nothing has been the Dem promise for decades.

  2. Wilson Mixon says:

    I agree that the “multiplier” suggested by Vilsack is nonsense. I do have one concern about the Pennsylvania proposal: A system that takes away benefits when recipients accumulate assets increases the likelihood that recipients will become trapped in the system.

  3. …. Vilsack did not mention the economic activity interrupted when government took that Dollar from the person who earned it ….

    From the person, that is, who’d created that Dollar.

    And who owned it.

  4. Matt says:

    “In other words, food stamps stimulate the economy. It’s almost as if, even if there were no folks down on their luck, we’d still want to spread around some food stamp money for all the good it does.”

    The reason that stimulus works is because food stamps go to the poor who immediately turn the money around in their local economy. That is economic stimulus that would not be there without the program. If people that didn’t need the money got food stamps, it wouldn’t change their shopping behavior, they would just be paying for the groceries they already would have purchased by a different means. There would be no net gain to the local economy.

    They may spend that money locally, invest it, stuff it into savings or do whatever they wanted with it. But that simply doesn’t have the net ripple effect that studies have shown.

    Moody’s has a pretty clear breakdown of the economic benefits of various stimulus provisions. Notice food stamps is at the top and capitol gains and corporate tax cuts are near the bottom:

    http://frac.org/initiatives/american-recovery-and-reinvestment-act/snapfood-stamps-provide-real-stimulus/

  5. The primary problem with Moody’s infographic is that it uses a fundamentally incorrect notion that some forms of spending have a greater economic multiplier than others. The multiplier is nothing more than a product of Keynes’s fevered imagination.

    http://www.thefreemanonline.org/featured/keyness-ghost/
    http://www.cato.org/pub_display.php?pub_id=12143

  6. Redactor says:

    The multiplier works, in theory, by denying (or simply ignoring) the opportunity cost of expropriated or borrowed funds. The problem when confronting this issue is that, while we know that opportunity costs are real and vital, we cannot calculate them. See James Buchanan’s great book on cost.

  7. MoreFreedom says:

    This is a good example of government bureaucrats protecting their jobs, at the expense of taxpayers. They throw out all kinds of arguments (most are worthless and not to be believed) for continuing and expanding their programs and budgets. It’s rare that they ever provide a fair and balanced evaluation of their costs and benefits (their incentive is to fill their pocket).

    Redactor is right to point out James Buchanan’s book. Buchanan received the Nobel prize in 1986 for his work showing how politicians’ and bureaucrats’ self interest guide policy. They are interested in their own wealth and power, not our freedom. And as Ron Paul continues to point out, government is supposed to protect our liberties, not reduce them by taxing us so the disincentive to work leads us to quit working.

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