Just Give Everyone Food Stamps

The right-wing is getting riled up about food stamps, again. Sean Hannity even dedicated an entire hour to the food stamp program last week, with predictable messaging about how it is exploding and a scourge on the country. While the purpose of this manufactured outrage is to get rid of or dramatically shrink the food stamp program, I think a better move is to go in the opposite direction and just give everyone food stamps.

Before we get into that, some facts might be helpful. To be eligible for food stamps, your household needs to have a gross monthly income that is no more than 1.3x the poverty line, and a net monthly income that is no more than poverty line. For a family of four, that is a gross monthly income of $2,498 and a net monthly income of $1,921. Those that are eligible receive monthly benefits that vary based on how much need they have, and the average benefit last year was $133.41/month per person. The people on this program are hardly living large. Additionally, the program does not cost that much. Last year, the program cost $74.6 billion, which was 0.47% of GDP.

With that out of the way, we can get into why universal food stamps would be such a great idea. First, universal food stamps would make administration of the program so much simpler. Instead of having to detail all of your finances and long, complicated lists of deductions to get food stamps, the universal food stamp sign-up form would have only one question: are you a person? If you check yes, you get food stamps. If you check no, you still get food stamps. Simpler administration saves money that is spent figuring out whether people are sufficiently poor, which frees it up for more productive uses.

Second, when food stamps are universal, people will not lose benefits as they make more money, which means they will not have any incentive to avoid doing so. The way food stamp benefits are currently computed, every $1 increase in monthly income causes you to lose $0.30 in monthly food stamp benefits until you reach the cutoff point and lose benefits altogether. This means food stamp recipients face a marginal tax rate of 30 percent! That is not good for anyone, and so we should just get rid of the means-testing altogether, which a universal food stamp program would do.

Third, a universal food stamp program is totally affordable. Using the most recent population estimates and a $200/month per person benefit, we can calculate that the program would cost around $757 billion per year, or 4.8% of GDP. Of course, calling this a cost is a bit misleading: the money is really just being moved around. We would have to bump taxes to pay for it, but that tax revenue would get shot right back out for people to spend. The only direct losses would be the costs of administering the program.

Of course, once we have gone this far, it is fair to wonder why exactly the universal food stamp program should give out food vouchers instead of cash. Even the current food stamp program faces those objections. Indeed, a universal cash program would probably be better. After all, since money is fungible, food stamps are already basically cash. Getting food stamps allows someone to replace some of the money they were spending on food with the food vouchers, and thereby free up that money for other expenditures. Giving out money directly would be no different, and would also eliminate the “fraud” in the system, where “fraud” just means people explicitly trading food stamp credits for money instead of using the fungibility of money to do it in the indirect way the program allows.

The universal food stamp program — or universal cash program — would seem to be a sure winner. It will make administration easier, eliminate fraud, avoid the means-testing marginal tax rate problems, and give everyone assistance, not just the sufficiently poor. For a family of four, the program as described above would provide $9,600 of supplemental income each year, which would be a huge boon to their economic security and comfort, especially the poorest families.